What You Need To Know

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What You Need To Know


In January of 2016, the Department of Urban Housing and Development announced $48 million in federal grant money to help the community of Isle de Jean Charles in Louisiana. Today, these individuals are considered America’s first “climate refugees,” and research suggests they are far from the last.

Two years later, in a study published in The Journal of the Association of Environmental and Resource Economists, experts anticipated one in 12 Americans will move from the South toward California, the Mountain West, or the Northwest over the next 45 years due to climate change. For these future residents, relocation is merely an alternative, replacing imminent challenges with a greater possibility of safety and security. Nevertheless, the burdens of one region don’t negate the challenges of another.

Whether you move as a result of climate change, a career opportunity, retirement, or “a new start,” relocation encompasses a wide range of adjustments. Before you make the trek, there are multiple financial details worth researching, and one often forgotten factor is the wide range of homeowners insurance costs from coast to coast.

How much do homeowners insurance costs vary by state?

The Dramatic Impact Of Location On Homeowners Insurance: Why You Should Do Your Research Before You Relocate - How much do homeowners insurance costs vary by state?

According to Policygenius, the national average annual premium for homeowners insurance is $1,211; however, depending on where you live, this number can fluctuate by hundreds of dollars.

One of the primary reasons for such significant gaps in insurance premiums from state to state is simple geography. In short, the nation’s most expensive states in terms of homeowners insurance are also extremely prone to natural disasters.

Tornado Alley, for example, refers to a region in the heart of America with a “disproportionately high frequency of tornadoes.” Among other states, this region covers parts of Texas, Oklahoma, and Kansas, three of the country’s top five most expensive states, in terms of homeowners insurance.

On the other hand, areas like the West face significantly smaller risks when it comes to natural disasters, and insurance costs reflect this reality. In fact, the nation’s top four states in regards to most affordable homeowners insurance policies are all in the western part of the country, including Oregon, Utah, Idaho, and Nevada.

Take a look at the chart below to see how insurance costs in your state compare to the rest of the country.

Regions States included Rates compared to the national average ($1,211) Region in detail
Northeast Maine, Massachusetts, Rhode Island, Connecticut, New Hampshire, Vermont, New York, Pennsylvania, New Jersey, Delaware, Maryland Average The Northeast is a bit of a mixed bag when it comes to homeowners insurance rates. Policies in these states range between roughly $300 more or less than the national average, with Maine on the low end ($882) and Rhode Island up top ($1,551).
Southeast West Virginia, Virginia, Kentucky, Tennessee, North Carolina, South Carolina, Georgia, Alabama, Mississippi, Arkansas, Louisiana, Florida Above average The vast majority of the Southeast sits in above-average territory, and the farther south you travel, the higher the prices go. Most states in this region have rates between $1,000 and $1,500, but a few jump the $1,500 mark, like Louisiana (America’s most expensive state in terms of homeowners insurance) and Florida, both of which share average rates higher than $1,900.
Midwest Ohio, Indiana, Michigan, Illinois, Missouri, Wisconsin, Minnesota, Iowa, Kansas, Nebraska, South Dakota, North Dakota Average With the exception of a few especially lucky states, like Wisconsin ($779) and Ohio ($862), most of the Midwest offers relatively average homeowners insurance rates. However, Kansas and Nebraska reside in Tornado Alley, and their rates reflect the risks therein ($1,584 and $1,481, respectively).
Southwest Texas, Oklahoma, New Mexico, Arizona Above average The Southwest is home to two of the nation’s most expensive states, in terms of homeowners insurance; Texas takes the #2 spot, with rates around $1,893, and Oklahoma is close behind at $1,885. Meanwhile, Arizona and New Mexico are a little more fortunate, with below-average rates of $825 and $1,017, respectively.
West Colorado, Wyoming, Montana, Idaho, Washington, Oregon, Utah, Nevada, California, Alaska, Hawaii Below average The West boasts the nation’s most affordable homeowners insurance rates, with most states lower than $1,000. In fact, Colorado is the only state in this region with an above-average homeowners insurance rate, at $1,495. Oregon, on the other hand, is the cheapest in America, at just $677.

What other factors impact the cost of homeowners insurance?

The Dramatic Impact Of Location On Homeowners Insurance: Why You Should Do Your Research Before You Relocate - What other factors impact the cost of homeowners insurnce

Each state certainly has its own range of homeowners insurance costs, but your unique premium is based on a variety of factors.

The type of home you own

First of all, your homeowners insurance premium will depend on the size, age, and condition of your unique home. A certified appraiser can provide you with an estimated replacement cost, which explains the anticipated cost to rebuild your home from the ground up — or replace stolen belongings. A larger home will likely produce a higher replacement value, but older homes will do the same, as repairs are often more expensive in older properties.

Keep in mind the replacement cost for your home is not the same as its market value. The replacement cost is based on construction and labor costs as well as the price of necessary building materials. 

The amount of coverage you’re looking for

Your premium also changes depending on the amount of coverage you want and the deductible you select. For example, some homeowners may prefer $300,000 in liability coverage, while others think $100,000 will suffice. In the same way, standard deductibles may be $500 or as much as $2,000, and whichever you choose impacts your monthly payment.

Your personal information

Homeowners insurance costs also fluctuate based on your personal information. Details like your credit history, for instance, can play a significant role in the price you’re quoted for coverage. Nevertheless, you may be eligible for discounts, so be sure to ask your insurance agent what kinds of deals may apply to you and your home.

Your provider

Finally, another factor that can impact your homeowners insurance premium is the provider you select. Insurance companies consider a variety of factors and utilize different formulas and processes to determine appropriate costs for coverage. Consequently, it’s important to do your research and compare quotes from different providers before you make your selection.

How do you research homeowners insurance costs in your state?

The Dramatic Impact Of Location On Homeowners Insurance: Why You Should Do Your Research Before You Relocate - How do you research homeowners insurance costs in your state?

To help you research homeowners insurance costs in your state, check out independent resources like Policygenius and Young Alfred.

After you’ve answered a few simple questions about your home and finances, Policygenius provides you with a list of personalized quotes from top insurance companies. The process takes only a few minutes, so you can find the best deal fast! Furthermore, if you want to compare information on other forms of insurance — including life insurance, auto insurance, and even pet insurance — Policygenius is an excellent place to get started!

Young Alfred provides a similar service, but the application process is a little more thorough, and the results are a little more narrowed. Once you’ve submitted your answers, Young Alfred compiles the information and delivers a list of select results to your inbox in just a few hours. It may take a little longer than Policygenius to get your quotes, but Young Alfred works with more than 40 top insurance agencies, so don’t worry about missing a great offer!

What factors may be worth high homeowners insurance costs?

The Dramatic Impact Of Location On Homeowners Insurance: Why You Should Do Your Research Before You Relocate - What factors may be worth high homeowners insurance costs?

Citizens of Louisiana aren’t the only ones affected by climate change. Following the wake of Hurricane Maria, more than 150,000 Puerto Ricans relocated to the United States. As temperatures rise in Central America, Honduran farmers have been forced to relocate to new regions like Mexico and Texas. To top it all off, research suggests these trends will only intensify in the coming decades, as natural disasters continue to rattle the country and the world.

Climate change has only presented us a teaser, and the steep rates insurance companies are charging residents to live in these regions reveal they’re preparing for the worst. Nevertheless, millions of Americans will remain in their southern states, and this begs the question: what’s keeping them around?

Warm weather

There’s a reason places like Hawaii are ideal vacation destinations. It’s that sweet, sweet sunshine.

My husband and I live in Oregon, and every winter we make grand plans to escape south for warmer weather. Southern states like Florida and Texas are among the warmest in the country, with average temperatures of 65° or higher. Not surprisingly, both states boast impressive numbers in the tourism industry as well. In 2018, Florida brought in $112 billion in tourism revenue, and Texas took the lead, grossing roughly $164 billion.

Low taxes

There’s no denying that homeowners insurance premiums are steep in the south, but these states offer some economic perks as well.

In Louisiana, for example, homeowners insurance costs are more expensive than any other state, but property taxes are among the lowest in the nation, at just 2.06%. Similarly, residents of Texas and Florida may pay $600 more than the national average for homeowners insurance, but they also don’t pay income taxes.

And, while Oklahoma’s average insurance rate is one of the highest in the nation, the state’s total tax burden — encompassing property, income, sales, and excise taxes — is one of the best, at just 6.94% of a resident’s personal income.

Low cost of living

Southern states can offer more than attractive tax breaks. The cost of living down south is generally much cheaper than the rest of the country. In fact, according to the Missouri Economic Research and Information Center (MERIC), the three states with the lowest cost of living index are Mississippi, Oklahoma, and Arkansas, respectively.

A state’s cost of living factors in a variety of expenses, from transportation to housing, and these numbers swing wildly from state to state. In Washington, for example, the median listing price per square foot is $242, but in Oklahoma, you’ll pay less than half the cost, at just $106 per square foot. Despite these numbers, you may pay twice as much in homeowners insurance in Oklahoma (average rate of $1,885) than you would in Washington (average rate of $854)

Summary

It’s easy to see why experts anticipate climate change will prompt so many moves north in the future. It also makes sense why states with a higher probability of natural disasters require higher insurance premiums from homeowners. But, money isn’t everything to a homeowner, and one state’s struggles may appear as perks to another.

Before you ogle at a neighboring state’s affordable insurance rates, research other financial factors like tax burdens and cost of living. You may find your home offers benefits of its own!

Additionally, no matter where you reside, homeowners insurance providers vary in practice and in cost. Take advantage of free, independent resources like Policygenius and Young Alfred to compare quotes from top providers to be sure you’re getting the best rates.

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