2025 Homeowners Insurance Rate Increases: What It Means for Your Renewal

According to the Consumer Federation of America, the average American homeowner is paying 24% higher premiums for homeowners insurance compared to three years ago.

It’s easy to blame inflation. However, the CFA report specifically found homeowners insurance premiums rose twice as fast as inflation between 2021 and 2024.

The report is titled “Overburdened: The Dramatic Increase in Homeowners Insurance Premiums and its Impacts on American Homeowners.”

Key findings of the report include:

• The average homeowners insurance premium has risen $648 over the last three years
• 95% of US ZIP codes have experienced an increase in insurance premiums
• In 33% of ZIP codes, premiums have risen more than 30%
• Some states saw significantly higher-than-average jumps in premiums, including Utah (59% higher premiums), Illinois (50%), Arizona (48%), and Pennsylvania (44%).
• The most expensive states for homeowners insurance overall include Florida, Louisiana, Oklahoma, Kentucky, and Nebraska.

A separate report from Insurify, meanwhile, concluded homeowners insurance premiums could rise around 11% nationwide by the end of 2025 – with homeowners in California paying 21% higher rates by the end of the year.

Like it or not, homeowners insurance premiums are going up – and it will impact your renewal.

Why Insurance Premiums Are Increasing

Premiums rise because of many factors. All of these factors, in some way or another, increase risk for insurers.

Some of the specific reasons why insurance premiums continue to rise in 2025 include:

• Severe Weather & Natural Disasters: Severe weather is becoming more common – and more destructive – than usual. The Los Angeles wildfires in January 2025 were one of the costliest natural disasters in United States history. Ohio experienced 74 tornadoes in 2024 – nearly triple the normal annual average of 24. When natural disasters become more severe and frequent, it increases insurance premiums.
• Inflation & Rising Construction Costs: A combination of inflation and tariffs is increasing construction costs. Higher labor and material costs make it harder for insurers to make you whole again after a loss. When it costs more to repair a property, insurers pass those costs to policyholders as higher premiums.
• Reinsurance Costs: Reinsurance, or insurance for insurance companies, is becoming more expensive. When reinsurance costs rise, these costs trickle down to consumers.
• Increased Insurance Losses: The insurance industry has been on the wrong side of the combined ratio for several years, which means insurers spent more in payouts than they earned in premiums. In 2024, insurers returned to profitability. However, many experts believe 2025 will be another down year. As long as insurers are losing money, they’ll continue to raise premiums to match risk.

What This Means for Your Renewal

Rising rates will impact the renewal of your homeowners insurance.

Some of the things to consider as you approach your renewal date in 2025 include:

• Expect Sticker Shock: If your homeowners insurance premiums haven’t already increased, then expect them to increase at your next renewal. 95% of all US ZIP codes experienced a rise in homeowners insurance premiums in the last three years. The average rise was 24%.
• Shop Around Early: Shop around for homeowners insurance before your renewal date. Insurers calculate risk in different ways. Some insurers like a balanced insurance pool, while others prefer focusing on a low-risk pool of homeowners. Even if you don’t switch, shopping around verifies you’re paying a competitive rate.
• Reduce Coverage: Higher insurance premiums may cause you to re-evaluate your insurance needs. Maybe you’re okay with the added risk of an actual cash value policy if it saves you $500 per year on homeowners insurance. Maybe you want to lower your limits or drop comprehensive coverage on an older vehicle.
• Raise Your Deductible (If You Can Afford It): Don’t want to pay higher insurance premiums? You have options – like raising your deductible. If you can afford to do so, consider raising your deductible. You’ll pay more for a claim – but save significantly in premiums.

Canceled Upon Renewal? You Have Options

Some insurers aren’t just raising premiums: they’re completely cancelling policies on renewal.

In 2024, for example, State Farm cancelled 72,000 homeowners insurance policies across California – including hundreds of homes that were later destroyed in the January 2025 wildfires.

Typically, your insurer will either cancel your policy immediately or send a notice of non-renewal.

Whatever the case, you have options, including:

1. Address the Insurer’s Concerns: Some insurers cancel policies because of something you can fix. You might have a dead tree hanging over your house, for example. Or, you might have debris on your roof. Some homeowners can avoid cancellation by establishing a fire break, pushing trees and shrubs back from their property.
2. Shop Around: As mentioned above, insurers calculate risk in different ways. What may be an insurmountable risk for some insurers is an opportunity for others. Shop around to try to find an insurer serving your area.
3. Your State’s Insurer of Last Resort: If you’ve been rejected by multiple insurers but still need homeowners insurance, then turn to your state’s insurer of last resort. Most states have a Fair Access to Insurance Requirements (FAIR) Plan. This plan consists of a pool of insurers who must provide homeowners insurance to clients. If you’re unable to obtain insurance through the open marketplace, then your state’s FAIR Plan (or equivalent insurer of last resort) is a good option.

Final Word

Insurance premiums have risen 24% over the last three years – and they’re expected to rise another 10% by the end of 2025.

However, insurers can only raise rates so much before homeowners can’t afford them.

By following the steps above, you can avoid sticker shock at your next renewal and ensure you’re getting fair value for your homeowners insurance coverage.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.