Homeowners will again face rising insurance costs in 2025 as insurance companies try to recoup massive losses from recent years. Insurify projects the annual cost of home insurance will increase 8% by the end of the year to a national average of $3,520. Severe weather is a major factor behind the increase, putting pressure on insurers to raise rates.
Western wildfires, Southern hurricanes, and Midwestern hail have continued to increase in intensity and frequency, leading to larger losses and higher claim payouts. The gap between what insurers charge in premiums and what they pay out in losses is shrinking, with some states costing insurers more than they make. For example, Iowa home insurers pay out $122 in claims for every $100 they make in premiums, according to Insurify analysis.
To stay profitable and operational, insurers typically pass increased losses on to consumers through higher premiums. The average annual cost of home insurance increased 8% in 2024 — nearly triple the rate of inflation (2.9%).
In 2025, homeowners in some states will see sharper cost increases than others.
Insurify projects California home insurance will rise 21%. The Palisades and Eaton fires that ravaged Los Angeles County in January and regulatory changes in the state will contribute to this increase.
Across the country, Florida remains the most expensive state for homeowners insurance. Insurify projects the average annual cost in Florida will rise to $15,460 by the end of 2025. Projections indicate that Colorado, facing heightened hail damage, will become one of the four most expensive states for home insurance by the end of the year.
Tariffs on steel, aluminum, lumber, and other homebuilding materials would further increase American home insurance prices.
“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.”
To forecast how much home insurance prices will increase in 2025, Insurify’s data science team analyzed costs in each state and projected rate increases based on historical pricing and insurer loss data.
Key findings
Insurify projects California home insurance will rise 21% by the end of 2025 to an average of $2,930 annually. This is partially due to California’s wildfires and a new insurance model that allows insurers to weigh future climate risks when pricing premiums.
Home insurance rates will rise 15% or more in Louisiana, California, Iowa, Hawaii, and Minnesota in 2025, according to Insurify’s projections.
Insurify projects Louisiana will see the largest cost increase of any state by the end of 2025, with rates expected to rise 27% — nearly $3,000 — to $13,937. This follows a 38% increase in home insurance premiums in 2024.
Florida homeowners pay the most for home insurance, with an average yearly rate of $14,140 in 2024. Insurify projects the average home insurance cost will increase an additional 9% in 2025 to $15,460. Hialeah, Florida, has the highest projected average cost of any U.S. city ($26,693).
Sustained tariffs could raise home insurance prices higher than Insurify’s current projections. Tariffs would increase the cost of imported construction materials by up to $4 billion, and insurers would pass those costs on to homeowners through higher premiums.
Home insurance costs and projections by state: Insurify projects an average increase of $261
Insurify projects home insurance premiums will climb in every state by the end of 2025. The typical homeowner will see their home insurance costs rise an estimated $261 over the next 12 months.
These states have the highest home insurance rates in 2025
Five of the eight most expensive states for home insurance are along the Gulf Coast. The region is extremely susceptible to hurricanes, which cause more financial damage than any other type of natural disaster.1 The states listed below have the highest projected home insurance costs for 2025.
1. Florida
Projected annual cost by the end of 2025: $15,460
Projected increase in 2025: 9%
Average annual cost in 2024: $14,140
Insurify projects Florida will remain the most expensive state for home insurance in 2025. Frequent hurricanes have caused insurers to take on heavy losses to make payouts from disaster damage. Floridians filed nearly 458,000 hurricane claims last year. Hurricanes Helene and Milton, the two most destructive disasters of 2024 in the U.S., caused more than $100 billion in combined damages. Since 2020, climate disasters have cost Florida an estimated $237 billion, according to the National Centers for Environmental Information (NCEI).
High losses have led 16 insurers to withdraw from the state, with another 16 going insolvent since 2017. FEMA rates 34 of Florida’s 67 counties at “very high” or “relatively high” risk of hurricane damage. Florida’s exposure to disasters makes the market untenable for many insurers and ultimately less affordable for homeowners.
2. Louisiana
Projected annual cost by the end of 2025: $13,937
Projected increase in 2025: 27%
Average annual cost in 2024: $10,964
Louisiana homeowners will pay nearly four times the national average for home insurance coverage in 2025, according to Insurify projections. Natural disasters, particularly hurricanes, have caused more than $115 billion in damages since 2020.1 Louisiana remains the least profitable state for insurers due to its large loss ratio — the gap between claims paid out and premiums charged. For every $100 Louisiana insurers collect in premiums, they pay out $159 in claims, according to Insurify’s analysis of five-year loss ratios. Loss ratios exclude overhead costs, meaning insurers are losing more money than the loss ratio reflects.
Twelve insurers in the state became insolvent after hurricanes in 2020 and 2021, lowering competition as premiums rose for homeowners. Insurify found that four of the nation’s 10 most expensive cities for home insurance are in Louisiana, including New Orleans, where homeowners pay nearly six times the national average.
3. Oklahoma
Projected annual cost by the end of 2025: $8,369
Projected increase in 2025: 8%
Average annual cost in 2024: $7,762
Oklahoma is at high risk for tornadoes, hail, and severe winds, according to FEMA. About 80% of claims in the state are for storm damage. Farmers Insurance, the state’s second-largest home insurance company, announced last year that it would not renew about 1,300 policies due to wildfire risk.3
From 2022 to 2023, Oklahoma saw a 41% increase in tornadoes. In 2024, state officials moved to provide grants to homeowners to strengthen structures against damage caused by tornadoes, windstorms, and hail. Some insurers in high-risk hail areas are changing the way they cover roof claims, moving from replacement cost to actual cash value, which factors in depreciation and reduces their burden by lowering payouts.
“While product changes may lead to lower coverage, this is a way for carriers to keep coverage affordable and available,” Lucas said.
4. Colorado
Projected annual cost by the end of 2025: $6,630
Projected increase in 2025: 11%
Average annual cost in 2024: $5,984
Insurify projects Colorado’s average home insurance cost will overtake Texas’ by the end of 2025. Centennial State insurers lost money in 2023, the most recent year with available data, paying out more in claims than they took in through premiums.5
Continued severe weather puts the state at heightened risk. Colorado has more than 300,000 properties at risk of wildfire, with nearly $200 billion in exposed assets.6 Hailstorms, which can cause expensive damage to roofing, have increased 65% over the past three years.
“The affordability problems we have in Colorado are driven by hail,” Colorado Insurance Commissioner Michael Conway told the Colorado Sun. “Anywhere from 50% to 60% of the insurance premiums that people pay in Colorado is, on average, paying for hail.”
5. Texas
Projected annual cost by the end of 2025: $6,522
Projected increase in 2025: 9%
Average annual cost in 2024: $6,005
Texas home insurance rates continue to climb, in large part due to losses from major natural disasters. In the last five years, 68 billion-dollar disasters have impacted Texas, the most of any state, causing about $108 billion in damages.1 Texas is one of three states, along with California and Florida, that FEMA rates “very high” for expected losses from natural hazards. In fact, FEMA ranks Texas among the 10 most at-risk states for hurricanes, coastal flooding, drought, hail, lightning, tornadoes, wildfires, ice storms, strong winds, heat waves, and cold waves.
Four home insurers stopped writing policies in the state in 2024, affecting about 11,000 homeowners. Progressive sent out notices of non-renewal to homeowners about a month after Hurricane Beryl, citing “risks relating to natural and catastrophic losses.”4
6. Alabama
Projected annual cost by the end of 2025: $5,831
Projected increase in 2025: 7%
Average annual cost in 2024: $5,445
Severe weather has led to higher home insurance prices in Alabama. The state has “relatively high” expected losses from tornadoes, according to FEMA. More than 400 twisters have struck the state in the last five years, causing more than $34 million in property damage.8
Among Gulf Coast states, Alabama broadly has less exposure to hurricanes than Florida and Louisiana. But FEMA maps indicate Alabama’s two coastline counties, Mobile and Baldwin, are at “very high” and “relatively high” risk for expected hurricane losses.
7. Nebraska
Projected annual cost by the end of 2025: $5,203
Projected increase in 2025: 10%
Average annual cost in 2024: $4,725
Homeowners in some parts of Nebraska are finding it harder to obtain insurance heading into 2025. Non-renewal rates increased in Nebraska from 2018 to 2023, with weather risk playing a large role.11 Nebraska has suffered about $10 billion in damages from natural disasters over the past five years, most often due to severe storms, according to an Insurify analysis of NCEI data.
Nebraska has the third-highest expected losses from hail of any state, and its most populous county, Douglas County, is considered “very high” risk for hail damage, according to FEMA. In June 2024, this county, which includes Omaha, “experienced up to baseball-sized hail, damaging homes, vehicles, and businesses,” according to the NCEI.
Nebraska saw 63 tornadoes in 2023, a 142% increase from the previous year, according to NOAA.
8. Mississippi
Projected annual cost by the end of 2025: $5,198
Projected increase in 2025: 8%
Average annual cost in 2024: $4,809
All five Gulf Coast states, including Mississippi, have higher-than-average home insurance costs. Coastal counties within Mississippi have historically paid about twice as much as inland counties for insurance due to hurricane risk.9
In 2020, winds and debris from Hurricane Zeta damaged about 10,000 homes, causing an estimated $635 million in losses, with the worst damage on the coast.10 In addition to severe weather, inflation and the rising cost of reinsurance have also put upward pressure on home insurance rates, according to the Mississippi Insurance Department.
9. Arkansas
Projected annual cost by the end of 2025: $5,077
Projected increase in 2025: 13%
Average annual cost in 2024: $4,490
Insurify projects high home insurance costs will continue in Arkansas. In both 2022 and 2023, insurers lost money in the state, paying out more in claims than they took in through premiums, according to a P&C Specialist analysis of S&P data.
Arkansas was one of several states struck by a May 2024 outbreak of 110 tornadoes, leading to about $3.5 billion in damages.1 In Arkansas, storm winds reached up to 155 mph. In the wake of Hurricane Beryl, the state saw an additional 10 tornadoes on July 8, the largest July tornado outbreak on record in the state.
Additionally, Arkansas is at “very high” risk for losses from ice storms, according to FEMA, behind Oklahoma and Missouri. The sheer weight of ice or snow can cause roof damage, with falling ice-covered tree limbs adding more danger.
10. Kansas
Projected annual cost by the end of 2025: $4,782
Projected increase in 2025: 5%
Average annual cost in 2024: $4,556
Kansas remains one of the more expensive states for home insurance. Located in the middle of Tornado Alley, Kansas experienced 45 tornadoes in 2023, with preliminary reports of 89 tornadoes in 2024. Preliminary findings also show the state recorded the second-most severe wind events of any state in 2024 with 948, according to National Oceanic and Atmospheric Administration (NOAA) data.
Hail is a major concern for Kansas homeowners, with hail events increasing 68% between 2022 and 2023. The state had 778 hail events in 2023. The state’s most populous city, Wichita, is most at risk for hail damage.2
Homeowners insurance rates are rising fastest in these states
Insurify projects homeowners in each U.S. state will see some level of price increase, ranging from 2% to 27%. Four states — Louisiana, California, Iowa, and Hawaii — will undergo increases of more than double the national average (8%). The table below shows which states will see the highest year-over-year price increases by percentage.
1. Louisiana
Projected average increase in 2025: 27%
Projected annual cost by the end of 2025: $13,937
Annual cost in 2024: $10,964
In 2024, Louisiana saw insurance premiums increase by a staggering 38%. Insurify projects that in 2025, Louisiana homeowners and insurers will continue to face surging costs. Affordability is a major issue, as the state has the third-lowest household income in the country, according to U.S. Census Bureau data.
In response, Louisiana officials aim to bring more insurers back to the state. Officials enacted a suite of 2024 laws that seek to alleviate the state’s insurance crisis by allowing insurers to raise rates before regulators approve them. The laws also allow insurers to drop up to 5% of their policies each year. State officials say the new legislation will make it easier for insurers to do business in Louisiana. In Florida, similar efforts have led to new insurers offering policies in the state.
2. California
Projected average increase in 2025: 21%
Projected annual cost by the end of 2025: $2,930
Annual cost in 2024: $2,424
Insurify projects California home insurance prices will rise significantly in 2025, following a 10% increase in 2024.
Two of the three most destructive fires in California history swept through Los Angeles County in January 2025. Insurify projects that losses from the Palisades and Eaton fires will contribute to rate increases averaging 21% in 2025. Total losses from the two fires have been estimated as high as $131 billion, which includes $45 billion in insured losses, according to a UCLA analysis.
The fires have undermined the financial stability of the state’s insurer of last resort, causing up to $4 billion in estimated losses. The state’s Fair Access to Insurance Requirements (FAIR) Plan had already seen its statewide exposure triple in recent years to $458 billion.
FAIR Plan administrators now say they need $1 billion from private insurers to maintain operations. Insurers can recoup half of that cost, $500 million, by passing it on to their policyholders through temporary fees added to their insurance premiums.
The California Department of Insurance (CDI) responded to the state’s home insurance crisis in part by allowing insurers to file for rate increases based on climate risk projections rather than solely using historical data, starting in January. The plan requires insurers who use predictive modeling to increase coverage in at-risk areas.
3. Iowa
Projected average increase in 2025: 19%
Projected annual cost by the end of 2025: $3,825
Annual cost in 2024: $3,201
Hail, flooding, and strong winds are major contributors to Iowa’s climbing insurance costs. Hail events, which can cause significant roof damage, increased in Iowa by 133% from 2022 to 2023, according to the NOAA. Some insurers have responded to the heightened risk of roof damage by shifting from using replacement value coverage to actual cash value coverage. The latter lessens the cost burden on insurers by allowing them to take depreciation into account when issuing payouts for roof damage. Homeowners, meanwhile, would be left to make up the difference in the event of a claim.
In addition to hail, flooding from heavy rains in June 2024 impacted northwest Iowa and southern Minnesota, forcing evacuations and damaging thousands of homes, according to the NCEI. Last year, Iowa recorded 131 tornadoes, tied for the second most of any state.
Polk County, the most populous in the state, is considered to be at “very high” risk for strong winds, according to FEMA. Strong winds can lead to falling trees, flying debris, and structural damage to homes.
4. Hawaii
Projected average increase in 2025: 17%
Projected annual cost by the end of 2025: $1,808
Annual cost in 2024: $1,548
Insurify projects insurance costs will rise by about 17% in Hawaii as insurers attempt to recover from major losses two years ago.
In 2023, America’s deadliest wildfire in more than 100 years devastated parts of Hawaii. The fire caused 102 deaths, damaged thousands of homes, and caused $3 billion in insured losses. Insurers in the state paid out $389 in claims for every $100 they made in premiums — the highest loss ratio in the country and three times higher than the state with the second-highest ratio, according to a P&C Specialist analysis of S&P data. To make up for those losses, insurers are raising premiums.
The rate of global disasters is also raising costs for Hawaii insurers, causing them to pay more for reinsurance and then pass those costs on to consumers.
5. Minnesota
Projected average cost increase in 2025: 15%
Projected annual cost by the end of 2025: $4,058
Annual cost in 2024: $3,524
Minnesota has seen a sharp increase in costly disasters over the past few years, causing insurers to lose more money to claims and, consequently, raise policyholder premiums. Throughout the 2010s, the state averaged one billion-dollar disaster per year. In the past three years, 18 billion-dollar disasters have affected the state, according to the NCEI.
Hail is a significant risk for homeowners because of its potential to cause roof damage. The state experienced 190 hail events in 2024 — three times as many as in the median state, according to NOAA. Severe thunderstorms in July dropped hailstones up to 4 inches in diameter.
To limit the chance of homeowners losing coverage, Minnesota is one of many states that has adopted a Fair Access to Insurance Requirements (FAIR) Plan. With FAIR Plan insurance, people who have been denied coverage on the standard market can access policies from a pool of private insurance companies. These policies, however, are typically more expensive and may cover less than traditional policies.
Cities with the most expensive homeowners insurance in 2025
The 10 cities with the highest projected home insurance costs in 2025 are all in Florida and Louisiana. For the second year in a row, Hialeah residents will pay the highest average cost for home insurance in the country, at $26,693 by the end of 2025 — about 7.5 times higher than the national average ($3,520).
How climate change is raising home insurance rates
Natural disasters, fueled by climate change, have caused more than $1 trillion in damage in the U.S. since 2017.1 Faced with escalating natural disaster losses, many insurers have raised rates to avoid insolvency.
Disasters disproportionately impact insurers in California and Florida, which have higher-than-average home values and elevated risks of catastrophic wildfire and hurricane damage.
California’s insurance crisis
The nation’s largest state will see the second-largest cost increase for home insurance (21%) in 2025, according to Insurify projections. Multiple companies have stopped offering new policies in the state, including the state’s largest insurer, State Farm, citing rising catastrophe exposure.12
To reverse the trend of non-renewals, the California Department of Insurance (CDI) will allow insurers to price future climate risks into their requests for rate increases using computerized catastrophe modeling. For decades, state insurance regulations limited insurers to using historical data.
“The reform measure is meant to respond to the growing risks of wildfire and climate change in the state,” Lucas said. “The goal is to stabilize the California insurance market in order to allow carriers to write more policies profitably, which, in turn, means more options for consumers.”
Before the change, the state didn’t require insurers to do business in high-risk areas. Now, major insurance companies must increase their underwriting presence in wildfire-threatened areas to at least 85% of their statewide market share.13
The new regulation could prevent more insurers from leaving the state in the wake of the devastating January fires. Fueled by dry conditions and strong Santa Ana winds, the Eaton and Palisades fires destroyed more than 16,200 homes in Los Angeles County and caused an estimated $45 billion in insured losses, according to a UCLA analysis.
In February, State Farm requested an emergency rate hike averaging 22% due to the wildfires, saying it had received nearly 9,000 claims and paid out more than $1 billion to customers. The CDI “provisionally” granted the increase in mid-March, which it may formalize after a hearing scheduled for April 8.
During the fires, the CDI expanded a moratorium on non-renewals in wildfire-affected areas. However, insurers struggle to operate when rates aren’t high enough to cover the potential risk of loss.
State Farm has cited mounting losses in requests for a rate increase, saying that failure to raise rates could cause the company to undergo a “more drastic reduction” in exposure. The rate of non-renewals had already been rising in California before the January fires. In some northern California counties, insurers non-renewed as many as 1 in 13 policies.11
The trend of insurers pulling back from California has led to more homeowners joining the state’s FAIR Plan, an insurer of last resort. As a result, the FAIR Plan has seen its exposure soar in recent years, with the January fires jeopardizing its finances. Plan administrators have asked private insurers to pay a $1 billion assessment so the plan can recover costs and continue making claim payouts. Even if insurers decide to pull back from the state, they will still be on the hook for the assessment. The CDI allows insurers to recoup $500 million of that assessment from their policyholders.
Florida’s insurance crisis
Extreme weather and high home prices have made Florida home insurance increasingly unaffordable. After some insurers left the state, Florida legislators and regulators worked to make the state easier for insurers to operate in. Regulators hope these steps will help insurers increase their profitability and encourage some companies to return.
“Early indications are that the plan is working, as we saw 17 companies file for rate decreases in 2024,” Lucas said. “Since the reforms were put in place, 10 new companies have been approved to write homeowners policies in Florida.”
Insurify’s analysis reflects progress on that front as well. The average annual cost of insurance in Florida dropped 3% from the end of 2023 to the end of 2024. Part of the state’s plan moving forward is to lessen the burden on its public-backed insurer of last resort, Citizens Property Insurance Corporation.
By the end of 2023, Citizens had become the largest insurer in the state, though it was originally meant to operate only in very high-risk areas where residents have few to no alternative insurers. To lessen the burden on Citizens, officials are working to shift policyholders to private insurers. Since fall 2023, the number of Floridians covered by Citizens has dropped from about 1.4 million to 850,000.
Florida officials approved Citizens’ request for a 6.6% rate increase in February. Florida law requires Citizens customers to move to private insurance if they can obtain similar coverage for a cost increase of less than 20%. The move is meant to allow more insurers to write more sustainable policies.
“[Citizens] was meant to be a backstop. It was never meant to be the primary insurer, so getting more companies in the state should help,” Ken Johnson, chair of real estate at the University of Mississippi, told Insurify.
To offset expensive premiums, some homeowners are taking on larger deductibles, in some cases going from a deductible of 2% of dwelling coverage to 5% or 10%. If they have $400,000 in dwelling coverage, that means homeowners would foot the bill for the first $20,000 or $40,000 in damage. Because those homeowners are partially self-insured and taking on more risk themselves, insurers face lower risks and may lower premiums accordingly.
How tariffs could affect home insurance
U.S. tariff plans have stirred uncertainty in the home insurance industry, as tariffs would increase the cost of construction materials. The U.S. imported about $6 billion in sawmill and wood products from Canada in 2023, as well as $354 million worth of lime and gypsum products from Mexico, according to the National Association of Home Builders (NAHB). In mid-March, another round of tariffs added a 25% charge to steel and aluminum imports.
In total, the NAHB estimates tariffs would raise the cost of imported construction materials by up to $4 billion. Since the cost of rebuilding is a factor in insurance rates, homeowners would see higher insurance costs.
“Tariffs on imported materials will lead to increased rebuilding costs, which will eventually result in higher insurance premiums,” David Marlett, who holds a doctorate in risk management and insurance and is a professor of insurance at Appalachian State University, told Insurify. “If the tariffs become entrenched, then their added costs will have to be passed on to the consumer through higher premiums.”
Given the evolving nature of the tariff situation, Insurify’s projections for this report didn’t incorporate tariffs into its estimated 2025 average insurance costs. If the U.S. saw sustained tariffs on homebuilding materials, Insurify’s projected cost increase for 2025 would be higher, although the extent of the increase can’t yet be determined.
Tips: How homeowners can navigate rising insurance costs
As home insurance costs rise, homeowners can take steps to save money on premiums. Homeowners who compare rates among different insurance companies may find that another insurer can offer them the same coverage for a lower price. From there, many choose to bundle their home and auto insurance with the same insurer, which often leads to a significant discount.
Homeowners can also raise their deductibles to see lower premiums. But doing so comes with some added risk. If a covered event causes damage to their home, they’ll be on the hook for higher out-of-pocket costs before their insurance benefits kick in.
Homeowners can lower their insurance premiums by making weather-resistant upgrades to their homes. Replacing an old roof or installing stronger windows can make insurers more confident that a home will hold up under extreme conditions. Insurers often reward that investment in protection with lower premiums.
“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.”
Methodology
Insurify data scientists turned to their real-time database of insurance quotes from partner carriers, as well as aggregated rate filings from Quadrant Information Services, to determine the state of home insurance in 2025.
Unless otherwise stated, rates in this report represent the average annual cost of an HO-3 insurance policy for homeowners with good credit and zero claims within the past five years, covering a single-family frame house with the following coverage limits: $400,000 dwelling, $25,000 personal property, $30,000 loss of use, $300,000 liability, and a $1,000 deductible.
Insurify gathered Quadrant rates in representative ZIP codes in the 10 largest urban areas in every state. Statewide costs reflect the average rate for homeowners across these ZIP codes.
The 2025 prices reflect rates as of Jan. 1, 2025. To project how home insurance rates will change in 2025, Insurify data scientists looked at the historical relationship between a state’s prior five years of personal home insurance industry-wide loss ratios and how much its average home insurance rates changed the following year. They then projected how much rates will rise or fall in every state in 2025 based on the most up-to-date home insurance loss ratio data.
To account for the unprecedented damages caused by the Los Angeles area wildfires in January 2025, Insurify data scientists extended California’s home insurance loss ratio timeline to include this event. The state’s projection thus accounts for loss ratio impacts from these fires using estimates of the total insured damages they caused.
For media inquiries or questions about our study, please contact the author here.