Louisiana and California are expected to see the country's biggest homeowner insurance rate increases this year, according to a new study by comparison website Insurify.
While only homeowners in these two states are expected to see hikes of over 20 percent on their annual premiums, rates are projected to creep up across the United States for a nationwide average increase of 8 percent.
Why It Matters
The growing threat posed by natural disasters, made more frequent and severe by climate change, has led to a vertiginous rise in property insurance costs across the country in recent years as carriers try to price in the additional risk.
In some of the most vulnerable areas of disaster-prone states, such as California, Florida, and Louisiana, insurers have either gone bust or decided to cut coverage, leaving homeowners with limited, often expensive, options. This phenomenon is expected to spread across the country as weather-related losses are expected to explode in the coming years.
What To Know
Insurify researchers expect homeowner insurance across the U.S. to increase by the end of the year as companies try to recoup major losses related to extreme weather events, including western wildfires, southern hurricanes, and midwestern hail.
The average annual premium will cost $3,520 at the national level, up from $3,259 in 2024.
Louisiana is expected to report the most significant increase in the country, up 27 percent compared to last year. On average, homeowners in the state will pay $13,937, according to Insurify. This is yet more pain for homeowners in the state, who were already hit by a 38 percent increase in premiums last year.
California followed with the second-biggest projected increase, up 21 percent from 2024. By the end of the year, the annual average premium will cost homeowners $2,930, up from $2,424 in 2024.
Insurify said the increase would be partially driven by the devastating wildfires that ravaged Los Angeles County in January.
Three other states will all face homeowner insurance rate increases of over 15 percent, including Iowa (up 19 percent to an estimated $3,825), Hawaii (up 17 percent to $1,808), and Minnesota (up 15 percent to $4,058).
The smallest increases are expected in Massachusetts (up 2 percent to an estimated $2,432), Vermont (up 3 percent to $1,248), New Hampshire (up 3 percent to $1,608), Maine (up 3 percent to $1,688), South Carolina (up 4 percent to $4,172) and Rhode Island (up 4 percent to $2,897).
The maps below show each state's average annual premium in 2024 and their projected increases throughout 2025.
Despite a relatively modest projected rate hike this year of 9 percent, Florida homeowners will still pay the most expensive annual premiums in the country for an average of $15,460 by the end of 2025.
It is expected to be followed by Louisiana (with a projected annual average premium of $13,937), Oklahoma ($8,639), and Colorado, which has suffered increased hail damage in recent years. The state will become one of the four most expensive by the end of the year, with a projected average annual premium of $8,369, considering an 11 percent increase.
In recent years, Oklahoma has seen the risk of tornadoes, hail, and severe winds grow, and insurers are taking notice. Last year, Farmers Insurance announced non-renewals for 1,300 policyholders in the state.
Texas is expected to be the fifth-most expensive state with a projected annual average premium of $6,522, up 9 percent from last year.
Some of these states have one thing in common: they are all in hurricane-prone areas. According to data from the National Centers for Environmental Information (NCEI), hurricanes cause more financial damage than any other natural disaster, suggesting that insurers need to consider the possibility of having to pay massive damage claims.
In Florida, which is already the most expensive state in the nation for homeowner insurance, nearly 458,000 hurricane claims were filed last year, according to Insurify. Hurricanes Helene and Milton, which struck the state within weeks of each other, caused more than $100 billion in combined damages.
Sixteen property insurers operating in the state have gone insolvent since 2017, and 16 have withdrawn from the state. While other factors were at play in the Florida property insurance crisis, natural disasters did play a role. Lawmakers and regulators in the state are working to fix the crisis and stabilize the market, but this threat is unlikely to disappear.
In Louisiana and Iowa, insurers are already losing money compared to the claims they pay for weather-related damages.
Louisiana has suffered more than $115 billion in hurricane-related damages since 2020, according to NCEI; Insurify calculated that for every $100 collected in premiums, they pay out $159 in claims.
In Iowa, vulnerable to hail, flooding, and strong winds, insurers pay out $122 claims for every $100 collected in premiums.
What People Are Saying
Daniel Lucas, carrier relations manager at Insurify, in a statement: "At a time when severe weather is raising insurer losses, insurance companies can't shoulder as much risk as they have in the past. As a result, companies are broadly shifting more of the risk burden onto homeowners."
What Happens Next
Insurify's projected increases do not account for sustained tariffs on steel, aluminum, lumber and other homebuilding materials, such as the ones imposed by President Donald Trump, which could increase the cost of homeowner insurance.
"The cost to rebuild or repair a home is a primary consideration in calculating insurance rates," said Lucas. "If the cost of construction materials rises, those costs would be factored into policyholder premiums."
That means that if the tariffs remain in place, home insurance prices could climb even higher than Insurify currently expects.
