Homeowners across the country are struggling with the rising cost of home insurance. But the biggest increases aren’t being felt in the most disaster-prone markets, according to a new report.
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According to a report from Insurify, a Cambridge, Massachusetts-based insurance comparison shopping website that examined insurance quotes for typical single-family homes, the states with the largest premium increases compared to the national average are not necessarily on the nation’s coast in 2023 and 2024.
The company expects home insurance costs to increase by an average of 6% in 2024. The national average annual rate in 2023 was $2,377 and is expected to rise to $2,522 this year. The figure does not include insurance against floods and forest fires, as these are usually considered additional insurance.
In Louisiana, homeowners should prepare for a much higher bill, with a projected increase of 23% in 2024, which would bring the average annual rate to $7,809.
Maine homeowners are likely to see the second-largest increase in premiums in 2024, up 19% to $1,571 per year. And in Michigan, Insurify forecasts a 14% increase to $2,095.
And strains on homeowners’ budgets will continue to grow, warns Insurify: “Early weather forecasts predict a devastating hurricane season, which would lead to further rate increases in 2025.”
According to Insurify’s analysis, these are the five states where insurance costs are rising the fastest:
|
Condition |
Average annual home insurance rate in 2023 |
Expected annual insurance rate in 2024 |
Percentage change year-on-year |
|
Louisiana |
$6,354 |
$7,809 |
23% |
|
Maine |
$1,322 |
$1,571 |
19% |
|
Michigan |
$1,840 |
$2,095 |
14% |
|
Utah |
$1,369 |
$1,541 |
13% |
|
Montana |
$1,778 |
$1,997 |
12% |
Florida homeowners are expected to pay the most for home insurance, with an average annual rate of $11,759 in 2024, an increase of 7%. The Sunshine State was followed by Louisiana and Oklahoma, where homeowners pay the third-highest home insurance costs at $5,711.
For California homeowners, premiums are expected to rise 8% to $1,921 in 2024.
Homeowners in Louisiana, Maine and Michigan are seeing the biggest increases in insurance premiums because these are “areas where insurers have the most catching up to do in adjusting prices to current climate risk,” says Chase Gardner, director of data research at Insurify, MarketWatch said in an interview.
In Louisiana, costs are rising because “companies that have increased their rates in the last six months have done so significantly” and are doing so to adjust prices to the risk of damage facing homes in the state, explained Gardner.
Louisiana is considered a higher risk state due to its vulnerability to storms like Hurricane Ida in 2021, which are becoming increasingly frequent and destructive as a result of climate change. Storms have previously damaged properties in the state and increased reconstruction costs, leading to higher costs for insurers. These companies have adapted their models and are now passing these costs on to consumers.
And that has become too much for some homeowners. Local news outlet WDSU News recently shared the story of a homeowner who sold her dream home in New Orleans due to rising insurance costs.
The effects of climate change have not spared countries that are less generally considered to be at risk of disasters.
In Maine, for example, rising sea levels are driving up insurance costs because “flooding and associated risks are increasing, such as storms or even flooding causing more trees to fall and land on homes, leading homeowners to file expensive claims to submit for their homes,” said Gardner. Because insurance companies have to pay these claims, they raise prices.
In Michigan, which saw the third-largest increase in home insurance premiums, the price increases are largely due to the rising costs of rebuilding damaged properties, Insurify said. According to insurance experts at Insurify, “It could simply be that Michigan has simply been undervalued in recent years and insurers are catching up to the risk they’ve seen,” Gardner said.
Overall, home insurance premiums are rising not only because of the increasing frequency of natural disasters, but also because “construction costs have increased everywhere since the coronavirus pandemic,” Robert Dietz, chief economist for the National Association of Home Builders, told MarketWatch. According to NAHB’s analysis of Bureau of Labor Statistics data, construction costs rose 38% between 2020 and 2024 after rising 10% from 2016 to 2020.
On the other hand, Insurify’s report found that Washington residents will see the smallest increase in home premiums in 2024, followed by Texas and South Dakota.