Home insurance rates are cooling — but they’ve jumped 45% since 2022

After several years of sharp hikes in premiums and coverage challenges, the U.S. home insurance market is showing early signs of stabilization, according to a new report from digital insurance agency Matic.

Affordability remains a top concern, with climate events, deductibles and aging roofs all playing a role in shaping the current landscape.

Premium growth slows but outpaces coverage

As of mid-2025, the average annual premium for new home insurance policies stood at $1,966 — a 9.3% increase over the past year.

That’s down from the 18.8% jump seen between 2023 and 2024, suggesting that the pace of increases is moderating. Still, premiums have risen 45% since 2022, while Coverage A, which reflects the insured value of a home, has grown less than 12%.

This gap indicates that homeowners are paying more for relatively less coverage. Matic reports that insurance costs now consume a growing share of monthly mortgage payments.

“In some cases, homeowners are now spending more than half of their monthly mortgage payment on insurance and taxes,” said Ben Madick, CEO and co-founder of Matic. “An increasing number of people are finding that rising insurance costs are standing in the way of buying a home or making it harder to keep the one they have.”

Climate risks drive premium hikes

Severe weather continues to drive costs. While coastal risks like hurricanes remain a factor, convective storms — including hail and tornadoes — now account for 70% of global insured losses, according to Matic.

“Tornado Alley” is shifting east, bringing increased tornado activity to the Southeast and Midwest. Rising temperatures and moisture levels are intensifying these storms, complicating insurers’ ability to assess risk using historical models.

Recent wildfires in California and major floods in Texas and North Carolina have also pushed premiums higher.

States like Colorado, Mississippi and Georgia are also seeing some of the steepest increases due to heightened local risks.

Matic’s report shows the average home insurance deductible rose 24.5% from 2024 to 2025, with higher increases in storm-prone regions like Florida and Texas.

Flat deductibles are increasingly being replaced by percentage-based deductibles — typically 1% to 5% of the insured value — for wind and hail damage. Between 2018 and 2022, these two perils accounted for 42% of all insured home losses. In 2024, convective storms caused $58 billion in U.S. losses, with hail responsible for most of the damage.

Insurance delays disrupt mortgages

Insurance challenges are spilling into the mortgage industry.

Matic found that 64% of lenders reported frequent delays or issues due to insurance, which are often tied to debt-to-income ratios or difficulties securing timely coverage.

“We’re hearing from lenders who are seeing closings fall through or get delayed because of insurance hurdles,” Madick said. “In today’s market, home insurance is no longer a checkbox at the end of the process. It’s a critical step that can make or break a loan, and mortgage leaders who get ahead of it are in a much better position to help their borrowers succeed.”

Roof age now a major rating factor

Roof condition is becoming a central issue in underwriting. In 2024, insurers paid nearly $31 billion in roof-related claims — a 30% increase from 2022.

Matic found that premium gap between homes with roofs under five years old and those 11 to 15 years old widened from $49 in 2022 to $155 in 2025.

Insurers are moving away from full replacement coverage for aging roofs, favoring actual cash value (ACV) or depreciation-based payment schedules. Many are also using drones, satellite imaging and artificial intelligence to inspect roofs more aggressively and limit claims exposure.

Tariffs push building costs — and premiums — higher

New federal tariffs on materials like copper, steel and aluminum are also impacting the market.

Matic notes that 60% of home reported supplier price increases as of April 2025. These higher construction costs are feeding into rising home values and insurance premiums.

Despite some easing in premium growth, Matic concludes that affordability and access remain unresolved.

For homeowners, reviewing deductibles, updating roofs and considering alternative coverage options are increasingly essential strategies for managing costs.