Homeowner Insurance & Lender Demands: What’s New in 2025-26

Buying or selling a home in Western New York? Then this update matters: home-insurance requirements and lender expectations are changing — and they influence everything from monthly payments to whether a loan can close.

Here’s what’s shifting in 2025-26, how it affects you, and what you can do to be ready.

What’s Changing in Homeowner Insurance & Lending

  • Premiums and coverage are rising. Nationally, homeowners’ insurance costs have climbed significantly over recent years. In markets exposed to climate risk, insurers are adjusting rates and tightening underwriting. As a result, lenders are paying closer attention to whether a home’s policy is sufficient and current.
  • Lenders are tightening insurance rules. Many mortgage lenders now require that your homeowners policy covers the replacement cost value (RCV) of your home (not just its market value), includes liability protection, and stays in force throughout the life of the loan.
  • “Lender-placed” insurance risks. If your policy lapses or is canceled and you don’t promptly replace it, your lender may force-place insurance — often more expensive with less coverage.
  • Flood, wind, and storm risks matter more. Even in Western New York, where flooding and winter storms occur, lenders and insurers expect homeowners to have appropriate coverage for perils relevant to the region. If you’re in a flood-prone zone or older home with risk exposures, this can affect eligibility or cost.
  • Older homes and renovation impact. Homes built decades ago may carry condition risks (outdated wiring, older roofing, inefficient systems) which insurers and lenders view as higher risk. Buyers and sellers should expect scrutiny or required upgrades/endorsements before closing.

How These Changes Affect Sellers

If you’re selling your home:

  • Expect prospective buyers’ lenders to review the existing insurance policy and coverage; if coverage is insufficient, that could delay closing or reduce your buyer pool.
  • If you’ve owned a home for many years and your policy hasn’t kept up with replacement-cost or condition changes, it may raise questions during buyer financing.
  • Highlighting recent upgrades (roof, heating, electrical, insulation) that reduce risk can help reassure lenders and buyers — translating into smoother, faster sales.

How These Changes Affect Buyers

If you’re buying a home:

  • Your down-payment and loan approval may be affected by how much your insurance will cost — higher premiums or special endorsements mean higher monthly payments and impact affordability.
  • Ask for a “home-insurance readiness” check: review the seller’s policy, make sure it’s transferrable or replaced promptly, and understand likely premiums in your ZIP code.
  • If you’re buying an older home (common in WNY), budget for potential insurance-risk improvements — upgrading wiring, roofing, or mitigating flood risk may save you money (and trouble) down the line.

What You Can Do Now to Be Prepared

  • Check your current insurance policy (sellers): See if it meets current lender expectations — replacement cost coverage, liability protection, any endorsements needed.
  • Ask your lender or agent about insurance requirements (buyers): Make it part of your pre-approval process.
  • Plan for condition upgrades: If your home or a target home is older, consider improvements that reduce risk (new roof, updated systems, flood mitigation) — this helps both insurance and resale value.
  • Budget smarter: Don’t assume premiums stay flat. Insurance costs are rising and could impact your monthly housing budget.
  • Work with professionals who know the local market: In Western New York, conditions (weather, older homes, flood zones) matter. A local agent or insurance advisor can help anticipate issues early.

Final Thoughts

Insurance and lender-insurance compliance used to be boxes to check, but now they’re strategic. In 2025-26 and beyond, paying attention to insurance—from coverage adequacy to property condition—will make the difference between a smooth deal and unexpected delays (or costs).

If you’re buying or selling in Western New York, let the experts at Great Lakes Real Estate guide you through these changing requirements. Call us today at (716) 754-2550 or visit greatlakesrealestate.com to connect with a local agent who knows both homes and the insurance side of the deal.