8 Reasons Homeowners Insurance Will Cost You More in 2024

INSURANCE - HOME INSURANCE
Homeowners in some states will find themselves with huge increases in 2024.
Updated April 9, 2024
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After a brutal 21% increase in 2023, homeowners insurance rates are poised for another potential spike this year.

Blame a combination of sky-high construction costs and devastating natural disasters that leave insurers footing the bill for more and more rebuilds.

Buckle up as we explore the states facing the steepest hikes, unpack the reasons behind the trend, and what you can do to lower your financial stress.

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1. Inflation

Funtap/Adobe inflation control concept

Replacement costs were up 55% between 2019 and 2022, and that's not trending downward. 

It's simply more expensive to buy the same items you had in your home today. Blame it on the supply chain, inflation, and the rising costs of life in 2024.

2. Increased building costs

sculpies/Adobe male carpenter fixing roof

Insurance rates will continue to increase, particularly as it becomes more and more expensive to build homes. 

The price to build the same home today is more than it was a few years ago, and that’s because of both rising costs of supplies and labor and scarcity. It’s hard to get both supplies and people to build the homes.

3. More natural disasters

sdecoret/Adobe tornado on road

Because of climate change and weather patterns, there are more natural disasters today than decades ago. 

Wildfires and flooding are doing more damage than previously, and insurers have to adjust their premiums because of the rising costs of fixing the damage.

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4. People living closer to disaster areas

Victor zastol'skiy/Adobe kids and flooding

As more people build homes on the water or in wildfire-prone areas, more people will be impacted by natural disasters. That leads to more houses being destroyed and, eventually, higher premiums.

5. More claims filed

awpixel.com/Adobe man writing insurance application

If you file a significant claim, your homeowners insurance will probably go up. And, as more disasters hit and more people file claims, the rates will continue to climb.

6. People are improving their homes

Krakenimages.com/Adobe thinking about renovation

With mortgage rates still higher than in previous years, more people are staying in their homes and choosing to renovate. This is great for their quality of life — except for their insurance rates. 

Improvements to a home, like adding a pool or addition, will often cause the insurance to skyrocket because that home becomes more expensive to replace

7. Your insurance score dropped

fizkes/Adobe senior woman stressed while working

Insurance companies rate premium holders based on their likelihood of filing a claim. The more likely you are, the lower your score. The lower your score, the higher your rate.

8. Insurance companies have pricing power

Drazen/Adobe senior couple consulting bank manager

While you’re not required to get homeowners insurance to buy a house, most mortgage lenders will require you to have it. 

That means they have a hold on the industry since most people will need it, and that means they get to call the shots on pricing.

States with the highest increases

pololia/Adobe Man shocked while reviewing bill

In some states, like Florida, some insurance companies have decided it’s too expensive to operate at all — and those that have stayed are hiking prices up to unimaginable highs.

Here’s a look at the states with the worst increases and why the rates are rising there.

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1. Florida

BEKIR/Adobe north miami beach

Florida has always been hard-hit by hurricanes, but the last few years have brought significant flooding, especially with Hurricane Ian, which made landfall in September 2022. 

The widespread disaster caused by hurricanes and flooding made insurance companies raise home insurance rates by nearly 70% in 2024, from an average of $1,127 to $1,896 annually.

2. New Mexico

SeanPavonePhoto/Adobe santa fe new mexico

New Mexico’s average homeowners annual insurance rate rose 47%, from $855 to $1,255, because of major wildfires that stretched long beyond their normal season in 2023. This led to evacuations and destruction and made New Mexico a less appealing state for insurers.

3. Colorado

Kevin Ruck/Adobe drone village skyline aerial

In Colorado, homeowners insurance rates rose 46%, from $1,390 to $2,031. The Centennial State is known for its vast wildlife and mountain regions, but it's also becoming known for wildfires, hail, and extreme weather, all of which insurance companies don't want to see.

4. Idaho

SeanPavonePhoto/Adobe traffic on streets of idaho

Idaho has seen wildfires in recent years, which caused homeowners insurance rates to go up 46%, from $552 to $804. 

And the state may be doing this to themselves — nearly three-quarters of wildfires in Idaho in 2023 were caused by humans. Higher costs to rebuild homes in the area are also driving up premiums.

5. Texas

Kevin Ruck/Adobe downtown houston skyline

The Lone Star State also saw significant increases in homeowners insurance, rising 46%, from $1,471 to $2,141. Why? Flooding, hail, strong winds, and tornadoes all hit Texas in 2023 — and that’s during a year with no hurricanes, which the state is also prone to.

How to lower your homeowners insurance

opolja/Adobe Woman on phone reading paperwork

Fortunately, it's not a foregone conclusion that your homeowners policy will continue to skyrocket completely beyond your control. 

Let’s look at a few ways to keep your homeowners insurance in check.

1. Shop around

WESTOCK/Adobe man checking documents

When looking at homeowners insurance, you should get quotes from at least three companies. The premiums could be wildly different, so you don’t want to go with the first quote you get.

2. Raise your deductible

Monkey Business/Adobe couple reviewing finances

Raising your deductible could have major savings, so keeping a healthy emergency fund on hand in case of an emergency could save you more in the long run. Just going from $1,000 to $2,500 could save you 11% annually.

3. Ask about discounts

peopleimages.com/Adobe african american business woman

You won’t get what you don’t ask for, so it’s always worth asking your agent if they can offer a discount. There may be discounts for taking specific actions, like installing a home security system or installing storm shutters.

4. Don’t always use your insurance

Krakenimages.com/Adobe worker smiling holding a phone

Filing claims, even for minor issues, can raise your insurance costs over time.

If you have a manageable home issue and a healthy savings account, you might be able to tackle it yourself and avoid the potential premium increase.

Just make sure you don't ignore the problem to avoid costly home repairs later on.

Bottom line

Clayton Daniels/peopleimages.com/Adobe couple with note from bank

The future of homeowners insurance may bring higher premiums, but you don't have to be powerless.

Understanding your coverage needs, actively seeking discounts, and regularly evaluating your policy can help you keep more money in your bank account.

Remember, securing your home's future is an ongoing investment.

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Author Details

Heather Bien Heather Bien is a writer covering personal finance and budgeting and how those relate to life, travel, entertaining, and more. With bylines that include The Spruce, Apartment Therapy, and mindbodygreen, she's covered everything from tax tips for freelancers to budgeting hacks to how to get the highest ROI out of your home renovations.

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