For five years running, homeowners have dreaded opening a certain envelope in the mail — the one with the return address of their homeowners insurance provider in the upper left corner.
That’s because annual homeowners insurance premiums have soared in recent years, driven steadily higher by climate risk, spiking reinsurance costs and rising material costs, among other factors.
According to a report released Thursday by Rate Insurance, a subsidiary of the Chicago-based mortgage heavyweight, annual premiums across its portfolio have skyrocketed about 107% since 2019. The average annual premiums and percentage increases are as follows:
- 2020: $1,135 (up 6.8%)
- 2021: $1,256 (up 10.7%)
- 2022: $1,426 (up 13.5%)
- 2023: $1,684 (up 18.1%)
- 2024: $2,020 (up 20%)
- 2025: $2,205 (up 9.2%)
Despite another increase in 2025, Rate Insurance President Jeff Wingate highlighted the silver lining that last year marked the first deceleration in home insurance costs since 2019.
“After several years of sharp increases, we’re starting to see early signs that the market is stabilizing,” Wingate stated in a press release. “Premiums are still elevated, but this shift gives homeowners a window to reassess their coverage, make informed adjustments and take a more proactive approach to managing long-term costs and their overall financial well-being.”
Water and wind damage are by far the most common climate events driving homeowners insurance claims, the Rate study found, combining for 86% of all claims. But those categories account for relatively moderate losses, with claims from water damage averaging $20,000 in 2025 and wind and hail claims averaging $14,000.
Fire and lightning damage, by contrast, comprised just 4.7% of claims in 2025 but 49% of total insurance payouts. The California wildfires were a significant driver of fire-based claims, with the average national claim of $341,000 being heavily skewed by the January 2025 climate disaster. For comparison, the five-year average for fire and lightning claims was $50,000, according to Rate data.
After reviewing more than 265,000 home insurance policy records across all 50 states, Rate Insurance concluded that “the highest-premium states in the portfolio continue to be those with persistent exposure to wind, hail, wildfire or severe convective storms.”
Those states include Colorado, which saw an average annual homeowners insurance premium of $3,392 in 2025, Texas ($3,343), Oklahoma ($3,135), South Dakota ($3,040) and Florida ($2,946).
