Home insurance claims severity hit an all-time high in 2025, driven by catastrophic wildfire losses that shattered previous industry records. According to a new LexisNexis Risk Solutions report released July 22, all-peril claims severity reached its highest level in at least seven years, increasing 25.9% from 2024 and surging 93.2% compared to 2019.
Fire and lightning emerged as the defining perils of 2025, with loss costs jumping 76.8% and severity climbing 67.3% year over year. The dramatic spike was largely driven by the January 2025 Los Angeles wildfires, including the Palisades and Eaton fires, which cost an estimated $61.2 billion in insured losses—making them the costliest wildfire in U.S. history.
The scale of the 2025 LA fires dwarfed previous records. The 2018 Camp Fire, the prior costliest wildfire on record, generated approximately $12.4 billion in insured losses, according to Verisk. The 2025 fires produced roughly five times that amount, underscoring how a single catastrophic event can reshape the entire industry’s loss landscape.
Beyond fire and lightning, the broader insurance picture revealed a shift in claim patterns. While overall claim frequency fell 23.8% from 2024 to 2025, the higher severity of individual claims more than offset the fewer number of losses. The U.S. home insurance industry experienced 23 climate disasters with $1 billion or more in damages in 2025, totaling $115 billion in damages. The Los Angeles wildfires accounted for more than half of that total, demonstrating the concentration of risk in catastrophic fire events.
LexisNexis Vice President George Hosfield noted that insurers face a “perfect storm” of rising severity, inflation-driven replacement costs, and shifting loss patterns. The data underscores the need for carriers to use multi-source datasets and granular property intelligence to assess risk more accurately and adapt to volatile market conditions. Non-weather-related perils also contributed to rising costs: liability claims severity increased 12.8% year over year, reflecting what insurers term “social inflation”—the phenomenon of liability claims costs rising above general economic inflation due to increasing litigation expenses.
Sources
- PR Newswire — 2026 LexisNexis U.S. Home Insurance Trends Report, released July 22, 2026, detailing all-peril severity increases and fire/lightning loss cost and severity figures
- Verisk — “The LA Fires Changed the Wildfire Claims Landscape,” May 15, 2026, comparing 2025 LA fires insured losses to the 2018 Camp Fire record
- LexisNexis Risk Solutions — Official press release and report findings on 2025 claims severity reaching all-time high
