In this article, we will be analyzing home insurance in the US while covering the 15 states with the most expensive home insurance in the country. If you wish to skip our detailed analysis, you can move directly to the 5 States with the Most Expensive Home Insurance in the US.
Home Insurance in the US
Home insurance is a package policy that protects households against property damage from natural disasters, theft, and liability from inflicting bodily injury or property damage on others. Homeowners can also add popular optional coverages such as earthquake, flooding, or water backup coverage. Those who reside near a fault line can benefit from earthquake coverage while water backup coverage can cover losses where water backs up through sewers or drains. Home insurance is not required by law. However, lenders might require homeowners insurance during house financing. Most of the time, private communities also require home insurance.
Homeowners need to pay a premium to keep their home insurance policy active. They can file a claim and receive compensation for damages to their home and belongings in case of on-time paid premiums. These premiums are estimated by insurance companies on the basis of a variety of factors. Location plays a significant role in this case since it depicts how vulnerable a place is to external threats such as hurricanes, tornadoes, strong winds, or even harsh weather conditions which could potentially damage the house. Other than location, credit scores and claims history also predict the premium. As the two factors determine the probability of a homeowner filing a claim, a good credit score homeowner typically pays a lower premium as compared to one who doesn't make payments on time and hence, classifies as a higher risk for insurance providers.
What's Happening in the Market?
Natural calamities especially have a huge influence on the US insurance industry. Regions more prone to disasters occurring naturally tend to have higher home insurance costs. In 2022, hurricane Ian destroyed numerous houses in southwest Florida. This hurricane likely caused billions in insured losses from Florida to the Carolinas and was deemed one of the costliest storms in Florida’s history. The rising extreme weather events have resulted in higher insurance costs for homeowners.
On June 19, CNN reported that home insurance costs have been on the rise in the United States. Other than climate change, increasing costs of repair or rebuilding due to inflation also tend to affect insurance costs. Many home insurance providers have left the Florida market due to high vulnerability to natural disasters. This has driven up premiums almost four times higher for the residents of the state. Similarly, wildfire risk in California has forced out many companies who cite that the cost to insure new home customers in California is much higher than the price they would pay for policies, given the existing risks. Since insurance companies are refusing to write new insurance in risk-prone states, insurance is becoming increasingly harder to find.
As a result of the aforementioned circumstances, state-backed insurance providers are being viewed as the last option due to bigger companies leaving the market and smaller companies going bankrupt. An example of this is Louisiana where 17% of homeowners insurance policyholders got their policies canceled in 2022. Furthermore, 19% of state residents tried to get a homeowner’s insurance policy but 55% of them faced difficulty in getting one.
Companies Facilitating Homeowners with Insurance
Companies assisting US residents with home insurance include The Allstate Corporation (NYSE:ALL), Chubb Limited (NYSE:CB), and Erie Insurance Group (NASDAQ:ERIE).
The Allstate Corporation (NYSE:ALL) is a popular American insurance company offering a diverse set of insurances including home insurance. On September 21, the companyreported its catastrophe losses for the month of August. These losses amounted to $551 million and included 18 events. Half of these losses were relevant to the Maui wildfire. Implemented rate increases and inflation in insured home replacement costs resulted in a 13.2% increase in homeowners insurance average gross written premium in August as compared to the same month in 2022.
Chubb Limited (NYSE:CB) is the parent company of the global insurance provider, Chubb which offers insurance products covering property and casualty, accident and health, reinsurance, and life insurance. Chubb’s homeowner insurance policies are available across all US states. On October 24, the company reported its financial results for the fiscal third quarter of 2023. The company reported earnings per share of $4.95, beating EPS estimates by $0.53. The revenue for the quarter amounted to $11.65 billion, up 8.42% year-over-year and ahead of the revenue estimates by 17 million. In North America commercial, property, and casualty premiums were up 10.5% while the company’s large U.S. middle market business had its best growth of the year at 16.3%.
Based in Pennsylvania, Erie Insurance Group (NASDAQ:ERIE) is another property and casualty insurance company offering auto, home, business, and life insurance using a network of independent insurance agents. It operates in numerous US states including Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin. On October 19, the companyreported a major milestone after being ranked by Forbes as one of the top insurance companies in the United States for 2024. The customer service and satisfaction offered by the Erie Insurance Group were attributed to the extensive network of agents who meet customer needs by customizing coverage for them while exposing them to the company’s discounts and top-notch service.
Now that we have taken a look at the home insurance scenario in the US, we can move to the 15 states with the most expensive home insurance in the country.
15 States with the Most Expensive Home Insurance in the US
15 States with the Most Expensive Home Insurance in the US
Our Methodology:
In order to compile a list of the 15 states with the most expensive home insurance in the US, we acquired the latest data on state-level home insurance rates. This data was available onBankrate, a leading consumer financial services company. The latest data was available, as of 2023. We selected average annual premium as our primary metric while average monthly premium was chosen as our secondary metric.
Finally, we ranked the 15 states with the most expensive home insurance in the US based on their average annual premium and average monthly premium, on a priority basis.
15 States with the Most Expensive Home Insurance in the US
15. Missouri
Average Annual Premium: $1,769
Average Monthly Premium: $147
The average annual premium for home insurance is $1,769 in Missouri which ranks it as one of the US states with expensive home insurance in the country. A high crime rate and risk of tornadoes and storms make home insurance costly in the state. Expensive cities for home insurance within the state include South West City, Pineville, and Anderson.
14. New Mexico
Average Annual Premium: $1,789
Average Monthly Premium: $149
The 15 states with the most expensive home insurance in the US ranks New Mexico as well. The average annual premium for home insurance is $1,789 in the state. The state’s arid climate increases the risks of natural disasters.Rowe, Serafina, and Encino are costly places for New Mexico’s homeowners.
13. North Dakota
Average Annual Premium: $1,900
Average Monthly Premium: $158
The average annual premium for home insurance is $1,900 in North Dakota which makes it one of the many US states with expensive home insurance. The state faces a harsh winter season. Hebron, Regent, and Elgin are comparatively expensive places for homeowners in North Dakota.
The Allstate Corporation (NYSE:ALL), Chubb Limited (NYSE:CB), and Erie Insurance Group (NASDAQ:ERIE) are known home insurance providers in the United States.
12. Mississippi
Average Annual Premium: $1,900
Average Monthly Premium: $158
Mississippi offers expensive home insurance as the average annual premium is $1,900 in the state. The state's coastal regions are vulnerable to tropical storms and hurricanes. Within the state, homeowners experience high home insurance costs, especially in Diamondhead, Leakesville, and New Augusta.
11. Minnesota
Average Annual Premium: $1,930
Average Monthly Premium: $161
The average annual premium for home insurance is $1,930 in Minnesota which ranks it as one of the 25 states with the most expensive home insurance in the US. Homeowners are vulnerable to higher costs, especially in areas such as Delano,Montrose, and Winsted. The state has unpredictable winter weather which adds to the cost.
10. Texas
Average Annual Premium: $1,967
Average Monthly Premium: $164
Homeowners in Texas can seek wind coverage, flood insurance, and coverage for seepage and leakage. Currently, the average annual premium for home insurance is $1,967 in the state. Deer Park,Hale Center, and Richardson are costly cities in this regard.
9. Florida
Average Annual Premium: $1,981
Average Monthly Premium: $165
Florida is another US state with expensive home insurance. The average annual home insurance premium is $1,981 in the state. Expensive Florida cities for home insurance include Pensacola, Panacea, and Saint Marks. Floods, tropical cyclones, severe storms, tornadoes, and wildfires have a substantial impact on homeowners in Florida.
8. Louisiana
Average Annual Premium: $1,992
Average Monthly Premium: $166
The average annual premium for home insurance is as high as $1,992 in Louisiana. Hence, Louisiana is one of the states with costly home insurance in the US. Hahnville, Luling, and Saint Rose offer expensive home insurance rates within the state. Louisiana has also witnessed damage as a result of natural disasters.
7. Kentucky
Average Annual Premium: $2,009
Average Monthly Premium: $167
The 15 states with the most expensive home insurance in the US include Kentucky as well. Currently, the average annual premium for home insurance is $2,009.Hurricanes, tornadoes, and floods are common risks for the state residents.Holyrood, Derby, and Florence are costly cities in this regard.
Investors who wish to seek exposure to the US home insurance market can look up The Allstate Corporation (NYSE:ALL), Chubb Limited (NYSE:CB), and Erie Insurance Group (NASDAQ:ERIE).
6. South Dakota
Average Annual Premium: $2,105
Average Monthly Premium: $175
South Dakota ranks as one of the most expensive US states in terms of home insurance cost. The average annual home insurance premium is $2,105 in the state. Hot summers and extremely cold winters are weather extremes prevalent in South Dakota. Costly places for home insurance in the state include Black Hawk,Belvidere, and Wasta.
