The State of Homeowners Insurance in 2024: Are Rates Expected to Go Down?

Just a couple of days into 2024, State Farm announced that they would be raising California homeowners insurance rates by 20%. This came as no surprise, seeing that home insurance rates have gone up, on average, around 27% across the country.^[1]

Several carriers have pulled out of California, which saw rates skyrocket and insurers pull out of the state after suffering unexpected losses caused by wildfires. Florida also experienced the same fate because it was hit hard by severe weather, lawsuits and insurance fraud.

Homeowners insurance rates vary widely from state to state, even city to city. Currently, the average national homeowners insurance rate is $1,820 a year, or about $152 a month.^[2] Compare that to the average cost of home insurance in 2022, which was $1,213.89!

It’s important to note that while most states have seen an increase in homeowners insurance rates, not all states have been hit very hard. Those who live in a low-crime area that doesn’t get much affected by extreme weather or wildfires will see a less dramatic increase this year.

Vermont has the lowest average homeowners insurance rate of $816 and Oklahoma pays the most at $4,365 a year.^[2]

Key Takeaways The average home insurance premium is $152 a month in 2024, but prices vary widely based on location. Some insurers left Florida and California in 2023, due to a high number of losses. Homeowners insurance rates are expected to level off towards the end of 2024.

Will Homeowners Insurance Go Down in 2024?

Property and casualty insurance has gone up for both car insurance and homeowners insurance. Prices will continue to climb before leveling off towards the end of the year. It’s possible that after insurers catch up on their losses in 2025 that prices may begin to drop. Some experts are hopeful for this while others believe that inflationary prices may continue well into 2025.

In states like Colorado, California and Florida, rates have surged and prices may remain high until insurers break even after many losses due to wildfires, floods and other forms of extreme weather.

Per usual, Oklahoma, Texas, Arkansas, Kansas, Missouri and Louisiana have exceptionally high rates due to a high number of storms each year, namely tornadoes.

Home insurance rates have gone up, on average, around 27% across the country.

Why Are Insurers Leaving California and Florida?

Extreme weather, inflation, cost of materials as well as labor and other factors, which include insurance fraud, have impacted California and Florida more than other states, and many insurers have opted to cut back or stop selling both home and car insurance in those two states.

In Florida, a large number of roofing scams and claim litigation have increased homeowners insurance rates in that state. During the last three years, Florida has seen 80% of property claim lawsuits in the country.^[5]

While hurricane season has always made insurance rather expensive in Florida, especially after Hurricane Ian in 2022, frivolous lawsuits and fraudulent insurance claims were the last straw for some insurers: Bankers Insurance, Lexington Insurance and Farmers pulled out of Florida, and AAA would not renew some of its higher risk policies. Of the carriers who’ve remained in Florida, the average rate offered to homeowners is $2,385 a year.^[2]

California wildfires, floods and even a rare tropical storm in 2023 caused some insurers to step back while others raised rates for existing policyholders. Allstate, State Farm, Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company and Kemper Independence Insurance Company said they would not renew policies in California. Of the carriers who’ve remained in California, the average rate offered to California homeowners is $1,300 a year.^[2]

Factors Causing a Spike in Homeowners Insurance Rates

Low Inventory

Supply line disruptions caused by COVID pandemic caused shortages in construction materials and the kinks are just beginning to get worked out. Until then, the cost of materials will remain quite high.

High Labor Costs

Not only is labor more expensive than ever, there is a shortage of construction workers, making the job of repairing the home much more expensive than ever.

Severe Weather and Wildfires

Insurers are still reeling from the wildfires and severe storms from 2021 and 2022. However, 2023 was not without its share of expensive storms, even a new phenomena called atmospheric rivers, which caused 80% of flood damage on the coast.^[1]

See what exactly insurers are still struggling to pay off:

Type of Extreme Weather	Name/Location	Year	Losses
Wildfires	Colorado Wildfires	2021	$801.17 million
Winter	Winter Storm Uri	2021	$195.6 billion
Hurricane	Hurricane Ida	2021	$75 billion
Hurricane	Hurricane Ian	2022	$67 billion
Hurricane	Hurricane Idalia	2023	$20 billion
Wildfires	Hawaii Wildfire	2023	$6 billion
Atmospheric Rivers	West Coast	Annually	$1.1 billion

Rates went up across the country, but went up much more in the states that have been greatly impacted by severe weather, which includes wildfires caused largely by droughts as well hurricanes and winter storms. The extreme surge in rates in newly devastated states like Colorado, California and Florida does not apply to all states.

Reinsurance Prices Have Gone Up

Insurance companies rely on reinsurance companies to make sure they are whole after paying out all claims. Reinsurers have raised their prices, which forces insurers to raise theirs.

Currently, the average national homeowners insurance rate is $1,820 a year, or about $152 a month.

Rise in Insurance Fraud

The average consumer pays more for rampant insurance fraud, which costs the U.S. $308.6B every year. It’s estimated that 10% of all auto and home insurance claims in the country are fraudulent.^[6]

Higher Medical Costs

Prices will continue to increase by around 8% in 2024, for both medications and medical services.^[4] This increase in medical costs applies to the liability portion of a homeowners insurance policy. Injuries to third parties are covered by homeowners insurance, if they occur on the insured property.

Flood, Earthquake and DIC Insurance

Floods and earthquakes have their own insurance products, because homeowners insurance does not cover related claims. A DIC policy is also sold separately and covers landslides and mudslides. For protection against these types of disasters, look into what type of risk your location poses and buy a policy if the risk is worth the cost. A flood or earthquake can have devastating consequences, and FEMA is only able to pay out small claims for immediate recovery, which will not cover the cost of rebuilding.

Tips on How To Lower Homeowners Insurance Costs

Shop Around for the Best Rate

Using an online insurance comparison tool, you can do the work of gathering quotes much quicker than calling the carriers directly. Also, pricing changes daily so avoid taking days to gather your information and quotes. You never know which insurer will offer you the best rate until you ask. Doing it all in one shot just saves time and it’s free.

Ask About All Discounts

Before you buy the policy, take a good look at the discounts each carrier offers. Some offer more than others. Are you a veteran? Do you own more than one property and qualify for a multi-policy discount? Is there a discount for having a graduate degree? Discounts can easily knock off 25% of your monthly cost if you qualify for more than one discount. Do the math after the discounts are applied and see which carrier will charge the least.

Bundle Home and Auto

Sometimes, bundling home and auto will save you money, but not always. That’s why it’s important to compare prices, both separately and in bundles, as well as across several carriers. Ask what it would cost with the bundle and without. Then, see which option saves you the most money.

Schedule an Insurance Review

Sometimes insurance agents will schedule an annual review but sometimes they just auto-renew the policy without much fanfare aside from an email. It’s your duty to get on the phone and go over your policy. Be reasonable: everyone’s rates went up, but be persistent to see what you can do to lower your cost.

Improve Your Credit Score

Your credit score is a big factor in how you’re rated for home and car insurance, in most states. Take some time to catch up on debts and pay your bills on time. In six months to a year, check in with your insurance agent because you may be eligible for a lower home insurance rate.

Increase Your Deductible

When you increase your deductible, your monthly payments will be lower. Having a higher deductible will also make you more discriminating over which claims to file and which to pay out of pocket. Filing a claim will only raise your rate so avoid filing one unless it’s an expense you simply cannot shoulder alone. Filing too many claims may even get you dropped by an insurer.

Install a Home Security System

The more comprehensive a system you have, the higher the discount on your policy. A 24-hour monitoring system will get you a bigger discount than cheap cameras you buy for $20. However, you can set up your own security system using a moderately priced security system from Nest, Ring, SimpliSafe or Abode, all of which offer great security packages at reasonable prices.