Triple-I Blog | Home Insurance Costs Outpace Inflation, 2000-2020

By Max Dorfman, Triple-I Research Writer

According to new research from the National Home Insurance Association, the cost of home insurance outpaced inflation from 2000 to 2020. Insurance Research Council (IRC) – like Triple-I, its affiliates graduate SchoolDuring this period, the IRC found that insurance was least expensive in Utah and least expensive in Louisiana.

IRC Research Brief, Home Insurance Affordability: National Trends and State ComparisonsAccording to the report, the average home insurance expenditure in the United States in 2020 was $1,311, while the median household income in the same year was $68,010. The data does not include flood and earthquake insurance, neither of which are included in standard homeowners policies.

Median household income comes from the U.S. Census Bureau, and average home insurance spending data comes from the National Association of Insurance Commissioners (NAIC). Because the most recent data from the NAIC is for 2020, the affordability index does not reflect the COVID-19 pandemic and the war in Ukraine.

In the most affordable state of Utah, households spend just 0.92% of their income on home insurance. Oregon, Wisconsin, Washington and New Hampshire are the states with the lowest spending-to-revenue ratios.

Catastrophes play a big role in states where home insurance is the most unaffordable. Louisiana topped the list, accounting for 3.84% of 2020 revenue. The other least affordable states are Florida, Oklahoma, Mississippi and Alabama.

Some of these higher costs are due to hurdles insurers face following catastrophic events related to fraud, excessive claims and abuse of the legal system. These cost drivers are causing coverage to become more unaffordable across the country.

Additionally, certain areas are experiencing an affordability and availability crisis as some insurers respond by reducing coverage or exiting specific markets. The research brief notes that examining trends in cost drivers can reveal opportunities to improve affordability and availability for all consumers.

Want to learn more about the risk crisis and how insurance companies are responding to it? Please check out Triple-I’s upcoming town hall,”Respond to risks and crises,” will be held on November 30 in Washington, D.C.

learn more:

Triple-I Issue Brief: How Inflation Affects Property Insurance Rates and How It Doesn’t

Triple-I Issue Brief: Drivers of Home Insurance Rate Increases

Triple-I Issue Brief: Proposition 103 and California’s Risk Crisis

Triple-I Issue Brief: Florida Home Insurance Crisis

Triple-I Issue Brief: Louisiana Insurance Crisis

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