Home Insurance in These 11 States Costs Over $4,000 a Year — and It Will Only Get More Expensive

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It is getting more expensive to insure your home, especially if your state is at risk of wildfires, tornadoes, or hurricanes. Find out how you can reduce your insurance costs. 

The U.S. has seen the highest ever number of billion-dollar disasters this year, and we’re only in September. According to the National Oceanic and Atmospheric Administration (NOAA), there’ve already been 23 separate climate-related catastrophes that cost more than $1 billion each. These include droughts, flooding, hurricanes, tornadoes, and wildfires.

The NOAA puts the total cost of the damage done by those disasters at almost $58 billion. That’s on top of untold harm to people’s lives and livelihoods, including over 250 fatalities. To put that figure in context, $58 billion is around $170 for every person in the U.S. It’s also higher than the GDP of countries like Tunisia and Jordan.

If you own a home, your homeowners insurance can cushion you financially against a host of unexpected events, including those of the climate variety. Unfortunately, that insurance is getting more expensive. Per Consumer Reports, S&P Global Market Intelligence says that homeowners insurance premiums are likely to increase by 7.1% this year.

Average home insurance tops $4,000 a year in these states

The cost of home insurance depends on a host of factors, including where you live, how you use the property, what condition it is in, and what the property is worth. As we’ll see, homeowners insurance in some states costs significantly more than in others. It’s particularly difficult to find affordable insurance in states that are regularly hit by extreme weather events.

The Ascent research shows that the average house price in the U.S. was $416,100 as of the second quarter of 2023. Taking that as a baseline, we looked at the coverage rates for $400,000 homes in each state. The average annual coverage rate nationwide comes in at $3,231 with a liability coverage of $300,000 and a $1,000 deductible, according to latest data from Insurance.com.

In tornado-prone Oklahoma, the most expensive state for home insurance, the average is almost double that. In fact, the average annual rates for homeowners insurance in the following 11 states are all above $4,000:

Oklahoma: $6,387Nebraska: $5,433Kansas: $5,427Arkansas: $4,598South Dakota: $4,596Mississippi: $4,578Texas: $4,529Missouri: $4,189Colorado: $4,142Alabama: $4,123Kentucky: $4,049

Extreme weather conditions and frequency of natural disasters are largely to blame for the high insurance costs in most of these states. It’s also worth noting that flooding is generally not covered by home insurance and so it has to be bought as a separate policy.

How to reduce your home insurance costs

Paying upward of $4,000 a year for home insurance works out to over $330 a month, which can be a significant chunk of your budget. It’s a cost most people can’t skip as mortgage lenders require you to have home insurance. Even if you could skip paying home insurance, it could turn out to be a devastating financial decision. Given that your home is often the biggest asset you own, it makes sense to insure it against unexpected damage.

All the same, here are three ways you might be able to cut your insurance costs.

1. Shop around

No matter whether you’re shopping for personal loans or insurance deals, it’s always worth getting two or three quotes. Each company will have offers that suit different groups of people, so take a careful look at what each one covers and decide which one is right for you. For example our best cheap homeowners insurance for Oklahoma shows the annual insurance costs can differ by over $1,000 a year, depending on the company you choose.

READ MORE: Best homeowners insurance companies

That said, do a bit of digging before you sign up with the cheapest company. Check for reviews online and ask friends or family for recommendations. There’s no point in shelling out thousands of dollars a year for an insurance policy that won’t pay out when you need it to. I’ve opted for the cheapest insurance in the past, but it actually wound up costing me more. I’d paid the premiums but then the company nickel-and-dimed me over a legitimate claim.

2. Bundle up

You can often swing decent discounts if you bundle your home and auto insurance and buy them from the same company. According to the Insurance Information Institute, you could save 5% to 15% if you bundle two or more policies together. If you’re paying upward of $4,000 in annual premiums, a 15% saving could come to $600 a year.

3. Increase your deductible

Your deductible is the amount you pay out of pocket before the insurance kicks in. It can be a dollar amount or a percentage. If you’re able to put enough cash aside to cover a sizable deductible, you can reduce your monthly premiums.

Let’s say your home is hit by a severe storm, damaging the roof. The repairs cost $15,000. If you have a $1,000 deductible, you’ll have to pay the first $1,000 and the insurance will cover the remaining $14,000. If you push the deductible up to $2,500, the insurance company would only pay $12,500.

Bottom line

Sadly, it looks like we are going to see more of these extreme weather events. That’s going to impact our lives in many different ways, one of which will be higher insurance premiums. Remember to factor the higher costs into your budget for the coming year, and don’t be afraid to switch insurance providers if you can get a better deal elsewhere. If you’re able to sock some extra cash into your home emergency fund so you could cover a higher deductible, this could also help to keep costs down.

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.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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.The Motley Fool has a disclosure policy.

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