States with Fastest Rising Home Insurance Rates
Americans continue to feel the sting of rising prices. As measured by the consumer price index, inflation has increased by 8.3% over the past 12 months. But some costs increase much faster.
Take home insurance premiums. The cost of insuring your home is up 12.1% year on year, according to Policygenius. And depending on where you live, things can be even worse: homeowners in three states have seen their premiums rise at more than twice the rate of inflation.
Plus, rising building material costs mean things could be more expensive than expected if you actually have to use your insurance.
“It’s a two-pronged effect,” says Pat Howard, editor and chartered property and casualty insurance adjuster at political genius. “Not only are premiums getting more expensive, but with replacement costs rising, you could find yourself underinsured.”
Here are the 10 states where homeowners insurance premiums have seen the biggest year-over-year increases, according to Policygenius.
- Arkansas: 18.5%
- Washington: 18.1%
- Colorado: 17.5%
- Texas: 16.0%
- Oregon: 15.4%
- Arizona: 14.8%
- Utah: 14.1%
- Minnesota: 13.9%
- North Carolina: 13.7%
- Illinois: 13.6%
Arkansas’ rhythmic increase equates to a $228 rise in the average annual premium from 2021, bringing the average annual cost of a policy to $1,235.
The biggest increase in terms of gross dollar amount belongs to Oklahoma, with the Sooners paying more than $257 more per household than in 2021. The smallest increase belongs to New York, whose residents saw an increase of $57.
Skyrocketing inflation is one of the main culprits for the increase in premiums. Home insurance coverage is based on the cost of rebuilding your home, and this may have increased significantly as the price of many building materials has risen and supply chain issues have made the construction process more expensive.
“Diesel fuel, copper, brass, lumber – all of these things affect how much it costs to replace a home,” says Loretta Worters, spokeswoman for the Insurance Information Institute. “Also, you don’t have enough contractors. And if the supply is lower, that means they charge more.”
The other important factor that increases your premiums: increasingly frequent natural disasters. Damage from tornadoes, hurricanes, storms, wildfires and other natural disasters so far amounts to more than $88 billion per year in the 2020s, according to the Insurance Information Institute. This is a sharp increase from the $52 billion in average annual losses in the 2010s and $37 billion in the 2000s.
If you own a home, especially in an area prone to natural disasters, what can you do? First, check that you are well covered. Your insurance payout should cover the cost of rebuilding your home, not its current market value.
“Your house might be worth $1 million, but it might cost a lot more to replace it,” says Worters.
Even if you think you’re properly insured, it’s worth checking regularly, says Howard.
“Let’s say your home is insured for $250,000. You renewed your policy three months ago and were assured that was the rebuild value,” he says. “But lumber has gone up 15% in those three months. Now your house is costing $300,000 to rebuild, and if it’s destroyed, you’ll lose $50,000 out of pocket.”
If, after talking with your insurance agent, you determine that you are adequately covered, start exploring ways to lower your premium. Your current agent may be able to help you on that front, says Howard.
“They’re likely to look at the discounts you’re entitled to, which vary from state to state,” he says. “You might have a home security system or a smart home or a water leak sensor. One of those might be a 10% discount.”
Beyond that, shop around with different insurance companies to see if a new company would be willing to offer you a cheaper premium. “Now more than ever, we recommend that you reach out and explore all of your options to see if you can get a lower rate,” says Howard.
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