The Homeowners' Defense Act of 2025 seeks to address the escalating costs and limited availability of homeowners' insurance coverage for catastrophic natural disasters. Recognizing that current systems place significant burdens on states and taxpayers, the bill establishes a comprehensive program to provide federal support for state-sponsored insurance initiatives. Its core purposes include promoting private market capital, expediting claims payments, and encouraging mitigation and prevention efforts.

Title I establishes the National Catastrophe Risk Consortium, chaired by the Secretary of the Treasury, to gather data on catastrophe risk obligations, assess gaps in the insurance sector, and advance transparent disclosure of catastrophic risk. The Consortium will also identify disparate impacts on disadvantaged communities and recommend mitigation strategies.

Title II authorizes the Secretary of the Treasury to establish a debt guarantee program, allowing the federal government to guarantee debt issued by eligible state programs to cover catastrophic losses. This program has specific limits, such as $3.5 billion for earthquake perils and $17 billion for all other perils, and requires states to demonstrate repayment plans and not use other federal funds for repayment. The full faith and credit of the United States is pledged to these guarantees.

Title III creates a federal reinsurance coverage program for eligible state programs, with contracts priced on an actuarially sound basis. This program will cover 80 to 90 percent of insured losses exceeding a state's retained losses, and payments will be made from the Federal Natural Catastrophe Reinsurance Fund. This fund is credited with premiums from reinsurance sales, appropriations, and investment earnings.

Title IV establishes a Mitigation Grant Program, administered by the Secretary of Housing and Urban Development, to help states and eligible entities develop and maintain programs for preventing and mitigating losses from natural catastrophes. These grants, which prioritize applicants with greater financial need, will be partially funded by at least 35 percent of the net investment income from the Federal Natural Catastrophe Reinsurance Fund.

Finally, Title V outlines the requirements for a state program to be certified as an eligible State program, including being established by state law, having public official oversight, promoting mitigation, and adhering to risk-based capital requirements. The bill also mandates studies on expanding coverage to commercial residential lines of insurance and analyzing risk-based pricing in state programs.