September 9, 2025
Illinois home insurance rates jumped 50% since 2021, with a 27.2% State Farm hike in 2025, as severe storms and inflation reshape one of the nation’s toughest markets.
Illinois homeowners are facing one of the most challenging insurance markets in recent history, with rates skyrocketing and coverage options becoming increasingly complex. As the Prairie State grapples with rising premiums and extreme weather events, understanding the current landscape has never been more critical for property owners.
The Illinois homeowners insurance market is experiencing unprecedented turbulence in 2025. State Farm is raising homeowners insurance rates in Illinois by a whopping 27.2% beginning Aug. 15, according to a filing with the state last month, affecting nearly 1.5 million policyholders. This dramatic increase represents one of the largest rate hikes in the state's history.
The numbers tell a sobering story. Illinois homeowners insurance premiums increased by 50% between 2021 and 2024, second only to Utah, according to the Consumer Federation of America. This surge far exceeds the national average increase of 24% over the same period, placing Illinois among the fastest-growing markets for insurance costs.
Current market conditions show that the average annual cost of home insurance in Illinois is $2,420, which is 15% higher than the national average of $2,110. However, with the recent State Farm increase, many policyholders can expect to pay significantly more, with the company's rate hike adding approximately $746 annually to the average premium.
Illinois faces mounting challenges from increasingly severe weather patterns. State Farm paid more in hail damage claims in Illinois than any other state except Texas, highlighting the state's vulnerability to damaging storms. The company reported that in 2024, it paid out $1.26 in claims for every $1 in premiums collected from Illinois homeowners.
In the 1980s, the U.S. averaged three "billion-dollar" weather events per year, but that grew to 28 in 2023, demonstrating the escalating frequency and severity of catastrophic weather events. For Illinois, tornadoes, wind, and hail drive most insurance losses, with these events accounting for 93% of catastrophic losses according to Allstate data.
The post-pandemic economy has significantly impacted repair and rebuilding costs. Labor shortages and increased material prices have created a challenging environment where insurers face higher claim payouts. This inflation in construction costs means that even minor repairs now cost substantially more than in previous years.
Illinois operates under a competitive regulatory framework with minimal rate oversight. Unlike some states with stringent rate approval processes, Illinois allows insurers more flexibility in setting premiums, which has contributed to the rapid rate increases seen in recent years.
Central and northern Illinois face particularly high wind and hail risks. Many carriers now implement separate deductibles for wind and hail claims, often structured as percentage-based deductibles rather than flat amounts. For a home with $300,000 in dwelling coverage and a 1% wind/hail deductible, homeowners would pay the first $3,000 of any wind or hail damage.
Standard homeowners policies exclude flood coverage, yet Illinois experiences frequent flash flooding across the state. The National Flood Insurance Program provides essential coverage that agents should recommend even for properties in low-risk flood zones, as flooding can occur anywhere.
Several endorsements have become increasingly important for Illinois homeowners:
For properties unable to obtain coverage in the standard market, the Illinois FAIR Plan provides basic fire and extended coverage. To qualify for this last-resort coverage, you must have been denied coverage at least three times by insurers in the standard market, and the property must meet basic safety standards.
Illinois homeowners pay significantly more than their neighbors for similar coverage:
*Based on $300,000 dwelling coverage with standard terms
The data reveals that Illinois homeowners pay substantially more than those in Wisconsin, Indiana, and Iowa, while Missouri residents face even higher premiums. Wisconsin's average annual cost of home insurance is $1,515, which is 28% less than the national average, making it particularly attractive compared to Illinois rates.
One important strategy for managing rising costs is shopping among multiple carriers. Rate variations between carriers can be substantial, with some insurers offering premiums well below the state average while others charge significantly more. The current market analysis shows companies like Chubb and Country Financial among the top-rated options for Illinois residents.
Homeowners can take several steps to potentially reduce premiums:
Working with experienced agents to optimize coverage rather than simply reducing limits can provide better value. Key areas include ensuring adequate dwelling coverage for current replacement costs, adding essential endorsements, and understanding deductible structures.
As Illinois homeowners navigate these challenging market conditions, finding a trusted insurance partner can make a difference. Covered's platform enables homeowners to compare policies from multiple carriers, helping them explore their options efficiently. While prices and coverage availability may vary by carrier, location, and property type, working with licensed professionals through Covered can provide guidance tailored to each homeowner's situation. This approach can help streamline the shopping process while ensuring customers receive expert assistance through the increasingly complex Illinois market.
Governor JB Pritzker has challenged State Farm's methodology, suggesting the company is shifting out-of-state costs to Illinois homeowners. "Hard-working Illinoisans should not be paying more to protect beach houses in Florida", Pritzker stated in response to the rate increases.
Legislative proposals are emerging to address the crisis. SB 268 was introduced requiring insurers to submit requests for approval to the Department of Insurance for any proposed rate increase, potentially limiting annual increases to 15%.
The Illinois homeowners insurance market shows few signs of stabilizing in the near term. With climate change continuing to drive severe weather events and construction costs remaining elevated, additional rate increases appear likely. Industry analysts suggest that homeowners should prepare for continued upward pressure on premiums while focusing on risk mitigation and strategic shopping to manage costs.
The current environment requires Illinois homeowners to become more sophisticated consumers, understanding their coverage needs, shopping regularly, and working with knowledgeable professionals to navigate an increasingly complex market. While the challenges are significant, proactive management can help minimize the impact of rising costs while maintaining essential protection for one of life's largest investments.
This article provides general information about Illinois’s homeowners insurance market based on available industry data as of 2025. Individual circumstances vary significantly, and premium quotes, coverage options, and policy terms differ by insurance company. Consumers should consult with licensed insurance professionals for specific coverage recommendations and current pricing. Information presented should not be considered as guaranteed outcomes or personalized insurance advice.
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*Savings claim based upon averaging actual anonymized savings data for dwelling-only insurance rates paid (from July 2023 - June 2024) by customers of two of Covered’s largest mortgage industry partners across twenty-seven (27) US states. Bundles and non-dwelling insurance coverages were excluded.
† Net Promoter Score (“NPS”)® calculation averages post-purchase customer satisfaction surveys from 9/24/2024 - 2/28/2025. NPS® is a market research metric measuring customer satisfaction with a scoring calculation that incorporates both detractor and promoter customer feedback.
Quotes are presented solely for your convenience. Savings may vary. Rates are subject to change based upon the specific coverage you select and other factors that apply to your situation. CA License #0M81402, doing business as Cubbard Insurance Solutions in California.
