Key Takeaways:
Filing a home insurance claim in the US has become a near coin flip, with the five largest carriers closing 44% of claims without payment last year.
The five largest US home insurers closed 44% of claims without payment in 2025, up from 36% a decade earlier, a Wall Street Journal analysis found. The group — State Farm, Allstate, Liberty Mutual, United Services Automobile Association and Farmers Insurance — collectively left homeowners and renters to fund repairs out of pocket on nearly half of all claims resolved last year.
"Policies were being used as a home-maintenance program, paying to replace roofs for even minor damage," Ann Frohman, a former Nebraska insurance commissioner, said. Frohman herself received nothing on a $6,500 storm damage claim last year after agreeing to a higher deductible.
Farmers Insurance had the highest nonpayment rate at 52%, followed by USAA at 51%, Allstate at 47%, Liberty Mutual at 41% and State Farm at 31%, according to the analysis of National Association of Insurance Commissioners filings. Insurers have raised deductibles, introduced separate wind and hail deductibles in high-risk areas, and tightened criteria for roof replacements — a key driver of the rising nonpayment rates, industry analysts and executives said.
The trend leaves homeowners funding repairs out of pocket while still facing potential rate increases or policy nonrenewal. In Florida alone, insurers declined payments on claims from more than 95,000 homeowners after Hurricane Milton in October 2024, with damage below the deductible cited as the leading reason.
How insurers are tightening claims
Insurers are responding to a yearslong run of postpandemic losses in their home-insurance businesses by getting tougher on claims, according to industry executives. One way they have done this is to raise deductibles from a dollar value to a percentage of a home's insured value, and to apply separate deductibles for wind and hail damage in catastrophe-prone states.
Sean Harper, chief executive of tech-based insurer Kin Insurance, said its high nonpayment rate — 58% in 2025 — is "ironically due to some of the really customer-friendly stuff that we do," such as encouraging customers to file claims quickly via text after a storm. That ease of filing can lead to more claims that are later withdrawn or fall below the deductible.
The national average homeowners insurance premium has risen to $2,800, up more than 40% over the past year, according to LendingTree data. Consumers hit by rising premiums are themselves selecting higher deductibles to save money, insurers and consumer advocates said, setting themselves up for disappointment when they file claims.
The cost of a denied claim
Vicky Weidner, an Oklahoma homeowner, paid around $10,000 a year to State Farm for home insurance for at least a decade. After a 2024 hailstorm damaged her roof, State Farm assessed the damage at $2,000 — well below her deductible — and paid nothing. State Farm later dropped her policy, citing the claim even though it resulted in zero payout.
"There were shingles with holes in them falling off the roof," Weidner said. "State Farm came out and inspected the roof and said, 'Nope, you're good.'"
Weidner is among hundreds of Oklahoma homeowners suing State Farm for allegedly using a narrow definition of hail damage absent from the policy language. Jeff Marr, her lawyer, said earlier cases settled by State Farm had revealed its "secret playbook" to replace fewer roofs. "They have weaponized their claims department," he said.
A State Farm spokesman declined to comment on Weidner's case but said a "single homeowner dispute, selective interpretations of data, or baseless allegations from a lawsuit do not paint an accurate picture of our level of customer care."
Representatives of the top five insurers said they investigate all claims and ensure amounts owed under policies are paid promptly, fairly and fully. A USAA spokesman said fewer than 6% of its claims were denied when accounting for claims below deductibles, those not pursued by customers or those later reopened and paid.
The rising nonpayment rates signal that homeowners can no longer rely on insurance as a guaranteed safety net. The next catalyst for the sector will be the 2026 Atlantic hurricane season, which runs from June through November, and how insurers handle claims from any major storms.
This article is for informational purposes only and does not constitute investment advice.
