Around the Industry: Premium Hikes & Policy Gaps: What Lenders Need to Know (May 2025)
Reading time • 3 mins
By Matic
Homebuyers and owners across the country continue to struggle with rising insurance premiums amidst both economic pressures and natural disasters. Uncertainty over tariffs continues to make people wonder just how much home insurance costs will increase by the end of 2025. On top of that, state legislatures are having mixed success combating these insurance issues for their constituents.
Tariffs Could Cause $100 Annual Premium Increase in 2025
Ongoing tariff negotiations have continued to cause uncertainty as experts clamor to estimate the economic impact across industries. For homeowners, rising costs of Canadian lumber and Mexican lime and gypsum products are expected to increase the average cost of home insurance premiums by $106 by the end of 2025.
It may not seem like a huge price jump, but could cause a financial pinch for some homeowners and buyers, especially those living in high-risk areas that are already facing insurance hikes.
States with Highest Home Insurance Premiums Revealed
A recent Bankrate study identified the average annual home insurance premium by state. The states with the highest premiums include:
- Nebraska: $6,097
- Florida: $5,409
- Oklahoma: $4,623
- Kansas: $4,415
- Louisiana: $4,145
The least expensive states were Vermont ($839), Alaska ($942), and Delaware ($964).
Read the full Bankrate report.
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Learn MoreAlarming Self-Insurance Trend On the Rise
All of the challenges and rising costs around home insurance are causing homeowners to second-guess the coverage they carry. Nearly 25% believe that home insurance isn’t worth the expense, while 31% have considered self-insuring — that means they would be responsible for any repairs caused by natural disasters. Another 34% have reduced their coverage, which could also place a greater financial burden in the event of major damage caused by a covered peril.
Colorado, Texas, and Oregon: High-Risk States and How They’re Handling Coverage Challenges
- Colorado legislature rejects bill to implement home insurance policy fee: The proposal would have imposed a 1% fee on every policy in the state, to be paid by the homeowner. The revenue would have been split between two programs: a grant effort to increase hail-proof roofs and a program to limit insurers’ risk of wildfire-loss.
- Texas lawmakers struggle to find solutions for rising insurance costs: The state legislature is considering a bill that would require pre-approval from the Texas Department of Insurance (DOI) for any insurance premium hikes above 10%. Currently, insurers can implement new rates while they’re still under review with the Texas DOI.
- Oregon joins California with homeowner wildfire prevention program: Oregon is implementing a Wildfire Prepared certification program that would qualify homeowners for lower insurance rates by tackling specific wildfire prevention efforts on their homes.
