Homeowners in Louisiana and California are expected to face the country’s largest insurance rate increases this year, according to a new study by comparison website Insurify. The study projects that Louisiana will see a 27% increase in average annual premiums, reaching $13,937, while California will experience a 21% rise to $2,930.
Rising Costs Across the Nation
The growing threat of natural disasters, exacerbated by climate change, has led to a significant increase in property insurance costs nationwide. Insurify researchers predict an 8% average increase in homeowner insurance rates across the U.S. by the end of the year, with the national average annual premium reaching $3,520, up from $3,259 in 2024.
State-by-State Projections
Other states expected to face substantial increases include Iowa (19% to $3,825), Hawaii (17% to $1,808), and Minnesota (15% to $4,058). Conversely, states like Massachusetts (2% to $2,432), Vermont (3% to $1,248), and New Hampshire (3% to $1,608) are projected to see more modest increases.
Factors Driving Rate Hikes
The increase in insurance rates is attributed to major losses related to extreme weather events, including western wildfires, southern hurricanes, and midwestern hail. In California, devastating wildfires in Los Angeles County in January have contributed to the projected rate hike. Insurify’s carrier relations manager, Daniel Lucas, noted that insurance companies are shifting more of the risk burden onto homeowners due to rising losses from severe weather.
Most Expensive States
By the end of 2025, Florida is expected to remain the state with the most expensive annual premiums, averaging $15,460, despite a relatively modest 9% projected rate hike. Louisiana will follow with $13,937, then Oklahoma ($8,639), and Colorado ($8,369). These states are particularly vulnerable to natural disasters such as hurricanes, tornadoes, and hail, which insurers are factoring into their rate calculations.
Insurance Market Challenges
The property insurance market is facing significant challenges, particularly in disaster-prone areas. In Florida, 16 property insurers have gone insolvent since 2017, and 16 have withdrawn from the state. Louisiana and Iowa are also experiencing financial strain, with insurers paying out more in claims than they collect in premiums. According to data from the National Centers for Environmental Information, hurricanes cause more financial damage than any other natural disaster, underscoring the need for insurers to reassess their risk exposure.
Future Outlook
Insurify’s projections do not account for potential sustained tariffs on construction materials, which could further increase homeowner insurance costs. Lucas emphasized that rebuilding or repair costs are a primary consideration in calculating insurance rates, and any rise in construction material costs would be factored into policyholder premiums. As a result, homeowner insurance prices could climb even higher than currently expected if tariffs remain in place.
