Iowa homeowners are facing a potentially daunting financial challenge as a new report from Insurify projects that home insurance rates in the state could surge by 19% in 2025. This follows a similar 19% increase in 2024, pushing the average annual cost of homeowners insurance to $3,825 by year’s end.
The primary driver behind these steep rate hikes is Iowa’s propensity for severe weather events, including powerful winds, tornadoes, and particularly damaging hail storms. These weather phenomena frequently cause significant structural damage to roofs, leading to a substantial increase in insurance claims.
According to preliminary data from the National Weather Service (NWS), Iowa has already experienced 56 severe hail events in 2025, with seven of these incidents involving hailstones measuring two inches or more in diameter. The NWS data also reveals that the state witnessed 504 hail events in 2023, marking a staggering 133% increase over the previous year’s activity.
The impact of these severe weather events on Iowa’s insurance market has been profound. Doug Ommen, Iowa’s insurance commissioner, noted that five insurance providers ceased operations in the state in 2023, citing severe weather and escalating repair costs as the primary reasons for their withdrawal.
In an effort to mitigate their losses, some of Iowa’s remaining insurance providers have begun offering actual cash value (ACV) coverage for roofs instead of replacement cost coverage. Buddy Parkhurst, an insurance agent with Insurify, explained the distinction between the two: “Replacement cost coverage replaces the item with a new product of the same value and quality,” while “actual cash value is the replacement cost minus depreciation.”
This shift to ACV coverage results in lower insurance payouts due to factored depreciation. Parkhurst provided an illustrative example: “If you have a 15-year-old roof that would cost $20,000 to replace, but depreciation is 50%, with ACV, the homeowner would only receive $10,000, minus their deductible. They’re then responsible for at least the remaining $10,000.”
Despite the potential for lower insurance payouts, homeowners cannot afford to delay roof repairs. Parkhurst emphasized that “the age and condition of the roof will be the driving factor for eligibility and pricing.” Prompt repair of roof damage is crucial to mitigate further rate spikes.
In response to the projected home insurance rates exceeding double the national average, Iowa legislators are proposing reforms. House Bill 499, introduced in February, aims to establish a disaster assistance program to aid homeowners with damages not covered by their insurance or other federal or state assistance. House Bill 957, introduced in March, seeks to modify the existing Disaster Recovery Housing Assistance Program, expanding eligibility and focusing on standards for insurance adjusters to promote impartial claims evaluations and prevent fraud.
