Costlier Claims Push Home Insurance Costs Up for All, Even Those Who Never Filed | Insurify

Home insurance companies are handling fewer claims, but the ones they do pay are far more expensive than a few years ago, a new industry report indicates.

This shift affects renewal notices and premiums, even for homeowners who've never filed a claim, experts say.

Claims are getting much more expensive

The average cost per home insurance claim — which insurers refer to as "claim severity" — hit a record high in 2025, rising almost 26% from 2024, according to the July 2026 LexisNexis U.S. Home Trends Report. Claim severity has risen more than 93% since 2019.

At the same time, the total number of claims dropped by almost 24% between 2024 and 2025, continuing a trend that started with the COVID-19 pandemic. Homeowners are filing fewer claims, but each claim they do file costs insurers — and eventually policyholders — more, the report states.

The effect of these claim-cost increases varies by region. The average U.S. homeowner paid 12% more for insurance in 2025, according to comparison platform Insurify. But much of that increase was concentrated in a handful of states, particularly in the Great Plains and Midwest.

Notably, Insurify analysis shows the cost gap between more and less expensive states widened in 2025. Premiums increased about three times faster in the 25 most expensive states for home insurance than in the 25 cheapest states (14% vs. 5%). Rates will rise another 4% by the end of 2026, pushing the national average cost of home insurance to $3,057 annually, Insurify predicts.

"U.S. home insurers continue to face increasing pressure and uncertainty as they contend with a 'perfect storm' of rising severity, rising inflation-driven replacement costs, and a reshaping of loss patterns in the face of shifting climate-driven catastrophes," George Hosfield, vice president and general manager of home insurance at LexisNexis Risk Solutions, said in a press release.

What's actually pushing costs up, peril by peril

Not every claim is changing in the same way.

Fire and lightning incidents saw loss costs jump nearly 77%, mainly because of the January 2025 Palisades and Eaton fires in Los Angeles County. Those fires cost about $61.2 billion and became the most expensive wildfires in U.S. history.

Water damage costs are also rising steadily. The severity of non-weather-related water damage increased by 63% between 2019 and 2025. The LexisNexis report says this is mostly due to inflation and higher material and labor costs for repairs. Older homes and those with aging plumbing are most affected.

Wind loss costs dropped by 50% from 2024 to 2025. Hail loss costs also fell 38% from their 2023 peak, helping explain why insurance costs fell for some policyholders in the country's heartland.

The cost of liability claims rose 13% last year, and the report suggests this could be due to higher litigation costs and physical damage, which together make claim payouts larger.

The bigger picture behind the numbers

Last year, the U.S. experienced 23 separate climate disasters that each caused more than $1 billion in damage, totaling $115 billion — the third-highest amount ever recorded, according to Climate Central. The Los Angeles fires alone made up more than half of that total.

And 2026 isn't looking any easier.

In the first half of the year alone, the U.S. experienced 12 billion-dollar weather and climate disasters, totaling nearly $32 billion in damage. Eight of these events were severe storms, along with two winter storms, a damaging freeze in Florida, and major flooding in Hawaii.

And peak hurricane season will occur later this year.

What's next? Strategies for finding affordable home insurance

Having a claims-free record doesn't mean premiums will stay the same. Insurers base prices on the average cost of risks like wildfire, water damage, wind, and liability across the region, not just an individual policy's history. If regional averages go up, individual premiums can go up too, even for those who've never filed a claim.

As homeowners prepare for 2027 home insurance coverage, experts offer suggestions for how to keep home insurance costs down.

Location matters more than almost anything else. The price for a home insurance policy with $300,000 in dwelling coverage, a $1,000 deductible, with good credit, and no prior claims varies widely from state to state. In Florida, the average homeowner pays $6,504 per year for such a policy, compared to $4,704 in Texas and $2,004 in California, according to Insurify data. Florida's high premiums mostly stem from increased hurricane risk and heightened legal costs. In storm-prone regions, investing in home-hardening improvements could score homeowners a discount with some insurers.Before filing a home insurance claim, homeowners should understand how it might affect their future premiums and balance the repair cost against their deductible. For example, a repair that costs a few hundred dollars more than the deductible could increase their premium at renewal.Always compare quotes before signing a new policy because prices vary based on risk exposure and insurer. Different companies can charge very different prices for the same risk. Comparing quotes from several insurers, instead of just accepting the current renewal price, is the best way to save money.

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