Home and auto insurance rate hikes are slowing down in 2026 — here's what the data shows

If you felt insurance premiums jump hard in 2023 and 2024, the pain isn't over — but according to the insurance industry's own numbers, it's easing. AM Best, the credit rating agency that tracks the insurance industry, published a May 2026 special report showing that the average approved rate increase for U.S. homeowners insurance fell to 8.3% in 2025, down sharply from 13.5% in 2024 — and private passenger auto insurance rate increases fell to 3.7%, down from 9.7% the year before.

That's not a rate cut. Insurance companies are still raising rates almost everywhere — just by less than they were. Here's what's actually driving the slowdown, and why it won't feel the same in every state.

What AM Best's report actually measures

AM Best's figures track average approved rate changes — the increases insurers requested from state regulators and got approved, averaged across the industry. It's not a survey of what any individual policyholder actually paid, and it's not a government statistic; AM Best is a private ratings and analytics firm, not a regulator. Individual premiums still depend on your state, your insurer, your claims history, your home or vehicle, and dozens of other underwriting factors that a national average can't capture. Read the AM Best release directly for the full report.

With that caveat in place, the trend line is real and it's the sharpest deceleration in years:

• Homeowners insurance: average approved rate increase dropped 5.2 percentage points, from 13.5% in 2024 to 8.3% in 2025.
• Private passenger auto insurance: average approved rate increase dropped from 9.7% in 2024 to 3.7% in 2025 — the typical hike shrank by more than 60%.

Why insurers pulled back

The short version: insurers had been raising rates aggressively to catch up with years of rising claims costs, and by 2025 that catch-up was largely working. AM Best's data shows the U.S. homeowners insurance industry's loss ratio — the share of premium dollars paid out in claims — fell from 74.8 in 2023 to 65.6 in 2025, a 9.2-point improvement. A lower loss ratio means insurers are collecting more in premium than they're paying out in claims relative to before, which reduces the pressure to keep pushing rates up as hard.

"The improvement experienced by U.S. homeowners' insurers has been driven by both aggressive rate increases and enhanced pricing," said David Blades, AM Best's associate director of industry research and analytics, in the report. Dylan Catania, an AM Best associate analyst, added that insurers in previously underperforming states "experienced more favorable underwriting results in 2025," which means future rate filings in those states will likely reflect that improvement too — in other words, if the trend holds, some of today's high-rate states could see relief eventually.

The states where this doesn't apply yet

Not every state is feeling the slowdown the same way. AM Best's report specifically flags California, Nevada, New Jersey, and New York as states where auto insurance rates stayed disproportionately high through 2025, despite the national average cooling off — because insurers in those states have run aggregate loss ratios above the national average for three straight years. If you live in one of those four states, don't expect your renewal notice to reflect the national trend yet.

California's homeowners market has its own separate pressure point worth knowing about, too: the state's FAIR Plan — the insurer of last resort for wildfire-exposed homes — just got approved for a 29.1% rate increase effective October 2026, and that increase can indirectly reach even non-FAIR-Plan homeowners policies through an assessment-recoupment fee. National deceleration and state-specific spikes can both be true at once.

What this means for you

• A "smaller increase" is still an increase. If your renewal notice shows a rate hike in 2026, this data suggests it's more likely to be a single-digit bump than the double-digit jumps common in 2023-2024 — but it's not evidence your premium will go down.
• Your state and insurer matter more than the national average. If you're in California, Nevada, New Jersey, or New York, the national cooldown may not show up in your bill yet.
• It's still worth shopping your renewal. Individual insurers set rates differently even within the same state, so comparing quotes can surface savings regardless of the national trend. See how your ZIP code affects your auto insurance rate and what a standard homeowners policy does and doesn't cover before you compare.

ClearValue Insure doesn't sell, bind, or issue any insurance policy — we're an educational publisher and comparison resource, not a licensed agent, broker, or carrier. For a quote or an explanation of a specific renewal increase, talk to a licensed agent or your current carrier directly.