Three in 10 American homeowners are nervous about rising home insurance rates and it's easy to see why. A new report predicts premiums will continue to increase through 2024 after spiking nearly 20% in the last two years alone.
According to Insurify, home insurance rates are expected to rise 6% nationwide by the end of the year. And it could continue to get worse.
"Early weather forecasts predict a devastating hurricane season, which would cause further rate increases in 2025," the report noted.
The average annual rate increased by 19.8% between 2021 and 2023, from $1,984 to $2,377, Insurify noted. With costs projected to rise an additional 6%, rates would reach $2,522 by the end of the year.
Homeowners in some states are definitely feeling the burden of rising costs more than others, especially if they live in areas prone to severe weather events.
Florida homeowners pay the most for home insurance, with an average annual rate of $10,996 in 2023. Insurify predicts costs will increase an additional 7% in 2024 to $11,759. In Louisiana, where rates are nearly three times the national average, home insurance costs could rise an additional 23% in 2024, pushing the average premium above $7,800.
On the other hand, Vermont residents pay the least, with an average annual rate of $918 in 2023 -- expected to increase 6% in 2024 to $977.
Most Expensive States for Home Insurance in 2024
1. Florida -- $11,759
2. Louisiana -- $7,809
3. Oklahoma -- $5,711
4. Mississippi -- $4,482
5. Texas -- $4,437
6. Colorado -- $4,367
7. Nebraska -- $4,292
8. Alabama -- $4,281
9. Kansas --$3,666
10. Arkansas -- $3,662
States With the Largest Rate Increases in 2024
1. Louisiana -- 23% ($7,809)
2. Maine -- 19% ($1,571)
3. Michigan -- 14% ($2,095)
4. Utah -- 13% ($1,541)
5. Montana -- 12% ($1,997)
6. South Carolina -- 11% ($3,410)
7. North Carolina -- 10% ($2,327)
8. Illinois -- 10% ($2,245)
9. Connecticut -- 9% ($1,927)
10. Nevada -- 9% ($1,336)
With all these increases, it's easy to feel overwhelmed. But don't panic -- policyholders won't see rate changes immediately.
"Insurance companies reassess rates based on anticipated payouts, file for increases, and get the necessary approval from state regulators before raising premiums," Insurify noted. "Since most homeowners policies have a 12-month term, policyholders may not see price hikes for as many as 18 to 24 months."
Insurance rates have spiked significantly in recent years. From 2018 to 2021, the average rate change was between 2.5% to 3.8% annually. Then in 2022, it jumped to 6.2%. And last year, top companies increased home insurance rates by an average of 11.3%, according to an analysis by S&P Global Market Intelligence.
The S&P analysis shows Farmers Insurance had the biggest rate increase at 19.4%. The insurer had a double-digit effective rate increase in 34 states, with the highest jump being in Illinois.
Liberty Mutual had the second-highest rate increase in 2023 at 17.2%. The insurer boosted rates in 47 states, with effective rate changes in Oregon, Louisiana, Idaho and Utah exceeding 30.0%.
Rounding out the top five insurers with the largest rate increases are USAA (14.7%), American Family Insurance (12.2%) and Nationwide (10.6%).
In total, 25 states saw double-digit rate increases in 2023, compared to only six states during the prior year, according to S&P. Texas led the way with the highest effective rate change at 23.3%, followed by Arizona at 21.8% and Utah at 20.3%. Five states -- Texas, Arizona, Oregon, Oklahoma and Colorado -- saw double-digit increases in 2022 and 2023.
On the other hand, some states saw very modest increases. Hawaii had the lowest effective rate change with only a 1.8% increase in premiums, followed by Vermont at 3.3%, and Delaware and Mississippi, both at 3.9%.
As for why rates are going sky high, analysts say climate change is partly to blame as rising temperatures fuel an increase in catastrophic hurricanes, wildfires, tornadoes and thunderstorms, which cause costly damages and reduce insurance affordability.
"These storms don't only affect one property at a time. They affect a large number of properties," Chuck Nyce, a professor of risk management and insurance at Florida State University, told CNN. "That changes the dynamic for an insurance company."
The forecasting company Weather Bell predicted a "hurricane season from hell," projecting six to eight major hurricanes (out of 14 to 16 total hurricanes) to touch down in the U.S. in 2024.
"A 'hurricane season from hell' could pile crisis upon crisis," Betsy Stella, vice president of carrier management and operations at Insurify, said in a statement. "The financial solvency of all insurance companies will be tested."