Dramatic Rise in Homeowners Insurance Rates
Homeowners insurance premiums have experienced a significant surge, increasing by 24% between 2021 and 2024. The average annual cost has risen from $2,656 to $3,303 during this period. This increase is more than twice the rate of inflation during the same timeframe. According to a report from the Consumer Federation of America (CFA), the rise in insurance rates has not been uniform across the United States, with some states being affected more severely than others.
States with the Sharpest Increases
The most significant spike was observed in Utah, where insurance rates soared by 59%, from an average of $1,126 in 2021 to $1,795 in 2024. Utah Insurance Commissioner Jon Pike attributes this sharp increase to more homes being built in wildfire-prone areas and the insurance market adjusting for inflation after being traditionally underpriced.
The top five states with the biggest increases in homeowners insurance rates are:
- Utah: +59%
- Illinois: +50%
- Arizona: +48%
- Pennsylvania: +44%
- Nebraska: +35%
“The skyrocketing price of insurance premiums is deepening the housing crisis… and homeowners across the country are feeling the strain,” said Sharon Cornelissen, CFA Director of Housing. The CFA report analyzed data from Quadrant Information Services, which collected rates from over 100 insurance companies across nearly every ZIP code for a homeowner with a mid-range credit score and a $350,000 replacement value policy.
Factors Driving Up Premiums
Several factors have contributed to the increase in homeowners insurance premiums:
- Climate Change: Wildfires, flooding, and severe weather events are damaging more homes.
- Inflation: Rising labor, construction, and building material costs have made homes more expensive to build and repair.
- Reinsurance: The reinsurance market is tight, and rates have increased as providers pass the cost onto customers.
- Weak Regulatory Oversight: State insurance commissioners have given insurers more leeway in raising premiums.
Most Expensive States to Insure Homes
The CFA identifies Florida, Louisiana, Oklahoma, Kentucky, and Nebraska as the most expensive states to insure homes. In Florida, a homeowner with fair credit and $350,000 in dwelling coverage could expect to pay $9,462 annually, or $789 monthly, in 2024. This represents a nearly 30% increase from 2021 when the same policy would average $7,344.
Ways to Lower Homeowners Insurance Rates
Despite the rising premiums, homeowners can take steps to reduce their monthly costs:
- Bundle Home and Car Insurance: Many insurers offer discounts for bundling home and auto policies.
- Review and Adjust Coverage: Ensure you’re not over-insured by reviewing your policy and adjusting coverage as needed.
- Raise Your Deductible: Increasing your deductible can lower your premiums, but ensure you can afford the out-of-pocket costs.
- Improve Your Credit: Maintaining a good credit history can help lower your insurance premiums.
- Comparison Shop: Look for insurers that offer competitive rates and suitable coverage.
The CFA’s report urges increased action by both state and federal governments to regulate insurers and protect consumers. As the insurance landscape continues to evolve, homeowners must stay informed and adapt to manage their insurance costs effectively.
