Revealed – The most and least expensive US states for home insurance

Revealed – The most and least expensive US states for home insurance | Insurance Business America

Revealed – The most and least expensive US states for home insurance

About 93% of all homeowners in the US carry some form of home insurance, according to the latest data from the Insurance Information Institute (III). This figure translates to more than 70 million households based on the most recent census.

The particularly high number of insured homes in the country does not come as a surprise considering the myriad of benefits home insurance can bring. Apart from covering the cost to repair or replace the dwelling and its contents in the event of a covered loss, home insurance can protect owners against claims resulting from injury or damage to other people and property.

However, the rates and coverage considerations can vary significantly depending on where the home is located. The reason is that different states present different levels of risk, which often dictate the cost of an insurance policy.

To find out which states have the most and least expensive home insurance premiums, financial services company Bankrate gathered and analyzed 2021 rates for all zip codes and carriers in all 50 states and Washington D.C. The firm then based the quotes on a $250,000 dwelling coverage for a 40-year-old homeowner with a clean claim history and good credit rating.

Based on Bankrate’s data, the national average price of home insurance for this type of coverage is $1,312 annually. Rates can be significantly higher or lower depending on the state. Here are the states where premiums cost the most and the least, according to the financial services firm’s analysis.

Read more: Top 10 US home insurers for customer satisfaction

The most expensive states for home insurance

1. Oklahoma

Average annual premium: $3,519
Percent of median household income spent: 5.92%
Percentage more than national average: 168%

Located in the so-called Tornado Alley in the Midwest, Oklahoma is prone to tornadoes and strong winds. Many homes there are also exposed to summer storms with those in the eastern part of the state also at risk of widespread flooding. These are among the reasons why homeowners there pay the highest premiums in the country. The average yearly insurance rates are particularly high in Oklahoma City at $4,239, while Tulsa’s $3,123 is below the state average. 

2. Nebraska

Average annual premium: $2,816
Percent of median household income spent: 3.85%
Percentage more than national average: 115%

Nebraska is another state in the Tornado Alley. It also ranks as among the most prone to hailstorms, which can cause severe property damage. Storms in the state can bring damaging winds and flooding, particularly in the summer. The key cities of Omaha and Lincoln have premiums below the state average at $2,766 and $2,060 per year, respectively.

3. Kansas

Average annual premium: $2,694
Percent of median household income spent: 3.68%
Percentage more than national average: 105%

Kansas’s location in the Great Plains makes it extremely vulnerable to blizzards, tornadoes, and hailstorms. This is the reason why the average home insurance cost there is more than double the national average. Annual premiums in the city of Wichita are among the most expensive in the state at $2,878.

4. Arkansas

Average annual premium: $2,142
Percent of median household income spent: 3.93%
Percentage more than national average: 63%

Arkansas’ proximity to the New Madrid Seismic Zone makes it susceptible to earthquakes. Several areas in the state are also prone to flooding. Arkansas sits along the path of many tornadoes, experiencing an average of 33 per year. This makes wind damage one of the most common insurance claims by its residents.

5. New Mexico

Average annual premium: $2,024
Percent of median household income spent: 3.81%
Percentage more than national average: 54%

Flash floods are a huge concern for homeowners in New Mexico because of its arid climate. Many parts of the state are also at an elevated risk of earthquakes. Tornadoes occur as well, but the risk is not as high as that in the Midwest. There is good news though for those living in the state’s largest city Albuquerque - annual premiums there are way below the state average at $1,513.  

6. South Dakota

Average annual premium: $1,917
Percent of median household income spent: 2.98%
Percentage more than national average: 46%

South Dakota is often considered a land of extremes because of its sweltering hot summers and extremely frigid winters. Summers can bring strong winds and tornadoes, while winters can freeze and damage water pipes. Some areas are also susceptible to wildfires like the Black Hills and Badlands.

7. Texas

Average annual premium: $1,863
Percent of median household income spent: 2.76%
Percentage more than national average: 42%

Last year, Texas recorded 105 tornadoes and 6,713 wildfires, which were both the second highest in the country. During the period, 1.5 million properties in the state were also affected by damaging hailstorms, accounting for almost a quarter of the US’s total and amounting to $14.2 billion in total losses, according to the Rocky Mountain Insurance Information Association. Home insurance rates in the cities of Houston and Dallas cost $3,183 and $3,107, respectively, about 70% higher than the state average.

8. North Dakota

Average annual premium: $1,841
Percent of median household income spent: 2.63%
Percentage more than national average: 40%

North Dakota has some of the harshest winters in the country, averaging about 50 days with sub-zero temperatures each year, causing pipes to freeze and burst. Some eastern portions of the state also have an above-average risk of flooding.

9. Kentucky

Average annual premium: $1,839
Percent of median household income spent: 3.30%
Percentage more than national average: 40%

Kentucky sits along the pathway of many hurricanes and tornadoes. It also has an above-average risk of flooding. Homeowners in Lexington and Louisville, however, can expect to pay lower than state average premiums at $1,381 and $1,683 per year, respectively.

10. Montana

Average annual premium: $1,826
Percent of median household income spent: 3.03%
Percentage more than national average: 39%

Scenic Montana recorded more than 2,400 wildfires last year, which is the fourth highest in the nation. These blazes burned nearly 3,700 acres of landline. Apart from this, the western part of the state is seismically active, making it susceptible to earthquakes.

Read more: Catastrophic weather caused 39% of all home insurance claims in 2020 – report

The least expensive states for home insurance

1. Hawaii

Average annual premium: $376
Percent of median household income spent: 0.43%
Percentage less than national average: 71%

Hawaii is relatively safe from the impacts of many natural calamities common in the US mainland, including tornadoes, hailstorms, and blizzards. This makes home insurance in the state the cheapest in the nation. Homeowners there, however, are still wary of earthquakes, wildfires, and flooding, which are the most common causes of property damage. Annual home insurance rates in the city of Honolulu are slightly below the state average at $372.

2. Utah

Average annual premium: $647
Percent of median household income spent: 0.77%
Percentage less than national average: 51%

Utah is another state that is relatively protected from many natural disasters. Flooding is a concern, but mostly in the southern regions. The state also experiences extreme heat during summertime and strong snowstorms during the winter. 

3. Delaware

Average annual premium: $680
Percent of median household income spent: 0.92%
Percentage less than national average: 48%

Despite having an increased risk of flooding, Delaware still boasts annual home insurance rates that are almost 50% less expensive than the national average. The state is also prone to hurricanes, which is among the most common cause for insurance claims by residents.

4. Vermont

Average annual premium: $686
Percent of median household income spent: 0.92%
Percentage less than national average: 48%

Much of Vermont is made up of forested natural landscape. The state has a moderate risk of wildfire, recording 96 blazes in the past year, and a moderate-to-high risk of flooding. Vermont’s emergency preparedness ranks among the best in the country, making it one of the most protected states from natural disasters.

5. Oregon

Average annual premium: $712
Percent of median household income spent: 0.96%
Percentage less than national average: 46%

Although it boasts one of the cheapest annual average home insurance premiums, Oregon is not without risks. The state recorded more than 2,200 wildfires in 2020, burning more than 1.1 million acres of land. Its western portion is also prone to earthquakes. Portland boasts one of the lowest insurance rates in the state at $657 per year. On the other end of the spectrum is Eugene, with annual premiums averaging more than double the state average at $1,433.

6. New Hampshire

Average annual premium: $724
Percent of median household income spent: 0.83%
Percentage less than national average: 45%

Like other states in the Atlantic, New Hampshire is prone to hurricanes. But the state’s location and topography cause hurricanes to lose intensity as they move northwards, keeping most of New Hampshire out of harm’s way. Flooding, however, is a primary concern for homeowners.

7. Pennsylvania

Average annual premium: $730
Percent of median household income spent: 1.03%
Percentage less than national average: 44%

Pennsylvania is another state that is prone to flooding. However, the risks of wildfires and snowstorm are lower compared to other states, pushing down premiums. Annual home insurance rates in Pittsburgh are slightly above the state average at $741, while those in Philadelphia are at $1,151, mainly because of higher incidences of theft and vandalism.

8. New Jersey

Average annual premium: $751
Percent of median household income spent: 0.86%
Percentage less than national average: 43%

Home insurance premiums in New Jersey are surprisingly among the least expensive in the US despite the entire state having a high risk of flooding. It also recorded almost 2,000 wildfires last year, which burnt nearly 12,000 acres of land. Annual insurance rates in Newark are at $868, while premiums in Jersey City cost $824 per year, both above the state average.

9. Wyoming

Average annual premium: $805
Percent of median household income spent: 1.24%
Percentage less than national average: 39%

Wyoming registered 828 wildfires last year, which is relatively low compared to other Western states. The damage, however, is among the highest in the country, burning a total of 340,000 acres of land. Despite this, yearly home insurance rates in Wyoming are almost 40% cheaper than the national average.

10. Nevada

Average annual premium: $822
Percent of median household income spent: 1.16%
Percentage less than national average: 37%

Annual home insurance rates in Nevada are about 37% less expensive than the US average, although many areas in the state are prone to flooding. Its western portion also has a relatively high risk of earthquakes. Another thing many Nevada homeowners may need to endure are periods of extreme heat during the year. Annual home insurance rates in Reno are below the state average at $782, while premiums in Las Vegas are a bit higher at $905.