According to the Insurance Information Institute (III), the cost of homeowners insurance has “risen significantly since the pandemic.”
Rates increased by an average of 12.2% between 2017 and 2021. Homeowners insurance premium hikes are now outpacing the current rate of inflation, and the III predicts the increases are likely to continue.
So, we know rates are rapidly rising, but does where you live play into this? Absolutely. Location plays a big role in how likely you are to be exposed to different risks that cause damages or loss to your property. And the more risk you’re exposed to, the more you’re likely to pay in premiums.
In this article I’ll review:
- 10 Most Expensive States for Homeowners Insurance
- 10 Least Expensive States for Homeowners Insurance
- Why Homeowners Insurance Rates Are Going Up
- How To Save Money on Homeowners Insurance
This article was updated in May 2023 and I review it every two months. Detailed notes on updates can be found here.
10 Most Expensive States for Homeowners Insurance
With its subtropical location and risk for hurricanes, it’s probably no surprise that homeowners insurance is pricey in Florida. I’ve written more about the state’s current insurance crisis and why homeowners insurance is so expensive in Florida. But you might be surprised to see that Florida doesn’t top the list of most expensive states for homeowners insurance.
(for $300-399k insurance) |
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According to Zillow’s Home Value Index, the typical home value as of May 2023 is $334,269. I compared the average cost for $300-399k insurance in each state based on home insurance data from the National Association of Insurance Commissioners (NAIC).
10 Least Expensive States for Homeowners Insurance
Across the country, the average annual cost for $300-399k total insurance is around $1,307. In Utah – the state with the cheapest rate for homeowners insurance – annual premiums cost just over half of that.
What other states have lower than average premiums? I’ve listed the ten least expensive states below.
(for $300-399k insurance) |
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Once again, I compared the average cost for $300-399k total insurance in each state using data from the NAIC’s 2022 Home Insurance Report.
Why Homeowners Insurance Rates Are Going Up
I’ve written in-depth about factors that impact your cost of homeowners insurance, but what’s leading to rising premiums across the country? Data compiled by the III suggests three key things:
1. More people are moving into areas with extreme weather.
A Redfin study on climate and real estate found that between 2016 and 2020, “U.S. counties with the largest share of homes facing high heat, drought, fire, flood and storm risk saw their populations grow.”
But populations decreased in “the 50 counties with the smallest percentage” of homes facing these same risks.
The more homeowners there are in a high-risk area, the more risk insurance companies take on if they offer coverage in those areas.
2. Damages and loss caused by extreme weather are increasing.
As more people move to areas with extreme weather, the impact of weather-related events intensifies. To make matters worse, data from the United States Environmental Protection Agency (EPA) shows that extreme weather events are becoming “more frequent or more intense” over time.
This also leads to increased property damage. The III reports that “average insured natural catastrophe losses have risen nearly 700 percent since the 1980s.”
3. The cost to repair and rebuild property is going up.
According to the National Association of Home Builders (NAHB), the costs of both home building materials and home building services are up 33% and 39% respectively since the onset of the pandemic in early 2020.
As the costs of materials and labor increase, so does the total amount it would take to rebuild or repair your home. This is why you should update your homeowners coverage limits every 3 years to be sure that your coverage is keeping up with the change in costs.
How To Save Money on Homeowners Insurance
Although the cost of homeowners insurance is likely to continue going up, there are ways you can save money on your premiums. Here are a few:
1. Shop around.
Whether you’re a new homeowner or it’s time to renew your policy, it’s always a good idea to get quotes from multiple insurance companies. Be sure you know how much total insurance you’d need to rebuild your home and cover your property, then compare rates to make sure you get a fair price for coverage. Check out our list of the best homeowners insurance companies and ones to avoid for more tips on what to look for from an insurance company.
2. Learn what discounts your insurance company offers.
Many insurance companies offer similar discounts to their members, which can help lower your premiums. You can check your insurer’s website or call its customer service department to see what discounts may be available to you. Common discounts include:
- Bundling: a discount for having two or more insurance policies (such as auto and home insurance) with the same insurer.
- Home safety and security features: discounts for devices or features in your home that reduce the risk of loss or damage, such as having an alarm system, smoke detectors, fire alarms, and/or deadbolts.
- Loyalty: a discount for remaining with the same insurer over a set period of time.
3. Don’t file small claims.
Money expert Clark Howard advises that you should file a claim only in the event of a catastrophe. “Think of homeowners insurance as a ‘use it and lose it’ kind of proposition,” he says. Not only can filing claims lead to your homeowners insurance rate increasing, but in the worst case scenario it can cause your insurer to drop you. This tip also connects to discounts, because many companies offer a claims-free discount to members who haven’t filed a claim within a set period of time.
4. Increase your deductible.
The more you have to pay out of pocket before your coverage kicks in, the less likely you are to file smaller claims. Having a high deductible means you’re taking on more responsibility for any claims you file, so insurance companies reward customers who take on more risk with lower premiums.
On the flip side, having a lower deductible leads to a higher premium. If you can afford a higher deductible, it’s a great way to save money upfront. But if you need to file a claim and your deductible is too high, it can cost you more in the long run. Aim for an amount that you can afford to pay if you unexpectedly need to repair or replace your property.
Final Thoughts
What you pay for home insurance depends on several factors. Many of those factors – like what natural disasters you’re exposed to – are out of your control. But property damaging events are becoming more frequent, and the costs to build and repair property are also on the rise. So, it’s no surprise that the cost of homeowners insurance is also on the rise.
That said, there are a few things you can do to make sure you’re getting the lowest rate possible for where you live. Be sure to shop around for quotes, always ask about discounts, and avoid filing small claims. Also, if you can afford a higher deductible, you can save even more money on your insurance.
Article Updates
- May 8, 2023: Article updated to reflect most current data from the NAIC and Zillow. Notable changes include:
- Updated the average United States home value based on Zillow’s current home value index (ZHVI).
- Updated the overall average annual cost for $300-399k total insurance based on NAIC data; updated average annual cost for $300-399k total insurance for all states listed in the article.
- For the most expensive states: Florida moved up from #3 to #2, switching places with Louisiana. Rhode Island was previously number ten, but is now the ninth. Kansas was previously #9, but has dropped off the list, and Colorado has joined the list at #10.
- For the least expensive states: Nevada and Wisconsin have changed places, with Nevada moving from third to fourth and Wisconsin moving from fourth to third.
