15 Worst States for Homeowners Insurance in the US

Published on February 17, 2024 at 5:24 pm by Zarah Hamid in Business, Lists, News

In this article, we will be navigating through the 15 worst states for homeowners insurance in the US. If you wish to skip our detailed analysis, you can move directly to the 5 Worst States for Homeowners Insurance in the US.

The Persistent US Climate Insurance Bubble: An Analysis

A climate insurance bubble penetrated the United States in 2023. This bubble is formed when climate risks result in insurance payouts that surpass the premiums that insurers are collecting, ultimately leading to higher rates from insurers. The effect of this bubble is that higher costs of home insurance increase the homeownership costs and are likely to bring home prices in risky areas down. You can also view the most dangerous states for natural disasters. Although the number of uninsurable places rose in all states of the US during this crisis, some of them were more affected. On June 19, 2023, CNN reported that those residing in Florida had to pay insurance premiums almost four times as compared to the rest of the US as home insurers were driven out of Florida.

Apart from the climate risk, home insurance companies have also cited the rising costs of repairing, building supplies, and labor as their reason to move out. The rebuilding and replacement costs went up by 55% between 2019 and 2022. The important fact in this regard is that insurance rates have not climbed a lot across the country but in states where home insurance is already hard to find.

Louisiana is subject to high costs of home insurance among other US states as 69% of state residents expressed how homeowner’s insurance costs more in Louisiana when compared to other states in 2023. Many of these residents tried to secure an insurance policy but faced trouble in obtaining one.

The aforementioned crisis has also been persistent in 2024. Existing homeowners in states vulnerable to natural disasters seem to be in a fix since they are running out of insurance options while the remaining options are too costly to afford. On February 5, CNBC reported that home insurers continue to leave markets or have simply stopped writing policies in areas that are more prone to fires and floods. One of the most prominent national insurers State Farm halted taking new applications for policies on Californian properties. The company presented the rationale that climate-related calamities were damaging many buildings in the state and the cost of repairing was even higher due to inflation. Another example of a state where homeowners are feeling deprived of ample or affordable home insurance policies is Florida where the flood risk is high.

Home Insurers to the Rescue

The Allstate Corporation (NYSE:ALL), The Travelers Companies, Inc. (NYSE:TRV), and Chubb Limited (NYSE:CB) are some of the dominant home insurance companies in the US. Let’s take a look at what these firms have been up to.

The Allstate Corporation (NYSE:ALL) is a popular American insurance company. The firm’s agents can help homeowners get the right coverage based on their needs. On February 15, The Allstate Corporation (NYSE:ALL) reported the catastrophe losses and implemented rates for the month of January. The after-tax estimate of these losses was $218 million. The company implemented rate increases for auto as well as homeowners insurance. Rate increases for homeowners insurance have been forecasted to increase annualized written premiums by almost $40 million.

The Travelers Companies, Inc. (NYSE:TRV) provides homeowners with feasible insurance options after evaluating the features of their home and their current homeowners insurance coverage. It offers an early quote discount as well as a discount if the client has three policies with the company. On January 19, The Travelers Companies, Inc. (NYSE:TRV) reported its financial results for the fiscal fourth quarter of 2023. The company reported earnings per share of $7.01, beating EPS estimates by $1.92. The company’s revenue for the quarter amounted to $9.97 billion, up 13.11% year-over-year and ahead of revenue consensus by $26.25 million.

Chubb Limited (NYSE:CB) is the parent company of the global insurance provider, Chubb. Chubb offers insurance products covering property and casualty, accident and health, reinsurance, and life insurance. The company’s homeowner insurance policies are available across all US states. On January 30, Chubb Limited (NYSE:CB) reported strong earnings for the fourth quarter of 2023. The company reported earnings per share of $5.54, beating EPS estimates by $0.42. The company generated revenue of $10.15 billion which increased 12.47% year-over-year and surpassed market consensus by $72.60 million.

You can also take a look at some of the best-manufactured home insurance companies heading into 2024. Now that we have taken a look at the home insurance industry in the US, let’s move to the 15 worst states for homeowners insurance in the country.

15 Worst States for Homeowners Insurance in the US

Our Methodology:

In order to compile a list of the 15 worst states for homeowners insurance in the US, we acquired the latest data on state-level home insurance rates from Bankrate, a leading consumer financial services company. The latest data was available as of February. We selected average annual premium as our primary metric while average monthly premium was chosen as our secondary metric. This is because we have considered the cost factor for determining how convenient the states are for homeowners. Furthermore, states that are prone to more natural disaster risks tend to have higher insurance rates. Please note that home insurance rates depend on other factors such as claims history, dwelling age, and square footage as well.

Please also note that there are other states such as Florida and California which might not have the highest costs of home insurance as of now but they have been subject to worse conditions in terms of homeowners insurance. These states have been discussed above.

We have ranked the 15 worst states for homeowners insurance in the US based on their average annual premiums and average monthly premiums.

15 Worst States for Homeowners Insurance in the US

15. Alabama

Average Annual Premium: $2,085

Average Monthly Premium: $174

The average cost of home insurance in Alabama is $2,085 per year while the average monthly premium is $174. The state is located near the coast and has a higher risk of hurricanes, tornadoes, and storms. Irvington, Stapleton, and Axis tend to be costly cities for home insurance in the state. Hence, Alabama is one of the worst states for homeowners insurance in the country.

14. Texas

Average Annual Premium: $2,130

Average Monthly Premium: $177

Texas ranks as another worse state for home insurance. The state has an average annual home insurance premium of $2,130 which is higher than the national average. La Salle, La Ward, and Mcfaddin offer high home insurance rates in the state.

13. New Mexico

Average Annual Premium: $2,168

Average Monthly Premium: $181

New Mexico ranks among the worst US states for homeowners insurance. As of February, the state has an average annual home insurance premium of $2,168 and a monthly premium of $181. The state faces a risk of property crimes as well as natural disasters which plays a role in the state’s high average annual cost of home insurance.

12. Montana

Average Annual Premium: $2,172

Average Monthly Premium: $181

As of February, Montana has an average home insurance cost of $2,172 per year. The monthly home insurance premium in the state is $181. Montana ranks as one of the worst states for homeowners insurance in the country. Some of the expensive places for home insurance in the state are Gildford, Park City, and Big Sandy.

11. Minnesota

Average Annual Premium: $2,174

Average Monthly Premium: $181

Minnesota ranks as another worst state for homeowners insurance in the US. As of February, the average annual home insurance premium in the state is $2,174 while the monthly premium is $181. Cities in Minnesota that offer high home insurance rates include New Germany, Saint Bonifacius, and Norwood.

10. Tennessee

Average Annual Premium: $2,177

Average Monthly Premium: $181

The average annual cost of home insurance in Tennessee is $2,177. The state has a monthly premium of $181 for home insurance. Arlington, Lenox, and Westport are cities deemed expensive for homeowners insurance in the state. Tennessee faces a risk of storms and tornadoes as well.

9. Kentucky

Average Annual Premium: $2,282

Average Monthly Premium: $190

Kentucky ranks as one of the 15 worst states for homeowners insurance in the US. The state has an average annual premium of $2,282 and an average monthly premium of $190, as of February. The most expensive places for homeowners insurance in Kentucky include Kuttawa, Livermore, and Calhoun.

8. South Dakota

Average Annual Premium: $2,455

Average Monthly Premium: $205

South Dakota is located in the Tornado Alley and is prone to the risk of storms and ranks as one of the worst states for home insurance in the US. As of February, the average annual home insurance premium in the state is $2,455 while the monthly premium is $205. Cities that tend to be expensive in terms of homeowners insurance in the state are Ludlow, Enning, and Faith.

7. North Dakota

Average Annual Premium: $2,519

Average Monthly Premium: $210

North Dakota has an average home insurance cost of $2,519 per year which is significantly higher than the national average. The state has a monthly home insurance premium of $210. Hebron, Regent, and Mott are some of the cities that offer the highest home insurance rates in the state.

6. Arkansas

Average Annual Premium: $2,809

Average Monthly Premium: $234

Arkansas ranks among the worst states for homeowners insurance in the US. As of February, the average annual cost of home insurance in Arkansas is $2,809. The average monthly home insurance premium in the state is $234. Some of the most expensive cities for home insurance in the state include Ashaway, Little Compton, and Barrington.

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