Home insurance prices are soaring, and homeowners in states prone to natural disasters have been hit the hardest.
Nationally, average home insurance costs increased 21% at renewal from May 2022 to May 2023, according to a September report from Policygenius, an insurance marketplace. This jump comes on top of a 12% increase in premium home insurance reported by the company the previous year, and experts predict that home insurance prices could see double-digit increases again in 2024.
No state has fared worse than Florida, where the average price of home insurance has increased 68% in two years, nearly double the national average of 35%.
Home insurance has always been expensive in Florida due to the risk of hurricanes and floods. But prices have risen sharply since 2021 due to recent storms, high costs to insurers related to roofing disputes and growing concern about climate change, according to the report. At least nine Florida property insurance companies have gone out of business since January 2021, and other home insurers have left the state because it is too expensive to offer policies, making matters worse for homeowners looking for coverage.
Wildfire and tornado-prone states also ranked among the top for the largest average premium increases over the past two years.
Where home insurance prices are rising fastest
Here are the top five states where home insurance became more expensive from May 2021 to May 2023.
- Florida: 68% ($1,127 to $1,896)
- New Mexico: 47% ($855 to $1,255)
- Colorado: 46% ($1,390 to $2,031)
- Idaho: 46% ($552 to $804)
- Texas: 46% ($1,471 to $2,141)
The Policygenius report cites “record losses in the insurance industry, more severe weather disasters, extended wildfire seasons and higher construction prices” as some of the reasons for rising home insurance premiums.
The national average annual cost of home insurance rose to about $1,700 in 2023, up from $1,175 in 2019, according to a December report from insurance company Matic.
Some of the states where home insurance costs are skyrocketing have been hit by natural disasters like Florida (Hurricane Ian). Additionally, both New Mexico and Colorado had the most destructive wildfires in their history.
The risk of wildfires isn’t just making it more expensive to get insurance in affected states. It is also making it harder for some people to find coverage as insurers are reportedly reducing exposure in some areas.
“While most home insurance providers have increased premiums or reduced coverage in high-risk areas to remain profitable, others have gone out of business entirely due to the turbulent market,” the Policygenius report states.
If you think you’re overpaying for home insurance, it’s smart to shop around, comparing quotes from multiple companies. You may want to consider opting for a higher deductible, which will reduce your premium, among many other strategies for saving money on home insurance.
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