How Often It Happens: The Rising Frequency of Claims
Extreme weather events are happening more often, and that means more claims. According to NOAA, weather-related disasters cost the U.S. $92.9 billion in 2023 alone. States across the country, 45 in total, saw double-digit increases in home insurance premiums due to these increasingly common climate events. For example, Arkansas experienced $489 million in claims from a single tornado in 2023, driving loss ratios well over 100%.
Even auto insurance is feeling the heat, comprehensive claims related to weather damage are on the rise, and insurers are adjusting their rates accordingly.
How Much It Costs When It Does: The Severity Problem
Insurance isn’t just about how often claims occur. It’s also about how much they cost when they do. And costs are soaring.
- Home insurance premiums rose about 11.4% nationally in 2023 and are projected to climb further.
- Auto insurance isn’t faring better. As of May 2025, the average full-coverage policy costs $2,680 per year, up 16% from the year prior.
- New cars come loaded with sensors, cameras, and advanced safety features. These reduce accident frequency, but they make repairs much more expensive. Even a small fender bender could cost thousands due to the need to recalibrate high-tech systems.
What’s Driving the Cost Increases?
Tariffs on Vehicles and Parts Tariffs on steel, aluminum, and imported auto parts are pushing up manufacturing and repair costs. Analysts estimate an insurance cost increase of $92 per driver per year, with up to $24 billion in extra claim costs industrywide.
Reinsurance Market Pressure Insurers rely on reinsurance to cover catastrophic losses. But global reinsurers are facing tighter margins, passing higher costs back to the primary insurance companies, and ultimately, to consumers.
Climate Change With hurricanes, wildfires, floods, and heatwaves becoming more frequent and intense, insurers are bracing for higher and more frequent payouts. Florida alone saw $390 billion in storm damages in 2023.
Advanced Technology in Cars Modern vehicles are safer but more expensive to fix. Sensors, automatic braking systems, and other advanced features have inflated per-claim costs even as accident frequency has dropped.
State-by-State Rate Increases
Here are some of the highest average home insurance rate hikes in 2024:
- Montana & Nebraska: +22.1%
- Minnesota & Washington: +19.5%
- Florida: +1.7%
- Texas: +3.4%
- New York: +3.8%
Nationally, homeowners are paying $21 billion more in premiums than in 2021, a 24% increase over just three years.
What You Can Do: Tips to Save
Home Insurance
- Fortify your home: Reinforce roofs, install impact-resistant windows, and upgrade plumbing or electrical systems.
- Bundle policies: Get discounts by combining home and auto policies.
- Raise your deductible: Just make sure you can cover it in an emergency.
- Review coverage annually: Adjust limits as needed and remove unnecessary endorsements.
Auto Insurance
- Higher deductibles: Raising deductibles can save 15–40%.
- Usage-based programs: Safe drivers benefit from telematics discounts.
- Compare rates annually: Shopping around is more important than ever.
- Take a defensive driving course: Can reduce premiums by up to 25%.
The Outlook
| Factor | Impact on Rates |
|---|---|
| Tariffs | Push up part and repair costs |
| Climate | Increases frequency and severity of claims |
| Technology Advancement in cars | Raises per-claim cost in auto insurance |
| Reinsurance | Passes rising global risks down to consumers |
Final Word
Insurance rates are rising for a simple reason: claims are happening more often, and they cost more when they do. With climate risks escalating, new tariffs looming, and repair costs climbing, the upward pressure on insurance premiums isn’t going away anytime soon. But informed consumers can still take smart steps to protect their wallets.
Need help reviewing your coverage or looking for ways to save? Reach out to Landsman Insurance Services today. We’re here to help you stay protected, without overpaying.