Home insurance costs are rising sharply across the United States, with new policies seeing an average increase of 9.3% in the first half of 2025. According to a report from Matic, a digital insurtech platform, the average premium now sits at $1,966. This trend highlights ongoing affordability issues for many homeowners.
Since 2022, home insurance premiums have skyrocketed by 45%, while the value of coverage has only increased by less than 12%. This means that homeowners are paying significantly more for less protection. Ben Madick, CEO of Matic, noted that many homeowners are now spending over half of their monthly mortgage payments on insurance and taxes, making it increasingly difficult to afford a home.
The report also points to climate change as a major factor driving up insurance costs. Severe weather events, such as hailstorms and tornadoes, have become more common, leading to double-digit premium increases in states like Colorado, Mississippi, and Texas. The traditional areas known for tornadoes are shifting eastward, which complicates risk assessments for insurers.
Moreover, average deductibles have risen by 24.5% year-over-year. Insurers are shifting more of the financial burden onto homeowners, with many policies now including separate deductibles for wind and hail damage, often ranging from 1% to 5% of a home’s value. The age of a roof is also becoming a key factor in pricing, with the cost difference between homes with newer roofs and those that are 11-15 years old tripling since 2022.
Federal tariffs on materials like copper, steel, and aluminum are adding to the financial pressures. These tariffs can increase construction costs by nearly $11,000, further affecting insurance rates.
Despite these challenges, there are signs of improvement in the insurance market. From March 2024 to July 2025, the number of insurance quotes available to consumers rose by 69%. Additionally, the Excess & Surplus market, which provides coverage for higher-risk properties, now accounts for 17% of Matic’s policies in states like California, Florida, and Texas, a significant increase from less than 2% two years ago.
The mortgage industry is also feeling the impact of these rising insurance costs. A recent survey found that 64% of lenders have experienced insurance-related issues that have affected loan closings over the past year.
As these trends continue, homeowners may need to rethink their insurance strategies and consider how rising costs could affect their financial stability.