Home insurance rates are rising in Alabama: What you need to know for 2025

Alabama homeowners may face a 7% increase in home insurance rates in 2025, with average annual premiums reaching $5,831, according to Insurify, a digital insurance agent and insurance comparison shopping website.

Alabama ranks sixth among states with the most expensive home insurance. In 2024, the average annual home insurance premium in Alabama was $5,445, compared to the national average $3,259. The typical Alabama homeowner will see their home insurance costs rise an estimated $386 over the next 12 months, compared to the national average increase of $261.

“In general, consumers may see an increase in their home insurance in 2025,” Jennifer Bowen, Alabama Department of Insurance public information officer, told AL.com in a statement.

Why are home insurance prices rising?

According to the Alabama Department of Insurance, many factors go into determining the premium for home insurance. The factors may include, but are not limited to

Rebuilding cost of the dwelling, which affects other coverages on the policy. This is different than the “market value” or “tax value” of the property.
Changes in discounts or endorsements attached to the policy.
The insurance company’s loss history in that particular part of the state.

Severe weather could be a major factor behind the increase, with severe thunderstorms, major hurricanes and tornadoes hitting the South, putting pressure on insurers to raise rates, according to Insurify.

Federal Emergency Management Agency (FEMA) maps indicate Alabama’s two coastline counties, Mobile and Baldwin, are at “very high” and “relatively high” risk for expected hurricane losses. Alabama has “relatively high” expected losses from tornadoes, according to FEMA.

Tariffs on steel, aluminum, lumber and other homebuilding materials would further increase home insurance prices.

To stay profitable and operational, insurers typically pass increased losses on to consumers through higher premiums.

“The cost to rebuild or repair a home is a primary consideration in calculating insurance rates,” Daniel Lucas, carrier relations manager at Insurify, said. “If the cost of construction materials rises, those costs would be factored into policyholder premiums.”

How Alabama home insurance compares to other states

Insurify projects home insurance premiums will climb in every state by the end of 2025.

Nationally, Insurify projects the annual cost of home insurance will increase 8%, nearly triple the rate of the 2.9% inflation, by the end of the year to an average of $3,520.

Five of the eight most expensive states for home insurance are along the Gulf Coast including Alabama, Texas, Louisiana, Mississippi and Florida. The region is extremely susceptible to hurricanes, which cause more financial damage than any other type of natural disaster.

Starting with the nation’s most expensive home insurance state, Florida’s average projected home insurance for 2025 is $15,460. Louisiana’s is $13,937. Oklahoma’s is $8,369. Colorado’s is $6,630. Texas’ is $6,522 and Alabama’s is $5,831. Nebraska follows at an annual cost of $5,203.

Insurify data scientists use a real-time database of insurance quotes from partner carriers, and aggregated rate filings from Quadrant Information Services, to determine the state of home insurance in 2025.

“The consumer should always be proactive and review their policy before it renews. That allows the policyholder to reach out to their agent or insurance company and ask questions about the policy. This would also allow the policyholder the opportunity to “shop” their policy. If the consumer does choose to shop, having their policy in hand allows them the opportunity to get an “apples-to-apples” comparison and reduces the chance of being surprised," the Alabama Department of Insurance told AL.com in a statement.