Around the Industry: Headaches Today and Market Shifts Tomorrow — What’s Happening with Home Insurance (June 2025)
Reading time • 3 mins
By Matic
The home insurance industry has been problematic for homeowners and buyers alike. As premium prices rise across the board, lower credit borrowers are hit the hardest and many policyholders are using a greater percentage of their household income to cover these increased costs. Over the long term, property values across the country are poised to shift based on climate risk, which could induce major changes to your most profitable markets.
Lower credit homebuyers pay 72% more for home insurance
According to NerdWallet’s State of Insurance for 2025, homebuyers and owners with poor credit pay 72% more for homeowners insurance premiums than their counterparts with strong credit. Mortgage professionals may need to account for these higher premiums when calculating an applicant’s maximum debt-to-income ratio.
Read the full report from NerdWallet.
Home insurance premiums are rising faster than income growth
A study from the Insurance Research Council (IRC) found that homeowners insurance is quickly taking up a larger percentage of household income compared to previous years. In 2001, the average home insurance policy accounted for just 1.19% of the median household income in the U.S. In 2022, however, that figure nearly doubled to 2.09% and is expected to hit 2.4% for 2024.
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Take the SurveyExperts predict property value changes based on climate risk and insurance concerns
Emerging research and projections anticipate major changes in property values over the next few decades, with drops concentrated in high-risk areas and increases in more predictable markets. Home values in climate abandonment areas could decrease 6.2% by 2055, while stable markets could average a 10.8% increase over the same period.
Depending on your primary buyer markets, this could impact your long-term business for better or worse.
California, Florida, and Texas face even more insurance challenges; Plus how to search local policy data by zip code
- Uninsured California homes exceed 150,000 due to wildfire risk. For those who still have coverage in high-risk areas, premiums have soared by 42%. To help keep coverage in place for as many homeowners as possible, the state granted State Farm an emergency rate hike of 17% in exchange for pausing additional nonrenewals through 2025.
- Florida and Texas are at the highest risk of lightning damage. While insurance claims related to lightning dropped over 16% in 2024, both Florida and Texas homeowners filed the highest number of claims in the country. Cost per claims were also significantly higher compared to other states. The average payouts in Florida and Texas were $23,686 and $38,558, respectively, compared to a national average of just $18,641.
- Insurance policy data now available by zip code: The Brookings Institution used federal data to create an interactive map that allows you to search premiums, paid loss ratio, claims paid, claims severity, nonrenewal rate, and cancellation rate by zip code.
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