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Homeowners are bracing for another year of rising home insurance premiums, with rates projected to climb an average of 8% by the end of 2025, according to a new analysis from Insurify.
This follows a staggering 20% surge over the past two years — increasing financial strain on property owners as insurers contend with escalating losses from climate-related disasters.
The average annual premium is expected to reach $3,520, up by an estimated $261 per household, Insurify reported.
Severe weather events — including Western wildfires, Southern hurricanes, and Midwestern hailstorms — are driving up claims and reportedly forcing insurers to raise rates to remain solvent.
“The cost to rebuild or repair a home is a primary consideration in calculating insurance rates,” said Daniel Lucas, carrier relations manager at Insurify. “If the cost of construction materials rises, those costs would be factored into policyholder premiums.”
Regional disparities
Some states are set to experience much sharper increases.
California is projected to see a 21% hike that’s driven by the destructive wildfires like the Palisades and Eaton fires in Los Angeles County, along with regulatory changes that are allowing insurers to factor future climate risks into pricing models.
Florida remains the most expensive state for home insurance, with annual premiums expected to climb 9% to $15,460 — more than four times the national average.
The state has been battered by hurricanes, including Helene and Milton in 2024, which caused more than $100 billion in combined damages. Sixteen insurers have exited Florida’s market since 2017, while another 16 have gone insolvent.
Hialeah, Florida, leads U.S. cities with the highest projected home insurance costs for 2025 at an average of $26,693 — about 7.5 times higher than the national average.
Insurify projects Colorado homeowners will pay $6,630 annually by the end of 2025, an 11% increase, as the state contends with growing wildfire risks and a 65% jump in hailstorms over the past three years.
Gulf Coast states are also seeing steep hikes. Louisiana is expected to see a 27% jump, pushing average premiums to $13,937 — up from $10,964 in 2024 and adding to a 38% increase in 2024. Insurers in Louisiana pay out $159 in claims for every $100 they collect in premiums, making it the least profitable state for insurers in the U.S.
Other Gulf Coast states projected to see significant increases include Texas (+9% to $6,522), Alabama (+7% to $5,831), and Mississippi (+8% to $5,198).
Meanwhile, tornado and hail risks are driving up costs in states like Oklahoma and Arkansas. Oklahoma homeowners are projected to pay $8,369 annually in 2025, an 8% increase. Arkansas premiums are expected to rise 13% to $5,077 after multiple tornado outbreaks and ice storms.
Insurify also warned that sustained tariffs on steel, aluminum, lumber and other building materials could add up to $4 billion in costs for home insurers, which would ultimately be passed on to homeowners.
Every state impacted
Rates are expected to rise in every state by the end of 2025. Alongside Louisiana and California, the largest projected increases include Iowa (+15% to $3,825), Hawaii (+15% to $1,808), and Minnesota (+15% to $4,058).
Minnesota has faced 18 billion-dollar disasters in the past three years, with severe storms and hail contributing to surging losses.
In California, the FAIR Plan — an insurer of last resort — has requested $1 billion from private insurers to cover losses, half of which will be passed on to policyholders through temporary fees.
“Early indications are that the plan is working, as we saw 17 companies file for rate decreases in 2024,” Lucas noted
State Farm — California’s largest home insurer — has been granted an emergency rate increase by the California Department of Insurance, which went into effect June 1. The moved allows for an interim 17% increase for homeowners, a 15% increase for renters and condo owners, and up to a 38% increase for landlords’ rental dwellings.
“At a time when severe weather is raising insurer losses, insurance companies can’t shoulder as much risk as they have in the past,” Lucas said. “As a result, companies are broadly shifting more of the risk burden onto homeowners.”
Homeowners can attempt to offset rising premiums by comparing quotes, bundling policies, raising deductibles and making weather-resistant upgrades.
Yet with the climate crisis escalating, rebuilding costs surging and regulatory changes reshaping the market, experts said homeowners should brace for continued financial pressures in the years ahead.
