Finance
Home insurance costs are highest in these states – Here’s how to lower your premiums
Climate-related disasters are making the cost of insuring a home unbearable for many Americans, a recent report said. (iStock)
Soaring home insurance costs could force Americans out of states with the highest price tags, according to a recent report.
Home insurance premiums for a $300,000 property in the U.S. increased 12% in 2023 to an average $1,770 per year, the Insurify report said. However, homes in areas at risk of more climate-related damages tend to pay higher premiums, while homes in less disaster-prone areas pay less.
For example, homeowners in Florida — a state battered by high-cost natural disasters — pay an annual average of $9,213. Americans living in Vermont, a “very low” or “relatively low” risk state in FEMA’s National Risk Index, pay an average rate of $914.
Moreover, homeowners in disaster-prone areas face the challenge of finding an insurer. The cost of climate-related catastrophes has pushed several major home insurers to stop renewing certain policies or leave states like Florida and California entirely.
“Nearly 75% of people who bought real estate in 2020 and 2021 have regrets about their purchases, with 30% saying they spent too much money, the 2022 American Home Buyer Survey by Anytime Estimate reveals,” the report said. “The rising cost of home insurance presents another obstacle, especially for homebuyers who pushed their budgets to the limit to secure a low mortgage rate.”
These are the ten states where least affordable states for insurance and how much homeowners paid on average in 2023:
- Florida, $9,213
- Oklahoma, $4,782
- Mississippi, $4,017
- Texas, $3,969
- Kansas, $3,245
- Georgia, $2,173
- Nebraska, $3,519
- Massachusetts, $1,649
- New York, $1,942
- Colorado, $3,308
If you have a mortgage, you’re typically required to carry homeowners insurance, but you don’t have to stick with any particular insurance company. Visit Credible to compare home insurance rates from top insurance carriers all in one place.
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Car insurance rates impacted by climate risk
The higher cost of covering climate-related damages has pushed several insurers to leave markets at higher risk of natural disasters, according to a second report by Insurify.
In the last few years, Allstate, American International Group, Inc. (AIG), Farmers, Nationwide, AAA Insurance and State Farm have either pulled or reduced coverage in California, Florida and Louisiana. In some cases, these companies chose to withdraw coverage completely, while in others, they avoided the state’s most at-risk properties.
It’s not only home insurance that is being impacted, according to Betsy Stella, Insurify vice president of carrier management and operations. Cars are increasingly being caught and destroyed in fires and floods, and severe cold snaps that bring ice increase the likelihood of collisions.
“This has led to auto insurers paying a higher number of — and a higher price for — customer claims,” Stella said in a statement. “As a result, customers are seeing higher premiums as insurers increase prices to cover these losses.”
If you want to save on your car insurance costs, consider changing your auto insurance provider for a lower monthly rate. Visit Credible to shop around and find your personalized premium without affecting your credit score.
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Disaster-proof your home to lower costs
Beyond moving to a low-risk state, homeowners can take these steps to disaster-proof their homes, lower insurance costs and protect their investments, according to Insurify.
Insurers recommend trimming trees and branches away from the house, inspecting a home’s roof to repair loose or damaged shingles, securing loose gutters and sealing gaps and cracks around windows and doors to prevent water intrusion. These are all low-cost ways to help reduce potential damage to homes. Upgrading a home to include a wind-rated garage door or hurricane shutters could also help reduce the impact of major hurricanes.
“Buying a home in an area with fewer severe weather risks could save homeowners from exorbitant climate-related rate hikes for now,” the report said. “But homeowners insurance prices in lower-risk states might not remain stable for an entire 30-year mortgage.
“As climate change progresses, home insurance rates will likely continue rising to make up for the risk, threatening the American dream of homeownership,” the report continued.
Whether your concern is hurricane damage, tornado damage, wind damage, flood damage, or beyond — it’s best to obtain multiple quotes from several insurance companies to compare prices and what is and isn’t covered. To help you find the best insurance rate for your situation, visit Credible to compare multiple providers and choose the right option.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
WASHINGTON – The Federal Reserve on Wednesday lowered its key interest rate by a quarter percentage point, the third consecutive reduction and one that came with a cautionary tone about additional reductions in coming years.
In a move widely anticipated by markets, the Federal Open Market Committee cut its overnight borrowing rate to a target range of 4.25%-4.5%, back to the level where it was in December 2022 when rates were on the move higher.
Though there was little intrigue over the decision itself, the main question had been over what the Fed would signal about its future intentions as inflation holds steadily above target and economic growth is fairly solid, conditions that don’t normally coincide with policy easing.
In delivering the 25 basis point cut, the Fed indicated that it probably would only lower twice more in 2025, according to the closely watched “dot plot” matrix of individual members’ future rate expectations. The two cuts indicated slice in half the committee’s intentions when the plot was last updated in September.
Assuming quarter-point increments, officials indicated two more cuts in 2026 and another in 2027. Over the longer term, the committee sees the “neutral” funds rate at 3%, 0.1 percentage point higher than the September update as the level has drifted gradually higher this year.
“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Chair Jerome Powell said at his post-meeting news conference. “We can therefore be more cautious as we consider further adjustments to our policy rate.”
“Today was a closer call but we decided it was the right call,” he added.
Stocks sold off following the Fed announcement while Treasury yields jumped. Futures pricing pared back the outlook for cuts in 2025 to one quarter point reduction, according to the CME Group’s FedWatch measure.
“We moved pretty quickly to get to here, and I think going forward obviously we’re moving slower,” Powell said.
For the second consecutive meeting, one FOMC member dissented: Cleveland Fed President Beth Hammack wanted the Fed to maintain the previous rate. Governor Michelle Bowman voted no in November, the first time a governor voted against a rate decision since 2005.
The fed funds rate sets what banks charge each other for overnight lending but also influences a variety of consumer debt such as auto loans, credit cards and mortgages.
The post-meeting statement changed little except for a tweak regarding the “extent and timing” of further rate changes, a slight language change from the November meeting.
Change in economic outlook
The cut came even though the committee jacked up its projection for full-year gross domestic product growth to 2.5%, half a percentage point higher than September. However, in the ensuing years the officials expect GDP to slow down to its long-term projection of 1.8%.
Other changes to the Summary of Economic Projections saw the committee lower its expected unemployment rate this year to 4.2% while headline and core inflation according to the Fed’s preferred gauge also were pushed higher to respective estimates of 2.4% and 2.8%, slightly higher than the September estimate and above the Fed’s 2% goal.
The committee’s decision comes with inflation not only holding above the central bank’s target but also while the economy is projected by the Atlanta Fed to grow at a 3.2% rate in the fourth quarter and the unemployment rate has hovered around 4%.
Though those conditions would be most consistent with the Fed hiking or holding rates in place, officials are wary of keeping rates too high and risking an unnecessary slowdown in the economy. Despite macro data to the contrary, a Fed report earlier this month noted that economic growth had only risen “slightly” in recent weeks, with signs of inflation waning and hiring slowing.
Moreover, the Fed will have to deal with the impact of fiscal policy under President-elect Donald Trump, who has indicated plans for tariffs, tax cuts and mass deportations that all could be inflationary and complicate the central bank’s job.
“We need to take our time, not rush and make a very careful assessment, but only when we’ve actually seen what the policies are and how they’ve been implemented,” Powell said of the Trump plans. “We’re just not at that stage.”
Normalizing policy
Powell has indicated that the rate cuts are an effort to recalibrate policy as it does not need to be as restrictive under the current conditions.
“We think the economy is in really good place. We think policy is in a really good place,” he said Wednesday.
With Wednesday’s move, the Fed will have cut benchmark rates by a full percentage point since September, a month during which it took the unusual step of lowering by a half point. The Fed generally likes to move up or down in smaller quarter-point increments as its weighs the impact of its actions.
Despite the aggressive moves lower, markets have taken the opposite tack.
Mortgage rates and Treasury yields both have risen sharply during the period, possibly indicating that markets do not believe the Fed will be able to cut much more. The policy-sensitive 2-year Treasury yield jumped to 4.3%, putting it above the range of the Fed’s rate.
In related action, the Fed adjusted the rate it pays on its overnight repo facility to the bottom end of the fed funds rate. The so-called ON RPP rate is used as a floor for the funds rate, which had been drifting toward the lower end of the target range.
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