home insurance prices soar in top 5 states

Home insurance prices have experienced a significant surge, particularly in the top five states that are prone to natural disasters. According to a report from insurance marketplace Policygenius, the average home insurance costs in the United States increased by 21% at renewal from May 2022 to May 2023. This rise comes on top of a 12% increase reported in the previous year, with experts predicting double-digit hikes in home insurance prices for 2024. Florida has the highest increase, with home insurance prices soaring by 68% in just two years, nearly double the national average of 35%. Other states, such as New Mexico, Colorado, Idaho, and Texas, also saw significant premium increases. The report attributes these rising prices to record-high insurance industry losses, severe climate disasters, prolonged wildfire seasons, and higher construction prices. These circumstances have made it harder for homeowners to find coverage, as insurers reduce exposure in high-risk areas. To mitigate the financial impact, consumers are advised to shop around, compare quotes, and consider other strategies for saving money on home insurance.

Where Home Insurance Prices Are Rising Fastest

Home insurance prices are soaring, and homeowners in states prone to natural disasters have been hit the hardest. According to a September report from Policygenius, a leading insurance marketplace, average home insurance costs increased by 21% from May 2022 to May 2023. This jump comes on top of a 12% premium increase reported the previous year, and experts predict that home insurance prices could see double-digit increases again in 2024.

No state has experienced a more significant increase than Florida, where the average price of home insurance rose by a staggering 68% in just two years—a rate nearly double the national average of 35%. The high costs of home insurance in Florida can be attributed to several factors, including the risk of hurricanes and flooding, recent storms, expensive roof litigation for insurers, and growing concerns about climate change. Since January 2021, at least nine Florida property insurance companies have gone out of business, and other insurers have abandoned the state due to the high cost of offering policies, worsening the situation for homeowners seeking coverage.

States that are prone to wildfires and tornadoes have also experienced some of the largest average premium increases over the past two years. Let’s take a closer look at the top five states where home insurance prices have risen the fastest:

Florida: 68% ($1,127 to $1,896)

Florida has long been known for its expensive home insurance due to the risk of hurricanes and flooding. However, prices have risen sharply since 2021 due to recent storms, high costs for insurers related to roof litigation, and mounting concerns about climate change. The challenging market conditions have led to multiple property insurance companies going out of business and other insurers abandoning the state.

New Mexico: 47% ($855 to $1,255)

New Mexico experienced destructive wildfires in recent years, contributing to a significant increase in home insurance premiums. The increased risk of wildfires and the associated costs have made it more expensive for homeowners to obtain insurance coverage.

Colorado: 46% ($1,390 to $2,031)

Colorado also faced historically destructive wildfires, driving up home insurance prices. The prolonged wildfire seasons and the resulting damage have led to insurers reducing their exposure in certain high-risk areas, making it more challenging for homeowners to find affordable coverage.

Idaho: 46% ($552 to $804)

While not typically associated with natural disasters, Idaho has also seen a substantial increase in home insurance prices. The reasons behind this increase include the rise in insurance industry losses, more severe climate disasters, prolonged wildfire seasons, and higher construction prices.

Texas: 46% ($1,471 to $2,141)

Texas is another state grappling with rising home insurance premiums. The combination of increasing insurance industry losses, severe climate disasters, prolonged wildfire seasons, and higher construction prices has made it more expensive for homeowners to protect their properties.

These five states have experienced the most significant increases in home insurance prices over the past two years. However, the national average annual cost of home insurance has also climbed steadily, reaching about $1,700 in 2023, up from $1,175 in 2019, according to a December report from insurance firm Matic.

The rise in home insurance prices can be primarily attributed to the impacts of natural disasters and market trends. States affected by hurricanes, destructive wildfires, and other severe climate events are facing increased risks and insurance industry losses. As a result, insurers have had to raise premiums or reduce coverage in high-risk areas to remain profitable.

Wildfire risk, in particular, has made it more expensive for homeowners in affected states to obtain insurance coverage. Insurers are actively reducing their exposure in certain areas, making it harder for some individuals to find coverage at all.

To cope with rising home insurance costs, homeowners can employ various strategies for saving money:

Shop around and compare quotes from multiple companies

By shopping around and soliciting quotes from several insurance companies, homeowners can better understand the available options and potentially find more competitive rates. It’s important to evaluate the coverage and deductibles offered by each company to make an informed decision.

Consider opting for a higher deductible

Choosing a higher deductible can help lower the premium cost. However, homeowners should carefully assess their financial situation and ability to cover a higher out-of-pocket expense in the event of a claim.

While the challenges of rising home insurance prices persist, homeowners can leverage these strategies to potentially reduce their costs. It’s essential to stay informed about the best homeowners insurance companies and keep track of any changes or updates in the industry.