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By Giulia Carbonaro
Senior Reporter
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The cost of home insurance is rising all across the country as extreme weather events become more common and destructive, adding a heavy financial burden on the tired shoulders of American households.
According to a new report by Bankrate, the average annual home-insurance premiums have increased by 9 percent nationwide since 2023, hitting $2,470 as of July. That is the equivalent of 3.18 percent of a typical U.S. household income, 0.01 percent more than they spent on home insurance last year.
Together with inflated home prices, mortgage rates still hovering around the 7 percent mark, rising homeowners association (HOA) fees and property taxes, growing premiums are contributing to making homeownership increasingly out of reach for many Americans.
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Where Are Premiums Rising The Most?
Bankrate's report found that from 2023 to 2025, California, Michigan, and Minnesota saw the biggest premium increases in the country.
In California, the average annual premium jumped by 4.58 percent between 2023 and 2024 to $1,468 and by a staggering 34.58 percent between 2024 and 2025, reaching $1,976. In Michigan, the average annual premium increased 6.29 percent between 2023 and 2024, hitting $1,933, and 21.6 percent between 2024 and 2025, reaching $2,351.
In Minnesota, rates jumped 4.4 percent in 2024, reaching $2,531, and 13.02 percent in 2025, hitting $2,860. Iowa and Ohio also saw some of the biggest increases in the country, at +12.81 percent and +4.48 percent, respectively, between 2024 and 2025, reaching an annual average premium of $2,362 and $1,406.
These states, however, are not the ones where the cost of home insurance is the most shockingly high. Bankrate found that homeowners in Nebraska, Florida, and Oklahoma, though they have seen smallest year-over-year increases, paid some of the highest premiums in the country in terms of the share of income they have to spend on coverage.
In Nebraska, the average annual premium is $6,425, about 8.61 percent of a typical household's income. In Florida, it is $5,735, or about 7.82 percent of a household's income. And in Oklahoma, it is $4,623, or 7.44 percent of income.
Why Are Premiums So High In These States?
"Rate raises in these three states can be attributed to widespread, catastrophic losses," Bankrate insurance expert Natalie Todoroff told Newsweek.
"Nebraska sits squarely in the heart of Tornado Alley, while Louisiana's position along the Gulf makes homes there prone to wind and hurricane damage. Wildfires have generated historic insured losses in California, which have pushed rates higher," she said. "Iowa has also experienced an uptick in wildfires, while Minnesota and Michigan have seen an increase in hail damage."
Florida, which has been at the heart of the ongoing home-insurance crisis creeping over the entire country, has gone from double-digit premium hikes over the past five years to reporting one the smallest increases in the nation. According to Bankrate, premiums in the state actually fell by 10.3 percent between 2024 and 2025.
The state's stabilizing home-insurance rates are largely a credit to the state's recently passed legislation, experts say.
"Third-party litigation funding, in particular, has been a major contributor to Florida's rising home-insurance rates," Todoroff said.
"One-way attorney fees led to excessive litigation, forcing insurance companies to pay expensive legal bills, which in turn pushed many insurance companies into bankruptcy. Since [Florida] Senate Bill 2-A, which eliminated one way attorney fees, passed in late 2022, more insurance companies have entered the Florida market and are beginning to turn a profit," she said.
The state has been reaping the benefits of these legislative reforms. "Since the beginning of 2024, Florida has posted the lowest average rate changes and lowest average premium increases in the U.S.," Mark Friedlander of the Insurance Information Institute (Triple-I) told Newsweek.
"Florida premiums have virtually flattened (0.5 percent average increase 2025 year-to-date), while most neighboring hurricane-prone states continue to experience double-digit premium increases."
Florida is also depopulating its state-backed insurer of last resort, Citizens, moving thousands of its policyholders into the private sectors. "This aims to boost competition among private carriers, which can help bring down rates," Todoroff said. "That said, Florida's home insurance rates remain uncomfortably high for many, especially homeowners along the coast."
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Oklahoma has also stabilized its home-insurance market this year, though homeowners in the state still face some of the highest premiums in the country, as is the case for Florida.
"Broadly speaking, insurance companies price [their] policies to reflect risk—the more likely it is that a home will get damaged, the more expensive the insurance policy will be," Todoroff said.
"Oklahoma home-insurance policies are priced with the state's tornado risk factored in, which helps explain why policies there are so far above the national average. The stabilizing rates we're seeing in Oklahoma could suggest that insurers there have adequately priced to reflect the state's high tornado risk."
Why Is the Cost Of Home Insurance Rising?
The main reason why premiums are rising across the country is that carriers are facing higher costs due to more extreme, more frequent natural disasters fueled by climate change.
"Extreme weather is widely considered to be the driving force behind many states' home-insurance crises. Weather has always been tied to home-insurance costs, but the natural disasters we're seeing now aren't the same ones as 20 or 30 years ago," Todoroff said.
"They're not only more widespread, they're also more destructive. This results in high losses for home-insurance companies, which they recoup by raising rates. The rise in materials and construction costs also contributes to the increase." she said.
Population shifts across the country—with droves of people relocating to the South and the Midwest because of their relative affordability in recent years—have also put more people in harm's way from natural disasters, Friedlander said.
"Other factors include rising replacement costs—escalating costs of construction materials and labor shortages—and an escalation of litigated home-insurance claims," he said. "Billboard attorneys are engaging a 'jackpot justice' approach to marketing their services to consumers, as they promise large awards to policyholders who hire them to settle storm and wildfire claims, versus settling a claim directly with their insurer."
In 2024 alone, legal service providers spent more than $2.5 billion on 26.9 million ads across the country, Friedlander said.
What Role Do Other Factors—Like Credit Score—Play?
Credit history, according to Todoroff, plays an outsized role in Americans' home-insurance costs.
"Bankrate's True Cost of Home Insurance report found that falling from the 'good' credit tier to the 'poor' tier added an extra $1,557 per year to your home-insurance bill, on average," she said.
"In some states, a drop in credit can more than double your premium. There is some evidence that policyholders with poor credit histories are more likely to file claims and fail to make payments on time, but many industry experts argue that using credit history to price home-insurance policies is unfair," she added.
According to Bankrate estimates, the average cost of home insurance in Nebraska increased by $6,201 after a drop in credit, the highest dollar amount of any state. Oklahoma and Michigan reported the second and third highest rate increases following a drop in credit, for an additional $5,590 and $5,005 per year, respectively.
Will Premiums Continue Rising?
A majority of experts expect home-insurance premiums to continue rising in the coming years.
"We have an insurance crisis throughout the U.S., not just in California," Dave Jones, the former insurance commissioner of California, who is now director of Climate Risk Initiative, Center for Law, Energy & the Environment, UC Berkeley Law School, told Newsweek.
"Every state, with varying degrees of severity, is facing increased frequency and severity of climate-driven, weather-related catastrophes. And so insurance companies throughout the U.S. are raising rates and declining to renew and write insurance," he said.
"That's landing with different levels of acuity in different parts of the country based on the severity and frequency of the climate-driven events, but there's no get-out-of-climate-change free card in the U.S. This problem is landing everywhere," he added.
According to Jones, the country will face more rate increases in both rate-regulated and non-regulated states in the coming years, unless drastic action is taken by insurers.
"I think we're going to see more non-renewals and more refusals to write insurance [in vulnerable parts of the country], because the background risk keeps going up for insurers, far outpacing the price," Jones said.
"And even if the price goes up, even at the highest price, insurers conclude that they can't keep writing insurance. So that means more people are gonna be pushed into what are called residual markets or "Fair Plans"—insurers of last resort funded by private associations rather than states.
"I think we're gonna see an increase in the number of people on these Fair Plans, and I think what we need to figure out is how to shore them up," he said.
"It is a rude awakening for many Americans. The insurance crisis is the canary in the coal mine for the climate crisis. And the canary is dying," Jones said.
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