The new year could be marked with change across the insurance industry, including personal lines like homeowners and auto insurance. 2024 certainly proved tumultuous and challenging for both policyholders and carriers alike, but will 2025 see the industry taper into a more stable state? Check out some homeowners and auto insurance trends to watch for in 2025 and find out how they could affect your policies.
Homeowners Insurance
While many sources around the insurance industry expect a continued rise in premiums, those costs may begin to level out in 2025. During the second half of 2024, premium growth slowed compared to the first half. Additionally, lower inflation could bring some relief for policyholders this year, creating a more balanced market. Advances in technology may also positively impact insurance policies, according to The Zebra, reporting smart devices like smoke detectors, thermostats, and security cameras could help mitigate risks and consequently lower rates.
However, some ongoing, outside factors could still contribute to higher costs in 2025 — climate change being one of the biggest. NOAA reports 27 extreme weather events in the United States costing more than $1 billion in 2024 with hurricanes Helene and Milton costing about $113.9 billion combined. As such occurrences become more common, carriers are re-evaluating their risk models and, in some cases, exiting riskier insurance markets like California and Florida. As the effects of climate change continue, homeowners renewing their policies should be mindful of how storms and wildfires affect rates.
Auto Insurance
According to ValuePenguin, auto insurance rates are also expected to rise in 2025, though at a slower rate than previous years. Compared to rises of 16.5% in 2024 and 12.0% in 2023, premiums are expected to grow by an average of 7.5% this year. Lower inflation has eased the impact on rates, but expected tariffs imposed by the government will drive up the cost of replacement car parts, leading to rising insurance premiums. Just how much these rate hikes will cost policyholders remains to be seen, but drivers should be aware of the potential for higher costs as they review their premiums in the new year.
Let our team help find personal lines policies to fit your lifestyle and budget
Contact Personal Lines Agent Noele Tatlock at (309) 642-6855 or email ntatlock@unland.com.