In 2024, personal insurance pricing continued to rise due to a complex mix of escalating claims, extreme weather events, and ongoing coverage restrictions in select markets. The insurance market remained challenging, as carriers navigated the unprecedented impacts of climate change, technological advancements, and evolving risk profiles. Moreover, record-breaking economic losses from hurricanes, wildfires, and freeze events, have driven significant premium increases, particularly in high-risk geographic regions.
Independent insurance agents are essential in this environment, helping customers understand and manage increasingly complex risk environments by providing personalized expertise that goes beyond the āone-size-fits allā approach of traditional insurance models.
Insurance carriers are turning to advanced technologies such as predictive analytics and real-time risk modeling to manage growing market volatility. These data-driven approaches address emerging risk assessment, pricing, and other statistical challenges with greater accuracy and efficiency.
While some market stabilization is anticipated in 2025, pricing will likely remain high. Insurance company profitability has started recovering, but carriers continue to be cautious with their capacity deployment which will keep pricing elevated. It is estimated that homeowners insurance pricing will increase by another 10% in 2025.
About Our Study
Rate Insurance, a leading provider of homeowners insurance, conducted a detailed market study using proprietary customer data spanning six years. This analysis examines nearly 70,000 active home insurance policies, placed with over 70 different insurance carriers, representing customers across all 50 states.
This market study provides insights into premium increases, notable shifts in deductibles, state-specific variables, claims analysis, and overall market trends. It also offers actionable recommendations to help homeowners navigate and manage rising insurance costs in 2025. The insights provided in this paper are for informational purposes only. Readers should consult with qualified professionals before making any coverage or business decisions based on this report or its contents.
Download the full report here.
Key Findings
Record Premium Increases
- The 2024 home insurance market continued to experience sharp premium increases. Internal policyholder data comparing January through August 2024 to the same period in 2023, showed a national average annual premium rise to $2,072, a significant 20% increase from $1,723 in 2023. Over the past six years, premiums have increased by 78%, placing persistent financial strain on homeowners.
- The combined ratio for homeowners insurance was estimated at 105.7% in 2024, down from 110.9% in 2023 as noted in AM Bestās 2024 Market Segment ReportĀ¹.
- Factoring in personal auto, the personal lines combined ratio improved to 101.2% in 2024, down from 106.7% in 2023, showing a near return to profitability.
- While the personal lines industryās year-over-year improvement in underwriting losses was an important development, homeowners insurance carriers are still operating at a loss. Pricing is expected to stay high and continue to increase until profitability is restored.
Regional Premium Trends
State-level homeowners insurance premium trends provide additional context to broader national increases, revealing significant regional variability. According to Rate Insuranceās customer database, Colorado ($3,280), Texas ($3,115), and Oklahoma ($2,918) had the highest average premiums. These states are particularly vulnerable to severe weather events, such as hailstorms, tornadoes, and other natural disasters, which drive up claims costs, and in turn, premiums.
In contrast, Washington DC ($985), Vermont ($956), and Oregon ($1,123) showed the lowest average costs for customers due to more stable claims environments and lower exposure to catastrophic risks.
When comparing premiums year over year, the largest increases occurred in Hawaii (35.92%), California (35.91%), and Idaho (33.32%). Increases in California and Hawaii can be mainly attributed to growing wildfire and natural disaster risks, rising reinsurance costs and limited carrier options.
According to the U.S. Census BureauĀ², Idaho has experienced one of the countryās highest percentages of population growth over the last ten years. While it is still a relatively sparsely populated state, premium increases can be tied to a surge in demand for housing and construction, which contributed to higher replacement costs and increased risk exposure.
Some regions appear less affected by natural disasters and population shifts, leading to more consistent premium adjustments. States such as Alabama (3.80%) and New York (4.83%), as well as North Dakota, Tennessee, and New Hampshire (all with increases under 7%) experienced comparatively stable premium increases.
Shifts in Coverage Limits
As home valuations and the cost of materials and labor continue to rise, Coverage A (Dwelling) limits have adjusted to reflect increased replacement costs. However, despite this, premium growth has consistently outpaced the rise in coverage limits.
Our analysis examined all Rate Insurance homeowners policies, including those with Coverage A limits up to $17M. On average, our data shows that Coverage A limits have grown to $443,430 over the past year. In 2022, Coverage A annual growth reached 9.6%, but by 2024, it had slowed to 3.32%.
While increased coverage limits significantly impact premium increases, they are not the only factor insurance carriers consider when determining costs. Even if Coverage A limits stabilize or decrease, broader risk factors will likely mean higher costs for homeowners in 2025.
Deductibles
Rate Insuranceās analysis showed a notable shift in homeowners deductible preferences among customers, with increased adoption of percentage-based deductibles and movement toward higher fixed deductibles. While many Rate Insurance customers continue to use fixed deductibles, the adoption of percentage-based deductibles rose by 63.22%.
Deductibles under $1,000 now represent just 4.95% of policies, a 56% year-over-year decline. Deductibles between $1,000 and $2,500 dropped from 53.25% of the total book of business in 2023 to 42%, a 35%
decrease. In contrast, deductibles between $2,500 and $5,000 grew from 15.85% to 20%, while
deductibles from $5,000 to $10,000 rose by 102%, now making up 3.54% of policies. Deductibles above $10,000, although rare at 0.44% of Rate Insuranceās total policy count, increased by 48%.
This analysis focuses only on primary policy deductibles and does not include recent shifts towards percentage-based deductibles for wind and hail or higher fixed deductibles for roof-related losses.
Both insurers and customers are driving the trend toward higher deductibles. Insurance carriers are requiring higher deductibles or introducing thresholds for roof-related losses, shifting more out-of-pocket costs to policyholders. At the same time, many customers are voluntarily opting for higher deductibles to offset rising premiums.
State-Level Deductible Trends
A growing number of insurance carriers are requiring higher deductibles as a condition for obtaining coverage in areas with high risks of severe weather or natural disasters. In many states, homeowners are seeing significant increases in deductibles year after year, with some areas exceeding 20% annually.
In states such as Colorado, Texas, and Arizona, insurance carriers are mandating higher deductibles for perils such as wind, hail, and wildfires.
In Colorado, deductibles increased by 20% and 26% in consecutive years. According to NOAAās National Weather Service Storm Prediction Center Annual Severe Weather Report Summary for 2023Ā³, Colorado consistently ranked among the top states for hail-related damage, which causes billions of dollars in losses annually.
Wyoming experienced similar increases with deductibles rising by 26% and 29% consecutively as severe hailstorms and high claims continued to strain insurance carriers.
Texas also saw consecutive deductible increases of 21.4% and 20.7% due in part to the growing threat of destructive hail, hurricanes, and wildfires. Other wildfire-prone states such as Arizona, California, and New Mexico faced similar pressures.
In the Midwest, states like Illinois experienced rising property damage claims from tornadoes, hail, and other severe weather events, leading to deductible increases exceeding 25% in back-to-back years
Shifts in Coverage Trends and Line Distribution
Flood Insurance
In 2024, Rate Insurance data showed a 25.25% increase in customers purchasing flood insurance with total flood policies growing by 38.27%. This tripled the growth rate of home insurance policies in 2024.
As severe flooding events continue to occur, customers are recognizing the importance of flood insurance coverage, even in regions not traditionally categorized as flood risk zones.
In some cases, regulatory changes and lender policies, particularly those of government-backed lenders, now require flood insurance coverage for properties.
Changes to Carrier Distribution
Between 2023 and 2024, analysis of policies placed within Rate Insuranceās customer base showed notable shifts in the distribution of home insurance policies among different market categories. As standard carriers slowed or limited the distribution, we saw an increase of home insurance policies placed
with new markets, state FAIR plans, and wholesalers.
The most notable findings showed that homes insured with smaller, regional carriers shrunk by 7.24% year over year, while homes placed with new markets and wholesalers grew by 88.38% and 80.48%, respectively.
Additionally, some homeowners were forced to find alternative options for their home insurance; thus Excess and Surplus lines options increased by 24.80% year over year.
State FAIR plan utilization was relatively low across the country with the exception of California and Florida. This study found that homeowners in California and Florida purchased new coverage through FAIR plans 12.03% and 35.38% of the time, respectively.
Claims Analysis: Trends and Insights from 2019-2014
Proprietary claims data, derived from over 6,600 claims across 17 companies, provides valuable
insights into loss frequency, claim severity, and peril-specific trends in the home insurance market.
This section highlights key findings from our analysis of home insurance claims from 2019 to 2024,
offering a detailed view of loss patterns and opportunities for risk mitigation.
Loss Frequency Trends
Over the past six years, loss frequency averaged 4.56%, representing a slight decrease compared to
4.97% recorded in the preceding five years.
Average Claims Cost by Peril
When comparing 2024 to the average from the last three years, claim costs show varied trends
across different perils.
While average claim costs for certain perils, such as fire and lightning or wind and hail have
declined, “Other Causes,” have seen slight increases. Although the frequency of these perils
remains consistent, the changing financial impact of claims may point to improvements in loss
prevention measures and changes in claims handling processes.
Additionally, some of the slight claims decrease in 2024 is likely a reflection of higher deductible
trends with customers being responsible for more out-of-pocket costs in the event of a claim.
Peril-Specific Loss Trends
Loss trends from 2019 to 2024 show the ongoing impact of water damage, freezing, wind, and hail
on home insurance claims.
- Water Damage and Freezing: 43.21% of claims in 2024 (relatively unchanged from 43.22% in 2023)
- Wind and Hail: 41.39% in 2024 (up slightly from 40.74% in 2023)
These two perils made up most claim activity, increasing from 83.12% over the past three years to
84.60% in 2024.
Largest Losses by Peril in 2024
The most significant individual losses in 2024 further reveal the potential severity of specific perils:
- Fire and Lightning: $1,482,926 (house fire)
- Water Damage and Freezing: $749,006 (pipe burst)
- Wind and Hail: $171,521 (roof and gutter damage from 70 mph winds)
- Bodily Injury/Property Damage: $30,000 (dog bite)
- Theft/Mysterious Disappearance: $24,778 (jewelry theft during a car break-in)
- Medical Payments: $2,320 (guest injury from a door accident)
These losses show the variability in claim severity, with catastrophic events such as fires and water-related incidents far outweighing more minor, frequent claims.
Seasonal Loss Patterns
Seasonality plays a prominent role in claims activity, with warmer months driving a higher volume of
claims.
- AprilāAugust: 53.29% of claims, with July as the most active month (11.74%)
- June, July, and August together: 32.49% of claims
- October: The least active month with 5.7% of claims
Certain states experience an even stronger concentration of claims during the summer months:
Nebraska (57.14% from June to August), North Dakota (56%), Michigan (50.67%), Iowa (50%), and
Colorado (46.41%). Understanding seasonal claims trends can help homeowners better prepare for
potential issues during times when properties may be at a higher risk of damage and loss.
CAT Activity Trends
The timing of claims largely correlates with catastrophic (CAT) event activity, which peaks between
April and July (64.03% of CAT activity). Catastrophic events largely follow seasonal patterns, with
most activity occurring in the spring and summer:
- April – July: 64.03% of CAT events
- September: 11.46% of events
- October – November: Minimal activity (0.79% and 0.40%, respectively)
Interestingly, Florida has no recorded CAT-coded data in this analysis, which likely indicates a gap
in the data rather than an actual absence of catastrophic events.
Market Trends: Primary Drivers for Premium Increases
Various factors drive premium increases across the country, with one major contribution being the economic impact of natural disasters. In 2024 alone, weather-related events in North America, particularly in the U.S., led to an estimated $135 billion in insured losses, as highlighted by Aonās 2024 Weather, Climate, and Catastrophe Insight Reportā“.
According to AM Best, personal lines reported a net underwriting loss of $11.9 billion in 2024, a significant improvement compared to the $36.7 billion loss in 2023Ā¹. 2024 rate increases in home and auto insurance contributed to this progress, with the auto insurance combined ratio improving to 98.7 from 104.9 in 2023, and the homeowners combined ratio improving to 105.7 from 110.9 in 2023.
Despite this improvement, the homeowners combined ratio still indicates that insurers are paying out more in claims and expenses than they are earning in premiums. AM Best projects a 9% increase in auto and homeowners insurance rates this year and the homeowners segment is expected to experience a slight underwriting loss in 2025.
Increased Frequency and Severity of Natural Disasters
In 2024, there were 27 weather and climate disaster events in the U.S., each causing over $1 billion in losses, with cumulative damages over $182.7 billion, as reported by the National Centers for Environmental Information under NOAAāµ.
This is a significant increase compared to the long-term annual average of nine events since 1980, and exceeds the recent five-year average of 23 eventsĀ³.
Hurricanes in 2024 had substantial financial impacts in terms of damages, with Hurricane Helene causing $78.7 billion and Hurricane Milton causing $34.3 billion due to historic rainfall and flooding.
A severe tornado outbreak across Oklahoma, Kansas, and Missouri led to an estimated $12 billion in damages. In the Northeast, widespread flooding in New York and Pennsylvania caused approximately $9 billion in damages, highlighting the increasing threat of extreme rainfall in regions not typically prone to flooding. In early 2025, California wildfires caused an estimated $10 billion in paid losses, which are expected to increase dramatically as reconstruction occurs.
The increasing severity and frequency of natural disasters are driving up insurance premiums while putting pressure on Government-backed ālast resortā insurance programs like FAIR Plans and state-run
Citizens Property Insurance Corporation in Florida. Originally designed to offer coverage in high-risk or underserved areas, these programs struggle to meet the surge in claims and escalating payouts.
At the same time, as private insurers increasingly limit their exposure to high-risk policies, programs like the FAIR Plan and Citizens are seeing a rise in policyholders and payouts, often exceeding their surplus
reserves. This has led to higher premiums for homeowners in disaster-prone states, even those not directly located in high-risk areas.
Increased Reinsurance Costs
Increases in broad-scale claims continue to strain insurance carriers and contribute to increased reinsurance costs. Reinsurers have been facing escalating payouts and increased risk exposure, forcing primary insurance companies to either raise premiums or limit coverage.
Homeowners faced with the challenge of securing affordable insurance are driven to rely on government-funded programs. This will likely leave many homeowners in the United States vulnerable to the financial consequences of future disasters.
Trend of Risk Mitigation Strategies
Homeowners are being increasingly motivated to adopt risk-reduction measures through programs such as discounts, policy credits, and other financial incentives.
Examples include using impact-resistant roofing, storm shutters, fire-resistant building materials, and smart home technologies like water leak sensors, security systems, and temperature monitors, many of which are offered by insurers. Properties with elevated foundations, flood barriers, and similar protective upgrades often qualify for lower insurance premiums as well.
Specialized Deductibles for Specific Perils
Insurance carriers are increasingly implementing bifurcated and higher deductibles for wind, hail, and roof damage. Separate wind and hail deductibles are common in hurricane and tornado-prone regions. They are often percentage-based and apply specifically to damage from wind or hailstorms.
Roof-specific deductibles are typically higher for roof-related claims, particularly for older roofs, to address rising roof replacement and repair costs. This encourages homeowners to maintain or upgrade their roofs to reduce potential claims.
Price-Sensitivity and Bundling Trends
While it goes against the prevailing recommendations and best practices, some customers have chosen to āunbundleā policies to seek cost savings.
Insurance carriers in 2025 have indicated that home insurance may not be offered in many cases unless the customerās auto is bundled together in certain specific select markets.
Ten Recommendations for Insurance Customers
Looking ahead to the remainder of 2025, the trends that have shaped the insurance market will
continue to challenge homeowners and carriers alike. As an insurance customer navigating the
market, it is increasingly important to have a solid understanding of the ever-evolving insurance
landscape, and proactive, detailed approaches are crucial.
Here are some strategies in 2025 to help customers avoid high premiums and at the same time get
great coverage:
- Engage With Trusted Agents
Customers need to stay in touch with their insurance agents to stay updated on changes that could affect their policies. Agents can help identify gaps in coverage, explain new risks, and offer advice on options or discounts that might fit their situation. This ongoing communication ensures customers are prepared and adequately protected as circumstances and insurance requirements change. - Review and Update Insurance Policies Regularly
Customers should review their insurance policies at least once a year to ensure adequate coverage. This includes assessing and updating coverage limits and deductibles to reflect any home improvements, renovations, or changes in property value, reducing the risk of being underinsured. - Consider Higher Deductibles
By raising deductibles, customers accept more out-of-pocket expenses after a claim, which usually leads to a lower premium. This method is significantly safer than letting coverage lapse or lowering coverage limits.
Customers may also want to explore deductible buy-down options with separate carriers, which are now available in the market. These programs provide additional insurance coverage through a separate policy or endorsement, reducing the deductible a policyholder must pay when filing a claim. It is important for customers to carefully consider these options, understand the trade-offs, and ensure they align with their financial situation and ability to cover potential out-of-pocket expenses. - Understand Flood Insurance Needs
Standard homeowner’s policies do not cover flood-related damage, leaving property owners vulnerable to significant repair and replacement costs. Flooding can result from various sources, including heavy rainfall, storm surges, overflowing rivers, and rapid snowmelt, and these risks are not limited to officially designated flood zones. FEMA reports that approximately 25% of flood claims come from properties outside high-risk flood areasā¶.
This additional coverage is especially vital as weather patterns shift and urban development alters existing drainage systems, increasing flood risks in previously unaffected areas. Policies should be evaluated based on both current risks and potential future developments. - Consider Adding Coverage for Flood Damage
Water damage is one of the most common causes of homeowners insurance claims, making it essential for customers to evaluate whether they have sufficient coverage. In addition to flood policies, homeowners should consider adding endorsements for increased protection against sewer backups and drain-related issues or raising coverage limits for water-related risks, particularly in areas prone to flooding or homes with aging plumbing systems. Including service line coverage is also recommended to protect against costly repairs to underground water, sewer, or utility lines.
Basic preventative measures can help reduce the risk of water damage year-round. Homeowners should consider installing sump pumps to manage water buildup, using smart water detection systems to catch leaks early, and insulating pipes to prevent freezing in colder months. - Stay Informed About Coverage Changes
Homeowners should stay informed about changes to insurance coverage, particularly for key home components like roofing, siding, and foundations. Policies may introduce stricter conditions, higher deductibles, or exclusions for older features. Regular policy reviews and proactively upgrading aging components can help maintain adequate protection.
By staying updated, homeowners can address these changes by replacing outdated components or adding endorsements to their policies, ensuring they have adequate coverage and avoiding unexpected expenses. - Plan for Natural Disasters
Customers in areas prone to natural disasters like hurricanes, wildfires, high winds, or hailstorms can protect their homes by investing in strategic improvements. For example, installing impact-resistant roofing and siding, reinforced garage doors, and adding protective systems like hurricane glass and shutters can reduce vulnerability to storms. For regions at risk of wildfires, creating defensible space by clearing flammable vegetation, using fire-resistant building materials, and sealing gaps around roofs or vents can help protect homes. Installing hail-resistant shingles, anchoring outdoor structures, trimming weak or overhanging tree branches, and securing outdoor property reduces the risk of damage from hail, high winds, or heavy rains during storm seasons.
Homeowners should also review their policy to fully understand coverage for specific hazards like hurricanes, tornadoes or hail. Since policy limits and exclusions can vary widely by location and insurance carrier, it is essential for customers to stay informed about their policy details. - Explore New Carrier Options
The evolving insurance market regularly introduces new carriers and competitive options. By comparing quotes from multiple providers, customers can evaluate premiums, deductibles, and coverage levels. Some carriers may offer unique discounts for bundling policies, maintaining claim-free histories, or having specific home upgrades like security systems or weather-resistant materials. Regularly exploring these options can help ensure customers get the best possible value for their coverage. - Understand the Implications of Non-Renewal
Non-renewal notices can happen due to factors like increased risk, geographic hazards, or property-related issues, such as an aging roof or poor maintenance. Insurance carriers may also issue non-renewals due to changes in underwriting guidelines and service area limitations. Understanding these factors and taking proactive steps to prevent risks can reduce the likelihood of a policy non-renewal. If a non-renewal does occur, shopping for new coverage promptly is critical to avoid gaps in protection. - Prepare for Increased Premiums
With the insurance market facing ongoing challenges, premiums are likely to continue increasing in the coming years. Customers should incorporate premium increases into their annual budgets to avoid financial strain and explore cost-reduction methods.
Additionally, homeowners should work closely with their agent or provider to identify the factors driving premium increases and uncover potential savings. By taking a proactive approach, customers can better manage rising costs while ensuring they maintain the coverage they need.
Conclusion
Rate Insuranceās data analysis indicates that the homeowners insurance market has continued to undergo a significant transformation. As risk levels grow and coverage options evolve, both insurers and customers must adapt to these new realities.
This analysis highlights industry-wide trends such as rising policyholder out-of-pocket costs, changes to deductible structures, and evolving risks driving coverage distribution shifts. These factors underscore homeownersā growing challenges in securing adequate protection while managing higher expenses.
Leveraging Rate Insuranceās proprietary data and projections through 2025, customers can utilize actionable, strategic recommendations to adapt to this ever-changing insurance market.
By understanding the drivers of change and aligning their priorities with available options, homeowners can effectively manage these shifts and secure long-term financial and personal protection in an increasingly unpredictable world.
Note on Methodology
The analysis prepared by Rate Insurance is based on proprietary customer data collected from 2019
through 2024. The information presented in this document is derived from internal sources and
external data, including data on national catastrophes and related losses from the Insurance
Information Institute. While every effort has been made to ensure the accuracy and reliability of the
data, Rate Insurance cannot guarantee the completeness or timeliness of the information. The
insights provided in this paper are for informational purposes only. Readers should consult with
qualified professionals before making any coverage or business decisions based on this report or
its contents.
References
- AM Best. Personal Lines Insurance Market Overview 2024. PDF file. Accessed March 15, 2025.
Available by purchase or corporate access. - U.S. Census Bureau, “Idaho: 2020 Census Data,” Explore Census Data. Accessed March 15, 2025.
https://data.census.gov/profile/Idaho?g=040XX00US16. - NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and
Climate Disasters (2025). Accessed 15 March, 2025. Available at:
https://www.ncei.noaa.gov/access/billions/ - Aon. 2024 Weather, Climate, and Catastrophe Insight Report. PDF file. Accessed 22 February,
- Available at: https://assets.aon.com/-/media/files/aon/reports/2024/climate-and-catastropheinsights-report.pdf
- National Centers for Environmental Information, NOAA. Billion-Dollar Weather and Climate
Disasters: Overview. Accessed 15 March, 2025. Available at: https://coast.noaa.gov/states/fastfacts/hurricane-costs.html - Federal Emergency Management Agency (FEMA), “Flood Insurance and the NFIP,” FEMA Fact
Sheet. Accessed March 15, 2025. https://www.fema.gov/fact-sheet/flood-insurance-and-nfip.
About Rate Insurance
Rate Insurance is a national insurance brokerage licensed in all 50 states that offers
comprehensive personal, commercial, specialty, and life insurance products. Founded in
2008 and owned by Guaranteed Rate d/b/a Rate, operating as Guaranteed Rate, Inc. in New
York, the second-largest retail mortgage lender in the country, Rate Insurance has been
recognized as a Top 50 Personal Lines Agency and a Top 100 Property & Casualty Agency in
the U.S. Additionally, the company has been honored as the 2023 Agent for the Future,
Outstanding Overall Agency Award winner.
Rate Insurance has built a reputation for exceptional customer service, as demonstrated by its
4.9-star rating from over 3.5k Google-verified reviews. Combining a growing team of
insurance agents and a cutting-edge digital platform, Rate Insurance leverages its
relationships with over 100 top-rated insurance carriers to provide customers with competitive
rates and a personalized shopping experience. For more information, visit rate.com/insurance.
Ā© Rate Insurance, LLC is licensed in all 50 states (d/b/a Rate Insurance Agency, LLC in
California (License 0K09890), Michigan, Minnesota, North Dakota, New York, and Texas).