Are Home Insurance Rate Increases Finally Slowing Down? What California Homeowners Should Know
If you have opened a renewal in the last few years, you have probably braced yourself for another double-digit jump. So it is worth knowing that the national picture is starting to shift. New industry data shows that home and auto insurers asked for much smaller rate increases in 2025 than they did the year before, and a few carriers are even filing for cuts. The natural question for a California homeowner is simple: does any of this actually reach my policy?
Key Takeaways
- Nationally, the average approved homeowners rate increase fell to 8.3% in 2025, down from 13.5% in 2024, according to a report from rating agency AM Best.
- Homeowners insurers posted an underwriting profit of more than $16 billion in 2025, their first profit in five years, largely because there were no hurricane landfalls and reinsurance was easier to buy.
- Auto slowed even more sharply: the average approved increase dropped to 3.7% in 2025 from 9.7% in 2024.
- A cooling national trend does not automatically mean cheaper California coverage. Our market has its own drivers: wildfire risk, the FAIR Plan, and the rate-approval process under Proposition 103.
- The practical move is to treat any slowdown as a chance to re-shop and re-check your coverage, not as a signal to relax.
What the new numbers actually say
The headline comes from a 2026 report by AM Best, an insurance rating agency that tracks how much carriers charge relative to the risk they take on. Their finding: after several brutal years, insurers appear to have "caught up," meaning premiums have finally moved close enough to actual risk that carriers no longer need to chase it with huge increases.
The specifics are striking. For homeowners insurance, the average approved rate increase across the country was 8.3% in 2025, compared with 13.5% in 2024. For personal auto, the average approved increase fell to 3.7% from 9.7%. Those are still increases, not rollbacks, but the pace of the pain slowed considerably.
Why insurers pumped the brakes
The turnaround is mostly about profitability returning to the business. For five of the six years from 2018 through 2023, homeowners insurers lost money on underwriting, meaning they paid out more in claims and expenses than they collected in premium. In 2025 that flipped: the homeowners line produced an underwriting profit of more than $16 billion, its first profit in five years.
Two things drove it. There were no hurricane landfalls that year, which spared insurers from the catastrophe losses that had been sinking their results. And reinsurance, the coverage that insurers themselves buy to backstop big losses, became easier and cheaper to obtain. When carriers are making money and can protect their downside affordably, the pressure to file steep rate hikes eases.
Does this reach California?
Here is the honest answer: national averages are a poor proxy for what happens on a California policy. Our market moves on its own set of forces, and a national cool-down can arrive here late, in muted form, or not at all for higher-risk properties.
Wildfire risk is the wild card
The national improvement leaned heavily on a quiet hurricane season. California's equivalent catastrophe is wildfire, and wildfire losses do not follow the Atlantic hurricane calendar. A benign year in the Gulf does very little for a homeowner in a high-fire-severity zone in the foothills. If your address carries meaningful brush exposure, your renewal may look nothing like the national trend, because your carrier is pricing your specific risk, not the country's average.
The FAIR Plan and the standard market
Many Californians who lost standard coverage have landed on the FAIR Plan, the state's insurer of last resort, often paired with a wrap-around DIC policy to fill the gaps. FAIR Plan pricing and standard-market pricing are separate worlds. A softening standard market is actually good news here, because it can mean more carriers are willing to write again, which is what eventually lets a homeowner move off the FAIR Plan. But that shift shows up as availability first, and lower premiums only later.
Proposition 103 and the approval process
California rate changes run through a review process under Proposition 103, which requires the Department of Insurance to approve rate filings. That process can slow both increases and decreases. So even if a carrier's national book is stabilizing, the timing and size of any California adjustment depends on what gets filed and approved here, on its own schedule.
What a California homeowner should do with this
A cooling market is most useful as a prompt to act, not as a reason to coast. When more carriers are competing for business, the homeowners who benefit are the ones who actually test the market.
Re-shop your coverage. If you were non-renewed or forced onto the FAIR Plan a year or two ago, the standard market may have reopened for a home like yours, especially if you have completed wildfire mitigation. It is worth having a broker re-run your options rather than assuming the door is still closed.
Re-check your limits, not just your price. A quieter rate environment is the right moment to confirm your Coverage A dwelling limit still reflects what it would truly cost to rebuild, and that you carry the endorsements that matter after a total loss, such as Extended or Guaranteed Replacement Cost and Ordinance or Law. Chasing a lower premium by quietly shedding coverage is how homeowners end up underinsured at the worst possible moment.
Document your mitigation. Defensible space, a Class A roof, ember-resistant vents, and participation in programs like Firewise can all matter to how a carrier prices and whether it will write you at all. As appetite returns, the mitigated home is the one that gets the offer.
The bottom line
The national data is genuinely encouraging: insurers have largely caught up on pricing, they returned to profitability in 2025, and the era of routine double-digit hikes may be easing. But California is its own market, driven by wildfire and shaped by its own regulatory process, so treat the national trend as a reason to re-shop and re-verify your coverage rather than as a guarantee that your next renewal will drop. If you want a clear read on where your home stands in today's market, that is exactly the kind of question a broker can answer for your specific address.
Important Note
This article is for general informational purposes only. Coverage depends on the specific terms, conditions, exclusions, and endorsements in your individual policy. Insurance policies can vary significantly between carriers. This article should not be relied on for coverage interpretation or claim decisions. For questions about your specific policy, review your policy documents or speak directly with your insurance professional or carrier.
