Homeowners in the United States can expect to pay more for insurance in 2025. A recent report from Insurify highlights that rising costs are driven by extreme weather events and new tariffs affecting the housing market.
The report predicts an 8% increase in the average annual cost of home insurance, bringing it to about $3,520 for a typical home valued at $400,000 by the end of the year. This estimate does not fully account for the impact of tariffs introduced by the previous administration, which are set to raise the cost of building materials. As a result, homeowners may face even higher insurance premiums.
States like Louisiana, Iowa, and Minnesota are expected to see particularly steep increases, with some areas experiencing double-digit rate hikes. This trend reflects the growing financial challenges from recent natural disasters, which have strained insurance companies.
Matt Brannon, who authored the report, explained that tariffs on imports from countries such as China and Canada will disrupt the supply chain for construction materials. This situation is reminiscent of the COVID-19 pandemic when material shortages led to price hikes and increased insurance rates.
The impact of tariffs isn’t limited to home insurance. The implementation of a 25% tariff on imported cars and auto parts could also lead to higher costs for vehicle repairs. This increase in repair costs is expected to push up the national average for full-coverage car insurance by 8%, raising it from $2,313 to $2,502 by the end of 2025. Some states, including Maryland and New York, may see even larger increases.
The report also points out a series of early-year disasters, such as wildfires in Los Angeles and severe storms in the Midwest, which have caused significant damage. Insurify notes that the effects of these events are spreading beyond traditionally high-risk areas like California and Louisiana, as the Midwest faces stronger storms fueled by changing climate patterns.
In Iowa, for example, insurers paid out $122 in claims for every $100 collected in premiums, highlighting the growing gap between premiums and claims. This widening gap is a key factor in driving up rates across the board.
Over the past three years, home insurance premiums have risen an average of 24% nationwide, with 95% of homeowners experiencing increases during this period. Florida, despite not being the leader in rate hikes, continues to have the highest home insurance premiums in the country, with rates expected to rise another 9% in 2025.
As homeowners brace for these changes, many are left wondering how to manage the rising costs of insurance in an increasingly unpredictable climate.