Home insurance rates may rise 21% in California in 2025

Source: Insurify

Homeowners will again face rising insurance costs in 2025 as insurance companies try to recoup massive losses from recent years. Insurify projects the annual cost of home insurance will increase 8 percent by the end of the year to a national average of $3,250. Severe weather is a major factor behind the increase, putting pressure on insurers to raise rates.  

Western wildfires, Southern hurricanes, and Midwestern hail have continued to increase in intensity and frequency, leading to larger losses and higher claim payouts. The gap between what insurers charge in premiums and what they pay out in losses is shrinking, with some states costing insurers more than they make. For example, Iowa home insurers pay out $122 in claims for every $100 they make in premiums, according to Insurify analysis. To stay profitable and operational, insurers typically pass increased losses on to consumers through higher premiums. The average annual cost of home insurance increased 8 percent in 2024 – nearly triple the rate of inflation (2.9 percent). Insurify projects California home insurance will rise 21 percent. The Palisades and Eaton fires that ravaged Los Angeles County in January and regulatory changes in the state will contribute to this increase.