If you’ve had homeowners insurance coverage over the past couple of years, you’ve probably felt the pain of soaring costs. Insurers say they’re charging more to compensate for climate change issues, the rising costs of materials, and inflation. You can’t control home insurance companies’ pricing based on market conditions, of course, but you can control some of your costs by being proactive about bundling, pursuing discounts, and more.
Why Homeowners Insurance Costs Are a Growing Problem
In addition to jacking up premiums, some insurers are exiting certain markets. Large insurers like Allstate, American Family, Nationwide, Erie Insurance Group, and Berkshire Hathaway have eliminated natural disaster coverage, including wind and hail, from their policies in some areas.
Homeowners insurance coverage in Florida has been especially hard hit. Insurers say they’ve been forced to hike rates or exit the state entirely. In the past half dozen years, devastating hurricanes have brought billions of dollars in insured losses, spurring 36 insurer bankruptcies and spiking average premiums to more than $4,000 yearly. That's nearly three times the national average, says Samuel Greenes, founder of BLUE Insurance in Farmingdale, N.J.
The problem isn't just storm damage. Rising property values, state regulations, rampant insurance fraud, and insurers’ hesitation to innovate have all worsened Florida’s issues, says Angel Conlin, chief insurance officer at Chicago-based Kin Insurance. High costs and the lack of coverage have even convinced some homeowners to leave the state.
Home insurance costs are still rising because of insurance companies' previous losses based on inflation, the elevated cost of building materials and the probability of future extreme weather-related losses, according to a 2024 analysis by Bankrate.
Homeowners Insurance Costs Vary Widely by Location
Homeowners insurance rates can fluctuate wildly, based on location. Bankrate’s analysis of average home insurance costs showed that policies with $300,000 in dwelling coverage can cost less than $1,500 per year, as seen in Vermont, West Virginia and New Hampshire, but cost well over $4,000 a year in states like Florida and Louisiana.
In some cases, fluctuations occur in the same state, Greenes said. For instance, according to 2021 data, the average annual premium in Florida was $3,588, with Miami-Dade at $7,256 a year and rural Liberty County averaging only $1,317 yearly, he explains.
Individual costs for insurance coverage depend on factors such as your location and that region’s weather-related risks, the amount of coverage carried, home characteristics such as roof type, deductible, insurance score, claims history, and discounts.
“While some perils are universal — a home can get broken into anywhere — others are regionally specific,” Conlin says, pointing to California wildfire risks, Louisiana flooding and hurricane dangers, and Oklahoma tornadoes. “On the other side of the coin, landlocked homes in the Midwest and West — Utah, Wisconsin, Idaho, and Nevada — often have lower home insurance rates because they are exposed to fewer catastrophes like floods, hurricanes, wildfires, and earthquakes,” Conlin adds. “That means they are less likely to suffer damage and require repairs.”
Analyze Limits of Home Insurance Coverage
When shopping for homeowners insurance, it pays to analyze and compare key features, Greenes says. Dwelling coverage limits cover damage to the physical structure. “Make sure limits match the estimated full rebuild costs,” he advises. “Compare replacement cost vs. actual cash value. Replacement is better but more expensive.”
Assess personal property coverage to see if limits are adequate to replace all possessions. Some items, like jewelry, may require special riders, Greenes says. Scrutinize deductibles, because higher deductibles mean lower premiums but greater out-of-pocket costs when making a claim. Weigh the trade-offs to reach an ideal level.
Essential Areas of Homeowners Insurance Coverage
When shopping, homeowners should consider issues including:
Amount of Liability Coverage
Take the time and effort to correctly estimate the value of your personal belongings, Conlin advises. Review your liability coverage, which may need to be higher than the typical $100,000 if you host large parties. And know what’s excluded from home insurance.
Construction and Repair Loss Exclusions
“Many homeowners insurance policies exclude losses related to the construction, repair, or demolition of a home when these are required by ordinance or law,” Conlin says. “For example, if your home insurance has this exclusion, your insurer most likely won’t pay for any upgrades required by new building codes.”
Neglect and Weather Exclusions
Other exclusions in your homeowners policy may include earth movements such as earthquakes, landslides, mudslides and sinkholes, Conlin says. Water from flash flooding is often excluded, as are power failures if they occur away from your home. Insurance companies typically won’t pay claims to homeowners who didn't take care of their properties. War and nuclear hazards aren't covered, nor are intentionally caused damages and losses as a result of government action, she adds.
How to Manage Homeowners Insurance Costs
Here are key ways to rein in your homeowners insurance expenses:
Shop and Compare Insurance Providers
Go on a home insurance shopping spree, advises Tyler Grizzle, a partner in Bluffton, S.C.-based GSP Insurance Group. “Compare, compare, compare!” he says. “Quotes are your best friends. And just like in any relationship, check out your insurer’s reputation and stability. If switching, watch out for those sneaky fees and coverage gaps.”
Bundle Home and Auto Coverage
"Bundle home and auto policies, which often yields substantial savings," says Robert Schmied, lead financial consultant with Switzerland-based Kredite Schweiz.
Add Home Features and Upgrade Systems
Other cost-reducing measures include taking advantage of discounts for implementing energy-efficient features, weatherproofing, and installing home security features,” Schmied says. “Upgrading plumbing and electrical systems can also reduce premiums.”
Explore Statewide Discounts and Credits
Conlin also recommends exploring additional discounts including wind mitigation credits. “Florida homeowners know how important a roof is,” she says. “It can be the difference between a home being destroyed or staying intact during a hurricane. The more wind resistant your roof is, the more you’ll save on your home insurance.”
California homeowners may benefit from a fire mitigation discount, based on steps taken to make homes more resistant to wildfires, Conlin adds. Discounts may be available for ember-resistant venting and annual brush removal contracts.
Research New Construction and Community Discounts
Homeowners may be eligible for discounts if their homes were built less than six years ago by accredited builders, defined as active builders providing warranties that cover defects in workmanship or materials. Community-based discounts may be available to those whose homes are part of a homeowners association, are in mobile home parks, or are part of secured communities. “The logic here is that HOAs and mobile home parks typically have quality standards for home maintenance,” Conlin explains.
Check for More Varied Discounts
Other discounts offered include those for mature homeowners 55 and older, new homeowners who bought a home in the past year, and owners of qualifying LEED-certified homes, Conlin says.
Policy Factors That Affect Cost
No two home insurance policies are precisely the same. Conlin says it’s important to weigh the factors that might impact cost:
- Property insurance. Policies offering replacement-value coverage for personal property tend to cost more than those offering actual cash-value coverage.
- Property liability limits. A policy with $100,000 in personal liability coverage costs less than one with half a million coverage, but insurers believe the former level is inadequate.
- Deductible. The higher your deductible, the lower your premium, but make sure you can afford the deductible.
Top 10 Tips to Save on Homeowners Insurance Coverage
Here's an at-a-glance summary to reduce your homeowners insurance expenses:
- Shop, compare, and change carriers if necessary.
- Bundle home and auto insurance coverage.
- Add energy efficiency, weatherproofing, and home security features.
- Upgrade plumbing and electrical systems.
- Explore wind mitigation credits and fire mitigation discounts.
- Ask about accredited builder discounts.
- Inquire about discounts for being part of a homeowners association.
- Check into homeowner discounts for those 55 and older.
- Look into new homeowner discounts for those buying in last year.
- Investigate LEED-certified home discounts.
The most basic advice is to review your policy annually. “By keeping track of any changes to home or family, you can ensure you always have the right coverage and the right provider for your situation,” Conlin says.