U.S. Insurance Rates Continue Climb in Early 2025, Led by Homeowners and Liability Coverages

Rates Push Higher Amid Catastrophe Fallout and Market Tightening

Personal and commercial insurance rates in the United States continued to rise in the first quarter of 2025, with notable premium hikes across homeowners, automobile, umbrella, and excess liability coverages, according to data released by MarketScout and supported by the Risk & Insurance Alliance.

Personal Lines: High-Value Homes and Fine Art Coverage Drive Rate Increases

The composite rate for personal lines rose to 4.9% in Q1 2025, up from 4.0% in the fourth quarter of 2024, with homeowners’ insurance showing the most substantial increases.

“Homeowners insurance saw notable increases in Q1 — likely due to the lingering impact of recent California wildfires,” said Richard Kerr, CEO of Novatae Risk Group. “It often takes time for the market to respond to catastrophic events. Rates are now trending upward and could rise further as we head into hurricane season.”

• Homes valued over $1 million saw premiums surge 7.3%, reflecting market reaction to recent catastrophic events.
• Homes under $1 million rose 4%, up from 3.3% in the previous quarter.
• Automobile insurance climbed 4.3%.
• Personal articles and fine art coverage also jumped to 4.3%, from 2.3% in Q4 2024.

Commercial Lines: Umbrella, Auto, and Transportation Sectors Lead the Climb

Commercial insurance pricing also rose, with the composite rate reaching 3% in Q1 2025. The steepest increases were observed in umbrella/excess liability and commercial auto, both up 6.7%.

“Umbrella and excess liability, along with automobile coverages, saw the most significant rate hikes this quarter—both increasing by 6.7%,” note Kerr, in his prepared markets on the latest results.

Among industry classes, the transportation sector experienced the highest premium hikes at 6%, amid ongoing underwriting concerns and market volatility.

Rate Changes by Coverage Class:

Cyber Liability:

Rate Changes by Account Size:

• Small Accounts (<$25,000): +4.7%
• Medium Accounts ($25,001–$250,000): +3.7%
• Large Accounts ($250,001–$1 million): +3%
• Jumbo Accounts (>$1 million): +2.3%

Rate Changes by Industry Class:

• Habitational: +4.7%
• Transportation: +6%
• Manufacturing, Contracting, Service: +2.7% to +3%
• Energy: +2.3%
• Public Entity: +1.7%

The quarterly figures highlight the continued hardening of the insurance market across both personal and commercial lines, driven by claims severity, catastrophe losses, and cautious underwriting. Analysts expect pressure on rates to persist, especially for high-risk classes and regions vulnerable to natural disasters.