Homeowners insurance rates have risen dramatically, according to an analysis by Bankrate.
The average premium in February 2024 is about $141 a month for a home with $250,000 worth of dwelling insurance. That represents a 23% increase from January 2023.
Find out why rates are going up, which states are being hit the hardest and how you can keep your premiums down.
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Why homeowners insurance rates are rising
Several factors are making homeowners insurance more expensive: The increase in the number and severity of hurricanes, floods, tornadoes and other harsh weather has led to a spike in claims in many parts of the country. And in the western U.S., drought and heatwaves have led to "extraordinary wildfire seasons," according to the National Oceanic and Atmospheric Administration.
More people are moving to regions affected by these natural disasters: Migration into the most flood-prone counties in the U.S. more than doubled during the pandemic, according to data from real estate company Redfin, while the counties with the highest wildfire risk saw a 51% increase.
Higher construction costs have made repairs more costly. Since 2020, residential building costs have risen almost 28%, according to an analysis by Mercury Insurance that found labor costs jumped nearly 12%.
The insurance industry as a whole has taken a hit, too: In the first nine months of 2023, State Farm, the largest home insurance provider in the US, reported a record loss ratio of 84%, according to S&P Global. That represents an increase of more than 20% from 2022.
Where homeowners insurance premiums rose the most
Utilizing Quadrant Information Services data for ZIP codes and carriers in all 50 states and the District of Columbia, Bankrate compared monthly premiums between January 2023 and February 2024, based on the cost of $250,000 of dwelling coverage for a 40-year-old couple with good credit and a clean claims history.
These 10 states saw the greatest increase.
Louisiana
- Average premium in February 2024: $270.50
- Increase from January 2023: 63%
Nebraska
- Average premium in February 2024: $395.41
- Increase from January 2023: 61%
Colorado
- Average premium in February 2024: 267.67
- Increase from January 2023: 49%
Arizona
- Average premium in February 2024: $148.17
- Increase from January 2023: 40%
Utah
- Average premium in February 2024: $82.92
- Increase from January 2023: 37%
Illinois
- Average premium in February 2024: $158
- Increase from January 2023: 35%
District of Columbia
- Average premium in February 2024: $99.17
- Increase from January 2023: 33%
North Dakota
- Average premium in February 2024: $209.92
- Increase from January 2023: 33%
Arkansas
- Average premium in February 2024: $234.08
- Increase from January 2023: 32%
Kansas
- Average premium in February 2024: $4,072
- Increase from January 202: 32%
How to lower your homeowners insurance rates
It may feel like the factors fueling the rate hike are out of your control. However, there are still ways homeowners can lower their monthly premiums.
Shop around for better rates
While most insurers consider the same factors when calculating premiums, they weigh them differently. So it pays to get quotes from at least three other providers.
Look for carriers that are financially solid and able to pay out claim benefits — usually ones with an A+ or A++ grade from A.M. Best, the insurance industry's leading credit rating agency. They should also have high customer satisfaction scores from J.D. Power and offer discounts that fit your situation.
Chubb Insurance has an A++ rating from A.M. Best and is CNBC Select's top pick for ensuring high-value assets, like fine art and jewelry.
Chubb Homeowners Insurance
Cost
The best way to estimate your costs is to request a quote
Maximum coverage
Not disclosed
App available
Yes
Policy highlights
Policy covers home and property damages caused by wildfires, extreme weather, crime, vandalism and personal liability, which also covers claims for libel and slander. Also includes replacement cost for contents, extended replacement cost for dwelling and a cash settlement option
Does not cover
Flood or equipment breakdown (these can be purchased as add-ons to your policy)
Terms apply.
A standout for its affordable premiums, Nationwide offers discounts for having protective devices like smoke detectors and burglar alarms. It's also one of the top-rated carriers in J.D. Power's 2023 property claims satisfaction study.
Nationwide Homeowners Insurance
Cost
The best way to estimate your costs is to request a quote
Maximum coverage
Not disclosed
App available
Yes
Policy highlights
Policy covers home and property damages caused by theft, fire and weather damage. It also covers personal liability, loss of use and unauthorized transactions on your credit card
Does not cover
Water damage, earthquakes, flood insurance, identity theft, high-value items, rebuilding home after loss (these can all be purchased as add-ons for extra coverage)
Terms apply.
Get the right amount of coverage
If your premiums are pricing you out of house and home, see if you need all the coverage you're paying for.
To estimate how much insurance you need, you need to know the cost of rebuilding your home. Check with a local real estate agent or builders association about per-square-foot building costs in your area. Then multiply that figure by the total square footage of your home.
It's worth reviewing your personal property policy, as well. If you sold your art collection, for example, you can cancel the floater you took out on it.
Don't skimp on coverage just to save money, though, or you could end up paying dearly if disaster strikes.
Bundle your home and car insurance
Many insurers offer bundling discounts for taking out both home and auto policies from them. In addition to potential savings, you can enjoy the convenience of accessing your policies through the same app or website.
The nation's second-largest home insurer, Allstate earns praise for its customizable policies and competitive rates. According to the company, customers can save up to 25% by bundling their car and home policies.
Allstate Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Allstate offers auto insurance customers a total of 14 discounts in addition to a pay-per-mile car insurance program. It offers quotes by phone, through an agent, or online. The company also offers a number of other insurance products to bundle your coverage and save.
Allstate Homeowners Insurance
Cost
The best way to estimate your costs is to request a quote
Maximum coverage
Not disclosed
App available
Yes
Policy highlights
Allstate's homeowners insurance can help you cover your living space with a variety of optional coverages and discounts. Standard homeowners insurance through Allstate can cover your home's dwelling, your liability and personal property, and guest's medical expenses. Optional coverages include HostAdvantage to cover your belongings when home-sharing, and flood insurance through the NFIP.
Does not cover
Coverage for flooding is additional.
State Farm is one of CNBC's top picks for both home and auto insurance. According to the Illinois-based carrier, customers who switched to State Farm and bundled their policies saved an average of $1,073 in 2022.
State Farm Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
State farm is one of the largest auto insurers based on market share and has an excellent reputation for customer satisfaction. It offers 13 discounts, including ones for safe driving and young drivers.
Terms apply.
Read our State Farm Auto Insurance review.
State Farm Homeowners Insurance
Cost
The best way to estimate your costs is to request a quote
Maximum coverage
Not disclosed
App available
Yes
Policy highlights
State Farm's homeowners insurance offers coverage that's easy to bundle with other types of insurance and covers things like fire, theft or vandalism. It offers several discounts for home security systems and wind mitigation.
Does not cover
Business or professional services, damage from flooding or underground water, earthquakes or mudslides, settling or deterioration, and animals, birds or insects.
Bundling isn't always cheaper, however, so get several quotes with the same coverage limits and deductibles to compare.
Consider raising your deductible
Your deductible is the amount you're responsible for before your insurance company pays out on a claim. Typically, the higher the deductible, the lower the premium.
If you're in a position to cover more out of pocket if you file a claim, you could save on month-to-month costs. Raising your annual deductible from just $500 to $1,000 can save as much as 25% on premiums, according to the Insurance Information Institute.
Take a good look at your emergency fund if you're considering this tactic. Make sure you can afford the up-front costs if something happens to your home.
Improve your credit
In most states, insurance companies consider your credit history when calculating your monthly premiums. While your insurance score is different than your FICO score, it's determined using many of the same criteria.
A strong track record of on-time payments can help boost your insurance score, as can paying the full balance every month.
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Bottom line
Homeowners insurance has gotten more expensive, especially for residents in the Midwest and Southwest. If you want to lower your premiums, shop around for a better rate, consider raising your deductible and make sure you've got the amount of coverage you need.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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