Florida leads nation in high-cost home insurance

Rising home insurance prices are affecting homeowners across the country, but some states are feeling the pain more than others.

In Florida, 20% of homeowners are paying at least $4,000 per year for home insurance, the highest share of any state, according to new data released by the U.S. Census Bureau on Thursday.

The other states where at least 10% of homeowners pay more than $4,000 annually are Louisiana, Texas, and Colorado, according to data from the 2023 American Community Survey.

Nationally, the average cost of home insurance for a policy with a $300,000 coverage limit is about $2,300 per year, according to Bankrate. Rates have been rising nationwide due to inflation in the cost of building materials and an uptick in weather and climate-related disasters.

In recent years, many insurance carriers have paid out more in claims than they collected in premiums. They’ve responded by raising their rates and reducing their coverage, particularly in areas prone to extreme weather and wildfires.

Higher premiums can make it harder for homeowners at the edge of their affordability range to meet their monthly mortgage payment obligations. A recent survey found that leaders in the default servicing space view rising tax and insurance costs as the biggest risk factor for rising mortgage delinquencies.

“Still-high home prices and elevated mortgage rates mean financing a home purchase is still out of reach for many would-be buyers,” says Realtor.com® senior economic research analyst Hannah Jones. “High insurance premiums only add to this cost, forcing buyers in these markets to either stay on the sidelines or settle for a lower-priced home.”

Nationally, home insurance rates rose 34% from 2018 through 2023, according to S&P Global Market Intelligence. Texas saw the biggest increase with premiums jumping 60%, followed by Colorado, Arizona, and Utah.

If insurance rates continue to rise, it could eventually affect home prices in the most costly areas to insure. “The monthly cost of homeownership includes not only paying down the principal and interest on a loan but also covering tax and insurance. This means that the whole picture—insurance costs included—has to be considered when defining a budget for a home purchase,” says Jones.

“Markets with high insurance costs may see downward pressure on home prices as buyers aim to balance out insurance costs by purchasing lower-priced homes," she adds. "This could push sellers to drum up demand with lower prices.”