Top 10 States With The Highest Home Insurance Premium Increase

Inflation is not only hitting consumer goods such as food and cars, but also impacting the cost of homeowners insurance. While the inflation rate recently hit 8.3 percent over the past 12 months, homeowner insurance has skyrocketed even more. 

Recently, Policygenius, ran the numbers and found that the cost to insure a home is up 12.1 percent from last year. The news is even worse for some states where premiums are rising at twice the rate of inflation. 

As if this news wasn’t bad enough, as construction costs increase due to inflation pushing up the cost of materials, the cost to rebuild your home is also increasing so you may no longer have enough coverage to fully rebuild your home if it was damaged or destroyed by a covered peril. 

“It’s a two-tailed effect,” said Pat Howard, managing editor and licensed property and casualty insurance expert at Policygenius in a recent CNBC article. “Not only are premiums getting more expensive, but with replacement costs going up, you could end up underinsured as a result.”

According to Policygenius, these are the 10 states where home insurance premiums have seen the largest year-over increase: 

Arkansas was the number one state when it comes to home insurance increases. It’s 18.5% increase translates into a $228 a year increase to the average annual premium from 2021. This brings the average premium in Arkansas up to $1,235.

When it comes to the largest dollar amount increase, Oklahoma grabbed the top spot. The Sooner state saw their premiums go up a shocking $257 a year when compared to 2021 rates. New York residents were on the opposite side, they saw the smallest increase of any state with their premiums only going up $57. 

Shopping your policy may help

While inflation is certainly a huge factor in premium increases, it is not the only issue that is pushing up the cost of homeowners insurance. 

Severe weather is increasing in frequency and severity. In the 2020s alone hurricanes, wildfires and other natural disasters racked up more than $88 billion a year in losses according to the Insurance Information Institute. This is a huge increase from the $52 billion in average annual losses in the 2010s and $37 billion in the 2000s.

As insurance prices increase, this is a good time to review your policy to make sure you are carrying enough coverage to properly rebuild or repair your home. 

“Say your home is insured for $250,000. You renewed your policy three months ago and were assured this was the rebuild value,” Howard said in a recent CNBC article. “But lumber increased 15% in those three months. Now your home costs $300,000 to rebuild, and if it’s destroyed, you’re going to be out $50,000 out-of-pocket.”

Once you have determined whether you have enough coverage it’s time to start looking for ways to lower you premium. Here are a few tips to keep your premium affordable:

Shop your premium: Insurers rate risk differently which can result in dramatic differences in premium quotes. Shop your coverage on a yearly basis and get quotes from at least 5 different insurers. Always make sure you are comparing apples to apples when it comes to coverage levels and deductibles.

Discounts: Insurers often a variety of discounts and your goal is to make sure that all of the discounts that you qualify for are being applied to your policy. Ask your agent to do a discount review of your policy. 

Upgrade your home: Upgrading your home with a monitored security system, replacing your roof with wind or hail resistant materials, or installing a sprinkler system can result in significant discounts. Notify your insurance company any time you upgrade your home to see if you qualify for a new discount. 

Up your deductible: The higher your deductible the lower your premium. If you can afford to double your deductible, you should see your premium drop. Always choose a deductible that you can easily afford in the event you have to make a claim on your policy.