The year 2025 will be transformative for real estate. Rising personal home insurance rates, fueled by escalating claims costs, increasing property values and the growing frequency of natural disasters, will all have a profound impact on market dynamics — and homeowner’s insurance costs. For real estate professionals and mortgage lenders, these shifts present both challenges and opportunities.
Rising insurance rates and their ripple effects
Personal insurance rates are expected to rise significantly in the coming year. Homeowners’ insurance premiums may climb by as much as 15%, especially in high-risk areas vulnerable to extreme weather, according to a 2025 personal insurance marketplace outlook released by VIU by HUB. In the first half of 2024 alone, insured losses hit $62 billion, 70% above the 10-year average. Catastrophic peril coverage, like wind and flood insurance, may see rate hikes exceeding 20%, driven by updated FEMA flood maps and more frequent natural disasters.
These rising costs directly impact homeowners’ ability to secure affordable coverage and their financial readiness for home purchases, with home prices also projected to rise by 4.4% in 2025. In disaster-prone regions, insurers are retreating from markets and policy non-renewals are increasing, leaving consumers with fewer options. As many as two-thirds of consumers report that extreme weather has impacted their insurance coverage, including having insurance underwriters increase premiums for comparable coverage, and 1 in 10 are “not confident” they will be able to afford to renew their policies.
For real estate professionals and mortgage lenders, these challenges heighten the risk of deal cancellations and complicate the closing process. Having a clear understanding of the underlying factors driving these shifts and addressing insurance costs early in transactions is essential to avoid last-minute disruptions.
Forward-thinking companies can overcome challenges by integrating access to comprehensive insurance purchasing solutions into their customer platforms. These vital partnerships simplify the personal insurance buying process and create a stickiness between real estate professionals and mortgage brokers and their customers.
Creating a frictionless journey from home search to purchase
As rising insurance rates and natural disasters reshape the housing market, real estate professionals and mortgage lenders must proactively adapt. With housing expenses on the rise, potential buyers are becoming increasingly sensitive to overall costs, making affordability a top concern.
Real estate and mortgage professionals can play a vital role by helping find policies that align with their clients’ budgets and specific circumstances, reducing financial stress and easing the path to homeownership, especially in high-risk areas.
In regions impacted by severe weather, offering guidance on risk mitigation strategies is essential. Assisting homeowners in securing adequate coverage and beyond strengthens local housing markets and fosters stronger ties between real estate professionals and their homeowner communities.
Adapting to evolving consumer needs is essential, as today’s homebuyers and borrowers demand convenience, transparency and expertise. Real estate professionals equipped with tech-forward solutions like virtual property tours and commercial investment property analytics empower their clients to explore options and make informed decisions quickly, giving firms and lenders a competitive edge.
Employing streamlined and digital processes to create a frictionless journey from home search to purchase — including making it easy to access options for securing insurance — can help homeowners feel supported and confident throughout their transaction.
Moreover, providing personalized, unbiased insurance advice elevates the customer experience, transforming the insurance purchase process from a transactional necessity into a meaningful component of the homebuying journey and fostering lasting brand loyalty.
Resilient real estate practices for 2025
The challenges ahead require forward-thinking solutions. By leveraging tech tools, providing access to tailored coverage options and offering mitigation advice, real estate and mortgage professionals can safeguard transactions and build lasting community relationships. In a rapidly evolving market, education and proactive strategies are key in ensuring resilient and successful real estate practices.
Travis Hodges is the Managing Director at VIU by HUB.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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