Tariffs Threaten to Push US Home Insurance Rates Even Higher

With the Los Angeles fires in January and last week’s severe storms that brought flooding and tornadoes to the Midwest, extreme weather is already battering U.S. homes in 2025. Homeowners should expect their insurance rates to jump accordingly, says Insurify, an insurance policy comparison website, in a new report.

The steep tariffs imposed by President Donald Trump will likely worsen the pain.

The average annual cost of home insurance will increase 8% nationally by the end of the year to $3,520 for a home worth $400,000, Insurify projects. Some states, including Louisiana, Iowa and Minnesota, will see double-digit increases.

These calculations were made ahead of the tariffs, which will push up the cost of building materials. That in turn could raise rates even further due to repairs becoming costlier, said Insurify’s Matt Brannon, an author of the report.

U.S. homebuilders and contractors import materials from tariff-hit countries such as China, Canada, Mexico, Japan and Vietnam. “These barriers will impact the construction industry’s supply chain,” Brannon said. The last time that happened, during the Covid-19 pandemic, the price of insurance was affected.

The pain won’t be limited to states like Louisiana and California, known for their disaster risk. The projections for Minnesota and Iowa show that powerful storms fueled by climate change are taking a toll everywhere.

“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,” the report noted. “For example, Iowa home insurers pay out $122 in claims for every $100 they make in premiums.”

Insurance rates have been going up fast for several years now, outpacing inflation. U.S. homeowners have seen their premiums rise by an average of 24% over the last three years, the Consumer Federation of America found, and a full 95% of homeowners have experienced increases.

To estimate how rates will change, Insurify looked at the historical relationship between home insurance loss ratios and rate changes the following year. Home loss data from California’s wildfires were factored into the analysis, but not losses from the recent storms in the Midwest.

Hail storms, which can cause significant roof damage, have increased in Iowa by 80% over the past three years, according to Insurify. The state also had 131 tornadoes in 2024, tied for the second most in the country.

The states experiencing the biggest price increases aren’t necessarily those with the highest premiums. Florida has the most expensive home insurance in the nation, and premiums are expected to go up 9% more this year.

But around the U.S., rates are rising so fast that consumers are feeling it. That’s likely cutting into people’s spending on items that are not food and shelter, according to a recent analysis by Bloomberg Intelligence.

“Nationally, home insurance premiums may divert as much as 4.6% of spending away from non-discretionary items and services,” wrote Andrew John Stevenson, a Bloomberg Intelligence senior ESG climate analyst.

Top photo: Existing homes in Hercules, California, on Tuesday, March 25, 2025. Photographer: David Paul Morris/Bloomberg.