Iowa Homeowners Brace for Double-Digit Home Insurance Rate Hikes in 2025
Homeowners in Iowa are facing a significant increase in home insurance rates in 2025, according to a recent report by Insurify, an insurance comparison marketplace. The state is projected to see a 19% rise in home insurance rates this year, following a similar increase in 2024. These back-to-back hikes will push the average annual cost of homeowners insurance in Iowa to $3,825 by the end of 2025.
The rate increases are largely attributed to the state’s exposure to severe weather events, including strong winds, tornadoes, and hail. These weather factors can cause substantial structural damage to roofs, leading to a surge in insurance claims. As of now, Iowa has experienced 56 severe hail events in 2025, with seven of these events producing hail two inches or larger in diameter, according to preliminary data from the National Weather Service (NWS).
Hail’s Impact on Iowa’s Insurance Market
The frequency of hail events in Iowa has been on the rise. In 2023, the state witnessed 504 hail events, marking a 133% increase from the previous year, as per NWS data. This uptick in severe weather incidents has had a profound impact on the insurance landscape. Doug Ommen, Iowa’s insurance commissioner, noted that five insurance companies ceased writing policies in the state in 2023, citing severe weather and rising repair costs as the primary reasons for their withdrawal.
In an effort to mitigate losses, some of Iowa’s remaining insurers have begun offering actual cash value (ACV) coverage for roofs instead of replacement cost coverage. According to Buddy Parkhurst, an insurance agent with Insurify, “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 results in lower insurance payouts due to factored depreciation.
To illustrate: “If you have a 15-year-old roof that would cost $20,000 to replace, but depreciation is 50%, the homeowner would receive $10,000 under ACV, minus their deductible,” Parkhurst explained. “They would then be responsible for at least the remaining $10,000 needed for a new roof.”
Despite the potential for lower insurance payouts, homeowners cannot afford to delay roof repairs. “The age and condition of the roof will be the driving factor for eligibility and pricing,” Parkhurst emphasized, highlighting the importance of prompt repairs to mitigate further rate increases.
Legislative Response to Rising Insurance Rates
As Iowa’s home insurance rates are projected to exceed double the national average, state legislators are proposing reforms to address the issue. House Bill 499, introduced in February, aims to establish a disaster assistance program to help homeowners cover damages not covered by their insurance policies or other federal or state disaster-related financial assistance.
Additionally, House Bill 957, introduced in March, seeks to modify the existing Disaster Recovery Housing Assistance Program. The bill aims to extend eligibility to any homeowner during a declared disaster, not just those already enrolled in the program. It also focuses on setting standards for insurance adjusters to promote impartial claims evaluations and prevent fraud.
