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Highest Homeowners Insurance States

Author: Daniel Taylor

Home insurance premiums are on the rise. According to a January 2015 study conducted by the National Association of Insurance Commissioners (NAIC), the average homeowners insurance premium increased by 5.7% in 2012, following a 7.6% increase in 2011. And that was on top of a 3.3% increase in 2010. The national average homeowners insurance premium was $1,034 in 2012, according to the Insurance Information Institute (III), but residents in many states paid significantly more than that – more than double in Florida – for home insurance.

Who paid the most?

Here's a look at the states with the highest average annual homeowners insurance premiums based on the most current data available. And a few reasons why it costs so much to protect the roofs over these homeowners' heads.

1. Florida – $2084

Eight of the top 12 costliest hurricanes in U.S. history have struck Florida, says Loretta Worters, vice president, Insurance Information Institute. And, given that Florida also has the second highest total value of insured coastal property in the U.S., anticipated losses from a major natural disaster are high among the reasons Florida is ranked number one in terms of homeowners average premium. The high number of lightning strikes and sinkholes also drives up Florida's home insurance rates.

A sinkhole claimed an entire house in a Tampa suburb in March 2013. And even though such large and drastic sinkholes are rare, thousands of smaller sinkholes occur in the U.S. each year. The U.S. Geological Survey says the most damaging sinkholes occur in Florida, Texas, Alabama, Missouri, Kentucky, Tennessee and Pennsylvania. Although most homeowners insurance policies exclude coverage for sinkhole damage, Florida and Tennessee require home insurance companies to offer the coverage. According to the III, catastrophic ground cover collapse is mandatory in Florida while comprehensive sinkhole coverage is optional.

2. Louisiana – $1,742

Catastrophic losses stemming from hurricanes and related extreme weather events blew the home of the Big Easy high up on the list of most expensive home insurance rates. It's just one of three Gulf states in the top five most expensive states for home insurance due to the dollar amount of major catastrophic losses.

Lawsuits have an impact on rates, as well, says Worters. When insurers pay out on fraudulent claims, rates can surge to cover the resulting losses. And Louisiana was on the 2012/2013 watch list for being among the most litigious for home insurance-related claims.

3. Texas – $1,661

Everything really is bigger in Texas. And that goes for home insurance rates! In addition to hurricanes, Worters says hail damage is one reason the Lone Star State is high on the list of most costly home insurance premiums. Texas is also almost always one of the top five states for highest amount of catastrophic losses in the U.S. every year, according to the III.

4. Oklahoma – $1,501

In 2013 Oklahoma led the U.S. with catastrophic losses that topped nearly $2 billion, the most in the country, according to the III. Saddled with the eighth highest U.S. natural hazard risk by state ranked by the CoreLogic Hazard Risk Score – comprised of nine natural disasters including wildfire, flood, hurricane, tornado, storm surge and earthquakes – residents are forced to pay above-average home insurance rates.

5. Mississippi – $1,314

Like its neighbors Texas and Louisiana, Mississippi has seen its share of violent and damaging weather resulting in catastrophic home losses. And over time, those losses result in everyone in the region paying high prices for home insurance policies.

The Other Top Ten

Overall, a mix of catastrophic events, a state's natural hazard risk score, hail events, number and dollar amount of lawsuits related to insurance and coastal property values play a role in all home insurance premiums. The lower those scores and number of incidences, the less homeowners will pay for home insurance. However, when states reach high levels in these categories, the annual home insurance premium tends to spike.

The following states make up the balance of the top ten list for 2012, due to high incidences of hurricanes and other weather events, fraudulent insurance litigation and pricey coastal properties.

6. Alabama – $1,248

7. Rhode Island – $1,233

8. Kansas – $1,213

9. Connecticut – $1,160

10. New York – $1,158

The Bottom Line

Weather is one of the driving forces of home insurance rates. But the amount you'll pay to protect your home is also based on such factors as your deductible and your fire protection class, including the location of your fire department and the distance to the nearest fire hydrant, says Dario Campolattaro, CEO of Kelly Insurance Agency in Leesburg, Va.

Before buying a new home or home insurance policy, or renewing an existing policy, talk to your agent about these and other elements that weigh into your rates based on your state's laws to make sure you fully understand how your policy is set up.

For more information, see Hurricane Insurance Deductible Fact Sheet and Prepare Your Finances To Handle Natural Disasters. For the other side of the coin, see Lowest Homeowners Insurance States.

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