While the cost of home insurance is rising rapidly in much of the United States, there are likely to be some exceptions this year in some states where premiums will remain stable or even fall.
A new report from online insurance marketplace Insurify predicts that average U.S. home insurance premiums will rise 6% this year, to $2,522 per year. However, the study found that states less vulnerable to climate change-related extreme weather events will largely be spared from sharp premium increases, while regions with increased climate risks will bear the brunt of rising premiums.
According to the report, South Dakota is the only state expected to see a reduction, with rates there set to drop by 3% to $2,488 per year. Six other states – Alaska ($1,117), Missouri ($2,697), North Dakota ($2,517), Texas ($4,437), Washington ($1,432) and West Virginia ($1,398) – are not expected to see an increase in 2024.
This stability is the opposite of the situation in coastal and disaster-prone areas. Floridians currently pay the highest premiums in the nation, an average of $10,996 a year, and next year costs are expected to rise another 7 percent. “Stabilization is important, but (premiums) have stabilized at a high level,” Florida state Rep. Anna Eskamani was quoted as saying in the Missouri Independent. “Floridanians can no longer afford Florida, and if we don’t take climate change seriously, we’re missing the point.”
Louisiana, a hurricane-prone state, faces an even steeper increase. A projected 23% increase will bring the average annual rate to $7,809.
The Insurify report, which analyzed home insurance costs in all 50 states, points to the increasing impact of climate change and natural disasters on insurance markets. While some regions are struggling with rising premiums due to increased risk from hurricanes, wildfires and floods, others are relatively unscathed.
These rising premiums are increasingly influencing home-buying decisions. Real estate experts report that insurance costs are becoming a major factor for some buyers, especially younger generations entering the real estate market who are showing greater awareness of the impacts of climate change.
While 25% of all homeowners believe that climate change has affected the value of their property, Millennials lead the way at 32%, followed by Generation Z at 29%.
As Generation Z and Millennials continue to enter the real estate market, their increased climate awareness could shift property preferences. The report found that areas with high climate resilience could become increasingly attractive, potentially at the expense of regions more vulnerable to the impacts of climate change.
However, experts warn that the current stability in some states may not last. Changing climate patterns could pose new challenges to areas that were previously considered low-risk. The insurance market continues to react strongly to changing weather patterns and the frequency of disasters.
