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Homeowners are facing rising insurance and increasingly limited options for carriers in some locales, and the problem is likely to worsen, warns a new report from Insurify, a virtual insurance company. The report blames severe weather, inflation and rising homebuilding costs.
The average insurance rate is $2,377 annually, but homeowners nationwide are expected to see a 6% uptick in average premiums by the end of the year. That’s on top of a 20% increase over the two years prior. Also, some coastal areas and inland locales could see double-digit percentage rises this year, according to Insurify’s 2024 Insuring the American Homeowner report. Places like Florida, Louisiana and Oklahoma are expected to see the highest annual spikes in the country. The report further warns that weather forecasters are predicting a lively hurricane season, which likely will lead to additional rate increases into 2025 in many coastal areas.
Some homeowners, such as those in South Florida, have been facing an extra $500 a month in insurance costs, the report finds. Plus, large insurers such as State Farm, Allstate and Farmers are leaving places like California and Florida that are perceived as high risk. More than a dozen home insurance companies also have declared insolvency since 2019.
“It’s possible that the highest-risk areas will become uninsurable,” says Betsy Stella, vice president of Carrier Management and Operations at Insurify. “However, where there’s demand, typically a supplier will appear. The question will be—at what cost?”
Where Insurance Costs Could Rise the Most
The following areas likely will face the steepest increases in insurance rates by the end of the year, many with double-digit percentage rate hikes, according to Insurify’s report:
- Louisiana
Projected change in 2024: 23%
Projected annual rate (2024): $7,809 - Maine
Projected change in 2024: 19%
Projected annual rate (2024): $1,571 - Michigan
Projected change in 2024: 14%
Projected annual rate (2024): $2,095 - Utah
Projected change in 2024: 13%
Projected annual rate (2024): $1,541 - Montana
Projected change in 2024: 12%
Projected annual rate (2024): $1,997 - South Carolina
Projected change in 2024: 11%
Projected annual rate (2024): $3,410 - North Carolina
Projected change in 2024: 10%
Projected annual rate (2024): $2,327 - Illinois
Projected change in 2024: 10%
Projected annual rate (2024): $2,245 - Connecticut
Projected change in 2024: 9%
Projected annual rate (2024): $1,927 - Nevada
Projected change in 2024: 9%
Projected annual rate (2024): $1,336
Priciest Areas Overall for Home Insurance
The insurance rates homeowners pay can vary considerably across the country. Vermont homeowners tend to pay the least, at an average annual rate of $918, whereas Florida homeowners pay the highest—at nearly $11,000 annually.
“The states with the highest home insurance costs are prone to severe weather events,” the Insurify report explains. “Florida, Louisiana, Texas, Arkansas and Mississippi are vulnerable to hurricanes. Texas, Colorado and Nebraska face a growing wildfire risk. Nebraska, Texas and Kansas are at high risk for tornadoes, being located in an area nicknamed ‘Tornado Alley.’”
Adding to financial woes, many of the areas with the highest insurance costs tend to be located in states with the highest poverty rates. Six of the 10 states with the highest home insurance rates in 2023 were among the 10 poorest states in the country, according to U.S. Census Bureau data. All but two—Nebraska and Colorado—have a higher poverty rate than the U.S. average of 11.5%.
What Owners Can Do
As homeowners see their rates rise, Insurify suggests a few ways to help manage the costs, such as:
- Gather quotes. Compare quotes from multiple insurers.\
- Add home protections. For example, in wildfire zones, homeowners could install dual-pane windows with tempered glass to better withstand fire-induced breakage, nonflammable sidings, like stucco or fiber cement, and home-hardening features to help mitigate damage. In hurricane-prone areas, owners may want to install impact windows and hurricane shutters to protect their home against flying debris. Garage doors rated for wind speeds above 130 miles per hour or hardier roofs are also good options. “Storm-resistant features are an upfront investment, but some insurers offer discounts for these upgrades,” the report says. Also, such add-ons could be attractive to home buyers when homeowners go to sell one day.
- Check if you have enough coverage. Even as rates rise, homeowners shouldn’t be tempted to skimp out on coverage; they could find themselves in even greater financial hardship if disaster ever strikes. Water or flood damage was the most common reason homeowners filed a claim last year, yet 60% of homeowners don’t have flood coverage, according to the Insurify report. Flood damage is not covered by standard homeowners insurance policies and requires owners to take out separate policies.
