Why Homeowners Insurance Rates Are Rising and What You Can Do About It
Homeowners across the U.S. are feeling the pinch as insurance premiums climb higher than ever. According to a recent analysis by S&P Global Market Intelligence, the national average increase in homeowners insurance rates was 10.4% in 2024, following a 12.7% jump the previous year. Over the past two years, rates have risen by a staggering 24%. This trend highlights the growing financial burden for homeowners as insurers adjust rates in response to higher losses and catastrophic weather events.
Insurers Driving the Rate Hikes
Among the top 10 insurers analyzed, American Family Insurance led the pack with an average rate increase of 31% over the past two years. In 2024 alone, the company raised rates in 42 states, with Missouri (30.1%), Illinois (27.5%), and Nebraska (27.1%) seeing the highest jumps. By comparison, State Farm, the nation’s largest homeowner insurer, implemented much smaller increases, averaging less than 20% over the same two-year period.
Meanwhile, Liberty Mutual, another major insurer, implemented the second-highest average rate increase nationwide in 2024 at 14.5%. Over two years, Liberty Mutual’s rates rose by an average of 37%, demonstrating a more aggressive adjustment compared to its peers.
For homeowners, these increases mean it’s more important than ever to shop around, compare rates, and understand how different insurers manage risk.
Profitability Trends and Industry Adjustments
The rise in premiums isn’t just about covering losses, it’s also helping insurers improve their bottom line. According to AM Best, homeowners insurance profitability improved significantly in 2024, with the loss ratio (the percentage of premiums paid out in claims) dropping by 13.8 points compared to 2023. This improvement is attributed to insurers’ aggressive push for rate hikes, better pricing segmentation, and enhanced catastrophe risk management.
Interestingly, even with major hurricanes like Helene in the third quarter of 2024, insurers still managed to improve their underwriting results. However, the fourth quarter brought Hurricane Milton, which is expected to have a greater impact on homeowners insurance results.
Other lines of insurance, like commercial property and personal auto, also saw profitability improvements. For example, personal auto premiums written rose by 14% in 2024, while direct premiums across the property/casualty industry increased by 9.1%.
U.S. Property/Casualty Industry 9 Month 2024 Snapshot Line of Business Trends
What Homeowners Can Do
As rates continue to rise, homeowners should take proactive steps to protect their finances. Here are a few tips:
- Shop Around: Compare rates from multiple insurers to find the best deal.
- Ask for Discounts: Many insurers offer discounts for bundling policies, installing security systems, or maintaining a good claims history.
- Understand Your Coverage: Make sure you’re not overpaying for coverage you don’t need while ensuring you’re adequately protected.
- Prepare for Weather Risks: Mitigate risks by reinforcing your home against common hazards in your area.
The insurance landscape is shifting, but with the right strategies, homeowners can navigate these changes effectively. Want to stay ahead of rising insurance costs? Contact us today to explore your options and find ways to save on your policy, call (877) 239-0067 Option 1.