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Homeowners are paying 9.3% more in home insurance premiums in 2025 compared to last year, according to a new report from digital insurance agency Matic. Today, the average homeowner is paying an annual home insurance premium of around $1,966.
These are the main factors causing the spike in premiums costs, according to Matic:
Climate change: Because of climate change, there has been an uptick in severe weather events in recent years, like wildfires on the West Coast and hurricanes in the Gulf Coast. These events make homes much riskier and costly to insure since insurers have to pay out more for claims. So to stay profitable, insurance companies have no choice but to increase premiums to cover those bigger losses.
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Tariffs: Tariffs have resulted in higher duties on building materials like steel, lumber and copper, which makes it more expensive to rebuild a home after a loss. The National Association of Home Builders estimates that tariffs could add nearly $11,000 to the cost of building a new home. And since insurance covers the cost of reconstruction, those higher material prices directly result in bigger premiums.
Insurers shifting risk to homeowners: To protect their own balance sheets, many carriers are raising deductibles, adding special wind or hail deductibles and weighing roof age more heavily in their pricing. These also translate into potentially higher premiums if your home is older or in poor condition.
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The report also pointed out that though premiums on new policies are up roughly 45% since 2022, the average Coverage A amount — the dollar figure that represents a home’s insured value — has increased less than 12%. In other words, homeowners are paying a lot more for coverage that hasn’t kept pace with rebuilding costs.
Around 64% of mortgage lenders surveyed by Matic said insurance issues, like high premiums and difficulty finding policies, are causing delays and derailing home sales. In states like Florida, Texas and California, some traditional insurers have pulled back altogether, which means some buyers have to rely on the more expensive Excess & Surplus market.
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Excess & Surplus is a specialty market that insures things standard carriers won’t cover. These specialty carriers now account for about 17% of Matic’s new policies in those states, up from less than 2% two years ago.