Written by: Internal Analysis & Opinion Writers
The cost of protecting a home is becoming an increasingly significant part of America's housing affordability problem, with homeowners insurance rates climbing sharply across the country. Once viewed primarily as a challenge in hurricane-prone Florida or wildfire-exposed California, rising premiums are now affecting homeowners throughout the Midwest, Mountain West, and other parts of the nation.
Nationwide, homeowners insurance rates increased nearly 47% between 2020 and 2025, according to LendingTree's 2026 State of Home Insurance report. The increases have been even more dramatic in several states, where severe weather, escalating rebuilding expenses, and higher insurance losses have forced carriers to reassess how they price risk.
"Homeowners across the country have faced steeply risen rates," Sharon Cornelissen, director of housing at the Consumer Federation of America, told Yahoo Finance. "It's not just California and Florida anymore."
Colorado experienced the largest increase in the country, with rates climbing 100.8% between 2020 and 2025. Iowa followed with a 96% increase, while Minnesota saw rates jump 88.2%. Utah, Nebraska, Arizona, Illinois, South Dakota, Oregon, and Montana rounded out the 10 states experiencing the largest increases.
Surprisingly, neither Florida nor California made the top 10, despite years of attention surrounding their troubled insurance markets. Instead, many of the fastest increases are occurring west of the Mississippi River, where hailstorms, severe thunderstorms, tornadoes, and wildfires are producing increasingly expensive insurance claims.
Colorado provides one of the clearest examples. The state experienced 22 separate billion-dollar disasters between 2020 and 2024, with hail, wildfire, tornadoes, and severe storms contributing to mounting insurance losses. The devastating Marshall Fire in December 2021 alone destroyed more than 1,000 homes in communities near Boulder.
Mark Friedlander, senior director of media relations at the Insurance Information Institute, said insurers previously priced wildfire and hail risks relatively conservatively because historical losses appeared stable. "However, a trend of costly loss events since 2020 forced insurers to re-underwrite the state's risk more aggressively," Friedlander told Yahoo Finance.
Hail has become particularly expensive for insurers because a single storm can damage thousands of roofs, vehicles, siding, windows, and other property within a relatively small geographic area. Meanwhile, population growth and new housing development have expanded into regions increasingly exposed to severe weather.
Wildfires present another growing challenge across Western states. Colorado, Utah, Arizona, California, and other areas have experienced destructive fires capable of generating catastrophic losses. These events have caused insurers to reconsider both premiums and underwriting standards in communities previously considered manageable risks.
Another factor is the widening gap between premiums collected and claims paid. LendingTree found that insurers in Louisiana, Iowa, and Hawaii paid more in homeowners claims than they collected in premiums. While carriers can withstand losses temporarily, repeated years of unfavorable claims experience can eventually lead to larger rate increases, higher deductibles, stricter underwriting requirements, or reduced availability.
"It's putting increasing pressure on already high housing costs for both renters and homeowners," Cornelissen said.
Reinsurance is also contributing to higher costs. Reinsurance essentially provides insurance coverage to insurance companies, helping carriers absorb catastrophic losses. When reinsurance becomes more expensive, insurers may attempt to recover those costs by increasing premiums, raising deductibles, tightening eligibility standards, or reducing their exposure in high-risk areas.
The effect on homeowners is not always immediate. Insurance companies generally must obtain regulatory approval before implementing rate increases, meaning losses from a major disaster can take months or even years to fully appear in consumer premiums.
Large percentage increases also do not necessarily mean a state has the nation's most expensive insurance. Arizona, for example, experienced a 71% increase between 2020 and 2025, yet its average annual premium of $2,225 remained about 7% below the national average of $2,395.
"A state like Arizona can post a large percentage increase off a historically low base and still land below the national average annual premium," Friedlander explained.
Nebraska presents the opposite problem. Rates there increased approximately 72%, while the state's average annual homeowners insurance cost reached $4,956, more than twice the national average.
The increases are becoming increasingly important to overall housing affordability. Homeowners are not only confronting higher mortgage payments, property taxes, utilities, and maintenance expenses, but also insurance premiums that are consuming a growing share of monthly housing costs.
"Homeowners are seeing a growing share of their monthly payments go towards insurance rather than their mortgage," Cornelissen said. "Growing insurance unaffordability is a big part of our housing affordability crisis."
Ultimately, the dramatic rise in insurance rates demonstrates that housing affordability extends well beyond mortgage rates and home prices. Severe weather losses, rebuilding expenses, reinsurance costs, and changing risk assessments are reshaping insurance markets nationwide. For homeowners, comparing insurers, reviewing coverage limits, considering appropriate deductibles, and making properties more resistant to disasters may become increasingly important as insurance costs continue to influence the true price of owning a home.
