BE PREPARED
PROPERTY INSURANCE IN 2026:
TRENDS, RISKS, AND WATCHOUTS FOR POLICYHOLDERS
If you’ re like many other Americans, you watched in horror as wildfires ravaged Los Angeles at the beginning of 2025, causing $ 61 billion in damage. Despite a slight reprieve of tropical storms, the year also saw extensive property damage caused by tornadoes and rain / hail events. As the nation worked to rebuild and pick up the pieces, property owners were left with a glaring question: What is the future of property insurance?
Now that we’ re well into 2026, it’ s important to understand what’ s happening in the insurance industry and how your policy might be impacted. Things like weather events and higher premiums aren’ t new concepts, but there are a few other key items that are changing the insurance landscape, and some are for the better. Here’ s what we’ re seeing:
IMPROVED MARKET OUTLOOK
We have to recognize the wins when they come, and this year, AM Best, the largest credit rating agency that focuses entirely on insurance, revised the market segment outlook from negative to stable. With expected price stabilization and a bit of weather reprieve in the second half of 2025, the agency is hopeful that policyholders will see smaller premium increases this year.
Additionally, reinsurance support and healthy cash reserves are giving insurance companies enough cushion to cover weather-related claims that may be submitted. It seems that the rate increases from 2025 and prior years did what they were supposed to do, allow providers to plan for the future while managing in-process claims.
TARIFFS AND INFLATION PERSIST
As tariffs continue to drive up the costs of imports and inflation continues to stay elevated, the cost of home repairs is higher than we’ d like to see. The Unites States imports a large share of the lumber needed to build and repair homes, and tariffs have made it more difficult to obtain it at reasonable prices. When the price of home repairs rises, premiums may go up to cover the gap.
LITIGATION EXPENSES
Manufacturers are now operating in a landscape where product liability claims are more complex, costly, and substantial. Greater jury expectations, aggressive plaintiff strategies, and the growth of thirdparty litigation funding have led to higher settlement amounts and longer case durations. Even simple product claims can escalate into significant disputes, impacting financial stability and brand reputation.
By understanding the factors behind the rise in complex claims and adopting proactive defense strategies, manufacturers can better safeguard their operations, reputation, and profitability in the long run.
WEATHER ISN’ T LETTING UP
We may not have started 2026 with wildfires in Los Angeles, but just in the first couple months of the year, we have seen historic winter weather events like ice storms and floods throughout the country. We cannot predict weather catastrophes, but we know enough to realize that we’ ll face more in the coming months.
Weather events have a national impact on coverage and premiums, but the pain is felt deeply at local and regional levels. For instance, State Farm stopped offering new home insurance policies in California due to fire risk. So, even if your home isn’ t impacted by adverse weather, regional events may bring policy changes and / or rate hikes.
AI IS HERE
As artificial intelligence permeates nearly every industry, property insurance providers are already seeing the impact. AI is changing things in two major ways:
14 • NesbitAgencies. com