Homeowners Insurance Affordability Study Reveals Significant Variations Across States

The Insurance Research Council’s study, covering 2000 to 2020, highlights a nationwide increase in homeowners insurance costs, surpassing general inflation rates. The research, excluding flood and earthquake insurance, indicates an average expenditure of $1,311 on homeowners insurance against a median household income of $68,010 in 2020. Notably, the most affordable state for homeowners insurance during this period was Utah, where households spent just 0.92% of their income on coverage, contrasting sharply with Louisiana’s 3.84%.

The affordability of homeowners insurance varied significantly across states, with Utah, Oregon, Wisconsin, Washington, and New Hampshire experiencing the lowest expenditure-to-income ratios. In contrast, states like Louisiana, Florida, Oklahoma, Mississippi, and Alabama faced the highest insurance costs relative to income. This disparity is largely attributed to the frequent catastrophic events in these regions, leading to higher insurance premiums.

Factors such as fraud, excessive claims, and legal system abuse post-catastrophes have driven up insurance costs, affecting affordability nationwide. Furthermore, certain areas are facing crises in both affordability and availability of insurance, prompting some insurers to reduce coverage or withdraw from specific markets altogether. The study suggests that a closer examination of these cost drivers could unveil opportunities to enhance affordability and availability of homeowners insurance for consumers.