Will we still be able to afford home insurance?

Analysis — Ward & Raven — September 14, 2026

Affordable home insurance should make it possible to pay the premium and recover after a loss. As floods, wildfires and drought threaten homes, preserving that protection requires reducing damage, financing improvements and sharing costs. Experiences in Canada, France, the United Kingdom and the United States shed light on the decisions facing households, insurers and local governments.

In November 2024, water entered Graham and Shirley’s home in Herefordshire, England. It receded that afternoon, but damage to the flooring and pipework kept them away from home for about seven months. During the repairs, the couple received drainage improvements, pumps and materials suited to flood exposure. Their account, published by the British Flood Re program, illustrates what rebuilding means in a household’s daily life: bills, delays and the prospect of returning to a better-prepared home. 1 — Flood Re, Build Back Better

This experience brings three parties together around the same question. The household wants to protect its budget and return home. The insurer must pay claims and remain able to cover future events. The local government wants to keep neighbourhoods liveable. Their decisions are connected, even when their budgets and responsibilities are separate. Flooding will be the main thread of this article, while acknowledging the other risks facing homes.

Insurance can be available yet still unaffordable

The issue is becoming urgent in Canada. The 2026 National Adaptation Strategy report cites an estimate of more than 1.5 million households at high risk without access to adequate, affordable flood insurance. The national program intended for homes that are hardest to insure is still described in that report as being under development. It is therefore not presented as coverage already available for purchase. 2 — Government of Canada, 2026

The pressure on household budgets can also be measured. Between December 2019 and December 2025, Canada’s homeowners’ home and mortgage insurance price index rose by 45.0%, compared with 21.0% for the all-items Consumer Price Index. This does not mean that every policy increased by the same amount, or that climate change alone explains the rise. For a household, however, the trend may leave less money available for home maintenance or savings. 3 — Statistics Canada, 2026

The annual premium does not tell the whole story. A policy may be offered at an acceptable price while excluding the main risk facing the home. A high deductible may make premiums easier to manage, yet leave a bill the household cannot afford after a loss. The duration and limit of coverage for temporary accommodation also matter. The Financial Consumer Agency of Canada specifically recommends reviewing these coverages and the conditions governing rebuilding. 4 — FCAC, 2026

Water damage illustrates this complexity. In Canada, an indoor leak, sewer backup, overland flooding and coastal flooding may fall under different coverages. Overland flooding is generally not included in a standard policy. Tenants also need to review their own coverage: their landlord’s insurance does not automatically protect their personal belongings against this risk. 5 — Public Safety Canada, 2026

Public assistance does not always fill the gaps. In Québec, the General Financial Assistance Program provides assistance as a last resort, subject to conditions. For a flood, eligibility depends in particular on a nearby watercourse overflowing; certain sewer backups or water infiltration may qualify when they result from that overflow. Water in a basement after rain is therefore not enough to assume that public compensation will be available. 6 — Government of Québec, disaster financial assistance

For a household, affordable protection must answer three straightforward questions: can it pay the premium, cover its remaining out-of-pocket costs and rely on sufficient coverage to resume everyday life? An improvement in average market conditions may leave those questions unanswered for the most vulnerable households.

Why climate risks affect the bill

The extent of damage depends on the event, the assets exposed and the vulnerability of buildings. Warming changes some hazards, while construction decisions can increase exposure. The attribution studies compiled by World Weather Attribution for 2024 document how climate change intensified many extreme events. They do not allow every claim or premium increase to be automatically attributed to climate change. 7 — World Weather Attribution, 2024

Rebuilding also becomes more expensive when the costs of materials, labour and specialist services rise. Statistics Canada examines these factors alongside claims and reinsurance. Administrative expenses, the capital needed to pay claims, competition and market rules also shape prices. Understanding these mechanisms can support a more informed discussion of an increase; its justification still needs to be examined. 3 — Statistics Canada, 2026

A catastrophe can also damage thousands of homes at once. Reinsurance, which covers part of insurers’ liabilities, spreads these losses more widely. Public guarantees can supplement this arrangement for exceptional events. The economic cost is nevertheless borne through premiums, capital or public finances: sharing risk does not eliminate the repairs that are needed. 8 — ECB and EIOPA, 2023

In the United States, the Treasury found that, over 2018–2022, average premiums were 82% higher in the fifth of ZIP codes with the highest expected climate-related losses than in the fifth with the lowest exposure. Average non-renewal rates were about 80% higher. This analysis, whose climate-risk indicator excludes flooding, establishes an association between exposure and insurance difficulties, without isolating a single causal effect. 9 — U.S. Treasury, 2025

Wildfires show why protection extends beyond a property’s boundaries. Windborne embers can ignite materials near a home. FireSmart Canada recommends addressing the building and its immediate surroundings, including a non-combustible zone extending 1.5 metres from the home, and coordinating efforts with neighbours. Roofs, possible ember entry points and surrounding materials all matter. The homeowner’s actions are therefore part of the neighbourhood’s preparedness. 21 — FireSmart Canada, protecting homes

In France, drought can weaken a home without a dramatic disaster. Clay soils shrink as they dry and swell when they absorb water again; these movements can damage foundations and crack walls. Adaptation should begin with a professional assessment of the home’s vulnerability, followed by improvements suited to the soil and building. Generic changes to drainage or foundations are not a universal solution. 22 — Géorisques, shrink–swell of clay soils

Coverage also follows different rules. Damage from the shrink–swell of clay soils may fall under France’s Cat Nat natural catastrophe insurance scheme, subject to the applicable conditions, including official recognition of the event and a link between the event and the damage. A crack alone does not establish entitlement to compensation. Wildfires fall under other coverages, including fire insurance. 23 — Géorisques, Cat Nat compensation

How to organize solidarity among policyholders

More expensive insurance may reveal a risk without giving a household the means to reduce it. In a scientific commentary published in 2026, Joakim Weill and Jesse Gourevitch highlight the limitations of price signals: a lack of funds for improvements, ties to work and family, and annual contracts covering buildings designed to last for decades. A household may understand the danger while having few alternatives. 10 — Weill and Gourevitch, 2026

France organizes broad risk pooling through the Cat Nat scheme, which is attached to the relevant property damage insurance policies. For home insurance, the surcharge rate increased from 12% to 20% on January 1, 2025. The 20% is the rate applied to the relevant premium base, not a 20% increase in the total bill. Compensation requires, among other conditions, a policy covering the property and official recognition of the catastrophe. 11 — French Ministry of the Economy, compensation, 2026

The scheme combines private insurers, public reinsurance through CCR and a state guarantee. It spreads part of the burden across areas with different levels of exposure. However, in its April 2026 report, France’s Court of Accounts concludes that higher contributions do not guarantee medium-term sustainability under every plausible adverse scenario. Prevention and up-to-date risk knowledge remain essential. 12 — Cour des comptes, 2026

In the United Kingdom, Flood Re reinsures flood risk for eligible homes, while households retain their own insurers. The scheme is intended in particular for homes built before January 1, 2009, subject to other eligibility conditions. The reform announced in July 2026 retains the 2039 transition horizon and provides for broader changes from 2028. Announced changes to reinsurance prices are distinct from the final premiums paid by households. 13 — Flood Re, eligibility criteria 14 — UK Parliament, July 2026

These experiences raise two different questions: how should costs be shared among places with different levels of exposure, and how should they be shared among households with different financial means? Pooled premiums can support at-risk areas without specifically targeting the people with the fewest resources. Income-based assistance can complement this solidarity, but its funding and conditions must be explicit.

What prevention can actually change

Prevention has measurable results that need to be assessed in context. Hudson and co-authors studied German households affected by floods in 2002, 2005 and 2006. After statistically adjusting for differences between households, several measures were associated with estimated avoided damage of between €6,700 and €14,000 per event. Water-resistant or easily replaceable interior fittings were among the promising options. These results represent neither universal annual savings nor a demonstrated reduction in premiums. 15 — Hudson et al., 2014

A study by Poussin, Botzen and Aerts involving 885 French households also shows that the effectiveness of improvements varies with the type and probability of flooding. Slow-rising river floods, rapidly arriving water and coastal flooding place different demands on protective measures. Québec’s adaptation guide accordingly presents several options: moving vulnerable equipment, choosing suitable materials, improving drainage or installing certain temporary protections, following an appropriate assessment. 16 — Poussin et al., 2015 17 — Government of Québec, adapting to floods

For a household, the benefit extends beyond the value of property saved. Less extensive damage may make repairs easier and reduce disruption. The effects on insurance still need to be checked: which improvements are recognized, what documentation is required, and what deductibles and coverage limits apply. The OECD notes that a risk reduction recognized by a reinsurer does not guarantee that the direct insurer will pass through the full benefit. Other costs may rise at the same time. 20 — OECD, 2026

Some initiatives seek to make this connection more concrete. In California, Safer from Wildfires combines protection of the building, its surroundings and the community, with premium discounts recognizing preventive measures. This local framework guarantees neither access to a policy nor a lower total bill in every situation. It nevertheless illustrates the value of clarifying what insurance will recognize before a household commits to spending. 24 — California Department of Insurance, Safer from Wildfires

The British Build Back Better program, which supported Graham and Shirley, can provide up to £10,000 for resilience measures in addition to repairs after a flood, under participating policies. Conditions vary by insurer. This approach brings restoration and adaptation together: when floors and equipment need replacing, there is also an opportunity to reduce future damage. 1 — Flood Re, Build Back Better

This approach also deserves funding before a loss occurs. A household with little savings may struggle to pay upfront for improvements, even when they offer benefits over several decades. Targeted assistance, an advance or suitable financing could be assessed according to household resources and expected effectiveness. The aim would be to make the measures achievable, then verify their benefits for occupants.

Who should pay for improvements and the losses that remain

A homeowner does not control a property’s exposure alone. A neighbourhood depends on stormwater systems, access routes, land management and surrounding development. Tenants have even less control over the building. Connecting insurance and prevention therefore requires assigning responsibilities at the level where action is possible.

Land-use planning plays a lasting role here. In a European modelling study, Tesselaar and co-authors show that insurance schemes which largely offset the cost of exposure can, in their simulations, encourage settlement in flood-prone areas. This result depends on the assumptions used. It points to the need to combine support for existing homes with limits on new exposure, to avoid accumulating risks that the community will later have to finance. 18 — Tesselaar et al., 2023

The following table offers a framework for discussing how costs could be shared. It does not describe a single existing program.

Home assessment and improvements

Parties to involve : Homeowner, targeted public assistance, possible insurer contribution

Priority to protect : The ability of lower-income households to carry out improvements

Neighbourhood infrastructure and protection

Parties to involve : Local governments and higher levels of government

Priority to protect : Reducing damage without shifting it to other neighbourhoods

Premiums that have become too burdensome

Parties to involve : Household, risk pooling and targeted income-based assistance

Priority to protect : Adequate coverage and transparent funding

Exceptional catastrophic losses

Parties to involve : Insurers, reinsurers, capital and public guarantees

Priority to protect : The ability to pay claims and transparency about public commitments

Supported relocation

Parties to involve : Public programs, homeowner and housing organizations

Priority to protect : An affordable option for homeowners and tenants alike

Each instrument addresses a different need. Premium assistance provides immediate budget relief, but may continue to support a growing risk. Funding for improvements targets future damage, with benefits that take time to emerge. A public guarantee supports compensation for exceptional losses while committing public finances. The combination should be evaluated in terms of beneficiaries, results and the duration of support.

For a family, a coherent arrangement should make clear who pays for the assessment, which improvements are feasible and what the insurer will recognize. For a local government, monitoring should include avoided damage, the households actually helped and the time taken to return home. Counting only policies or funded projects would overlook part of the intended outcome.

Preserving protection when staying becomes difficult

Improvements and insurance can reach their practical limits. When damage recurs, protections become too costly or safety remains inadequate, supported relocation needs to be an option for consideration. The comparison should include future repairs, maintenance and disruptions to daily life, as well as the cost of a replacement home, debts and moving expenses.

The study by Mach and co-authors of 43,633 voluntary property acquisitions funded by FEMA in the United States between 1989 and 2017 shows that access to programs also depends on location. Local governments in wealthier and more populous counties use them more often; within participating counties, acquired properties are more likely to be in socially vulnerable areas. These associations call for an examination of administrative capacity and residents’ experiences, without in themselves proving discrimination. 19 — Mach et al., 2019

Supporting relocation therefore requires more than a buyout payment. Tenants must be included in the arrangements; families need to be able to maintain access to employment, schools and loved ones. A move that is possible on paper may remain financially out of reach. The response must take account of land-use decisions that residents may have inherited.

Three conditions emerge from this analysis: reduce damage at the scale of both homes and neighbourhoods; make improvements financially accessible; and agree in advance how the remaining losses will be shared. They require verifiable commitments among policyholders, insurers and public authorities, along with monitoring of households left without sufficient protection.

Will we still be able to afford home insurance? In many areas, adaptation and solidarity can preserve that possibility. In some places, it will require changes to buildings or support for moving elsewhere. The measure of success remains practical: a household should be able to understand its protection, pay its share and regain a stable life after a climate-related event.

Methodology and limitations

This review draws on scientific research, public statistics, and institutional or industry reports accessed on September 14, 2026. Findings are interpreted in light of their methods and limitations. The coverage, assistance and schemes discussed depend on the country, policy and date concerned.

Sources and references

1. Flood Re. Build Back Better — Property Flood Resilience Funding, Graham and Shirley’s account [English title translation]. page accessed September 14, 2026; flood in November 2024 and work in 2025. Programme overview and personal account published by the programme. Account published by the programme, without an independent evaluation of losses or premiums after the work.
2. Environment and Climate Change Canada. 2026 National Adaptation Strategy Progress Report. August 2026; progress assessed mainly through the end of 2025. Government report, insurance discussion and Flood Insurance and Relocation annex. Published in August 2026, assessing progress mainly through the end of 2025. The 1.5 million figure comes from an earlier estimate, not a count conducted in 2026.
3. McGillivray, M. — Statistics Canada. Extreme weather impacts on consumers and insurers in Canada, December 2019 to December 2025: An updated analysis. June 16, 2026. Public statistical analysis.
4. Financial Consumer Agency of Canada. Insurance for unexpected events and disasters. July 14, 2026. Public consumer information.
5. Public Safety Canada. Overland flood insurance. March 23, 2026. Public information on insurance coverage.
6. Government of Québec. Financial assistance for homeowners and tenants following floods and other disasters [English title translation]. accessed September 14, 2026. Official terms of the General Financial Assistance Program.
7. World Weather Attribution. When Risks Become Reality: Extreme Weather in 2024. 2024, pp. 2–4. Review of attribution studies; report and public overview.
8. European Central Bank and EIOPA. Policy options to reduce the climate insurance protection gap. April 2023. Discussion paper, particularly the executive summary and sections 1–2.
9. Federal Insurance Office, U.S. Department of the Treasury. Analyses of U.S. Homeowners Insurance Markets, 2018–2022: Climate-Related Risks and Other Factors. January 2025, executive summary on pp. 2–3 of the report. Descriptive analysis of insurance data. 2018–2022 data from more than 330 insurers, averaging 49.3 million policies a year. Descriptive comparisons by ZIP Code; flooding is excluded from the climate-risk measure.
10. Weill, J. A. and Gourevitch, J. D. Prospects and challenges of risk-based insurance pricing for disaster adaptation. 2026. Nature Climate Change, 16, 382–383. DOI: 10.1038/s41558-026-02577-1. Scientific commentary; version deposited by the author. Scientific commentary discussing mechanisms; this is not a new empirical study.
11. French Ministry of the Economy. Natural disasters: how does compensation work? [English title translation]. July 29, 2026. Official information on the French natural disaster insurance scheme (Cat Nat).
12. Cour des comptes. Natural disaster insurance: a challenge for financial sustainability [English title translation]. April 27, 2026. Public evaluation of the French scheme.
13. Flood Re. Flood Re eligibility criteria. page accessed September 14, 2026. Programme eligibility and operating conditions.
14. UK Parliament, House of Commons. Flood Insurance: Reform of Flood Re. July 1, 2026. Ministerial statement and parliamentary debate.
15. Hudson, P., Botzen, W. J. W., Kreibich, H., Bubeck, P. and Aerts, J. C. J. H. Evaluating the effectiveness of flood damage mitigation measures by the application of propensity score matching. 2014. Natural Hazards and Earth System Sciences, 14, 1731–1747. DOI: 10.5194/nhess-14-1731-2014. Original research; survey and statistical matching. Initial surveys of 1,697 and 461 interviews, followed by sample filtering and statistical matching. Observational results depend on the context and characteristics accounted for.
16. Poussin, J. K., Botzen, W. J. W. and Aerts, J. C. J. H. Effectiveness of flood damage mitigation measures: Empirical evidence from French flood disasters. 2015. Global Environmental Change, 31, 74–84. DOI: 10.1016/j.gloenvcha.2014.12.007. Original research; bibliographic record and abstract accessed through the institutional repository.
17. Government of Québec. Adapting to floods — Understanding and taking action [English title translation]. guide accessed September 14, 2026. Public guidance on adapting homes.
18. Tesselaar, M., Botzen, W. J. W., Tiggeloven, T. and Aerts, J. C. J. H. Flood insurance is a driver of population growth in European floodplains. 2023. Nature Communications, 14, 7483. DOI: 10.1038/s41467-023-43229-8. Original research using forward-looking modelling; institutional repository consulted. Forward-looking modelling; results depend on assumptions about location choices and behaviour.
19. Mach, K. J., Kraan, C. M., Hino, M., Siders, A. R., Johnston, E. M. and Field, C. B. Managed retreat through voluntary buyouts of flood-prone properties. 2019. Science Advances, 5(10), eaax8995. DOI: 10.1126/sciadv.aax8995. Original research; analysis of U.S. administrative data. Analysis of administrative and area-level data; it does not directly measure households’ well-being after relocation.
20. OECD. Financial Protection Against Catastrophic Risks: Floods, Fires and Other Major Risks — chapter 5, The design of flood risk insurance programmes [English title translation]. March 5, 2026, particularly sections 5.6.2 and 5.6.3. Comparative analysis of insurance arrangements.
21. FireSmart Canada. The Home Ignition Zone. n.d.; accessed September 14, 2026. Institutional guidance on protecting homes from wildfire.
22. Géorisques. Shrink–swell of clay soils [English title translation]. n.d.; accessed September 14, 2026. Public information on soil movement and prevention.
23. Géorisques. The natural disaster compensation scheme [English title translation]. n.d.; accessed September 14, 2026. Public information on coverage and eligibility under France’s Cat Nat scheme.
24. California Department of Insurance. Safer from Wildfires. n.d.; accessed September 14, 2026. California regulatory framework for wildfire mitigation and recognition in insurance pricing.