Climate Disasters Are Making Homeowners Insurance Much More Expensive in These 5 States

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In 30 years, one report predicts that about a quarter of U.S. homes will face a climate-related home insurance crisis. Find out how you can handle skyrocketing costs.

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This year has seen more serious climate-related disasters than any year on record, and it’s not over yet. Not only do these disasters cause untold damage to people’s lives, homes, and businesses, they also come with a hefty price tag. According to the National Oceanic and Atmospheric Administration, the cost of this year’s high-profile disasters has already passed the $57 billion mark.

A quarter of U.S. properties are at risk from climate disasters

Unfortunately, research from the First Street Foundation that analyzed the risk of wildfire, wind damage, and flooding over the next 30 years says this is just the beginning. It says some properties could become “uninsurable,” while some homeowners will need to pay much higher premiums. On top of that, researchers warn of a “climate bubble” that could reduce the value of your home.

The First Street Foundation says almost 7 million properties have already been impacted by higher rates or canceled policies. By 2053, it predicts that figure will rise to over 39 million properties — around a quarter of American homes. Let’s take a look at the states where home insurance premiums have already skyrocketed and find out what you can do to reduce your risk.

Homeowners insurance has ballooned in these five states

If you search for average homeowners insurance premiums online, you’ll find many different figures. One reason is that rates are changing so quickly — the Insurance Information Institute (Triple I) predicts Florida insurance rates would increase by 40% in 2023.

We’ve used average annual premiums from Insurify’s latest report and predictions for 2023 home insurance below.

1. Florida: $7,788

According to Insurify, average home insurance in hurricane-prone Florida is $7,788 — more than four times the national average of $1,784. The state has been battered by storms in the past couple of decades. On top of which, Triple I says the state’s insurance industry has been beset with fraud and abuse. “Six insurers became insolvent in 2022, while more than a dozen others either left the state or placed moratoriums on writing new business,” it said in a policy brief.

2. Oklahoma: $6,853

Oklahoma consistently ranks as one of the most expensive states for home insurance. Located in Tornado Alley, Oklahoma homes are also at risk from earthquake, hail, and storm damage. Interestingly, the First Street research puts fewer properties in its “insurance bubble” — at risk of higher rates or canceled policies — than many other parts of the country.

3. Louisiana: $5,353

Homeowners in Louisiana are grappling with high premiums for both home and flood insurance. Not only is there a high hurricane risk, low-lying areas are particularly prone to flooding. According to First Street, Citizens Property Insurance Corporation, which is the

insurer of last resort for wind and storm insurance, recently increased rates in Louisiana by an average of 63% across the state year over year.

4. Alabama: $5,102

The Council on Foreign Relations highlights Alabama’s weak disaster codes in the face of “growing threats from worsening storms and sea-level rise.” What that means is that building standards in the state don’t offer adequate protection against the type of climate disasters that could hit its properties. Alabama is at risk of flooding, rising sea levels, tropical storms, and hurricanes.

5. Kansas: $5,005

Located in Tornado Alley, Kansans also face a high risk of hail, wind, and flooding. The Environmental Protection Agency says there are about 100 tornadoes every year in the state. It predicts summer droughts as well as potential flooding. “Rainstorms are becoming more intense, and floods are becoming more severe,” said an EPA report.

How to reduce your homeowners insurance

Climate change isn’t the only factor pushing up insurance premiums. Inflation and rising costs of repairs and rebuilding homes also play a part. Insurify predicts that homeowners insurance nationwide will rise by 9% in 2023, on top of a 7% rise in 2022. Whatever part of the country you live in, taking steps to reduce your premiums could make a big difference to your bank balance.

Here are a few to consider:

Shop around: Rate shopping can be a great way to score big discounts on your home insurance. Prices can vary dramatically. For example, there’s a difference of around $685 between two of the lowest cost Kansas home insurers on our list. Unfortunately, shopping around may not be an option if you live in a state like Florida or Louisiana where top home insurers are pulling back their coverage.Bundle your insurance deals: Savings vary by insurer, but bundling your home and auto insurance can be a good way to cut costs. For example, Allstate says on its website that you could save up to 25% by buying both home and car insurance from the insurer. If you’re paying almost $8,000 in premiums, that could come to almost $2,000 in annual savings.Consider upgrades to protect against extreme weather: Home renovations can be costly, especially if we’re talking about your roof. But if you live in a high-risk area, see whether a new roof, storm-resistant windows, or storm shutters could either reduce your premium or make you more eligible for insurance.

Even if you don’t live in one of the five states above, your home could be at risk as the weather patterns change throughout the country. Wherever you live, now would be a good time to research climate risks and understand how vulnerable your home may be. That way you might be able to prepare both your home and your budget for potential climate-related disasters.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Climate Disasters Are Making Homeowners Insurance Much More Expensive in These 5 States

A quarter of U.S. properties are at risk from climate disasters