High Insurance Rates Driving Homeowners Out of Florida and California

Soaring insurance costs and natural disasters are prompting some homeowners to leave areas and states where the insurance market is in crisis, according to a recent study by real estate company Redfin.

Nearly 12% of Floridians who plan to move in the next year said rising insurance costs are the reason they’re relocating. Nationally, 6.2% of movers cited insurance costs as a factor. And in California, natural disasters inspired 13.1% of movers to relocate, while nationally 8.8% pointed to natural disasters as the reason for moving.

The average cost of homeowners insurance soared 19.8% in 2023, according to Insurify data. They’re likely to rise another 6% in 2024, Insurify analysts predict.

Impact of rising insurance costs

Redfin’s survey found that nationally 45% of homeowners have seen their insurance rates rise in the past year. An Insurify poll found an even larger percentage — 72.29% — experienced rate increases in 2023. The majority of those who saw increases in the Insurify poll reported their rates rose by $100 or more per month, including 4% who saw monthly increases of more than $500.

Rate increases were most common in Florida, where 70% of homeowners told Redfin their homeowners insurance costs rose in 2023. Florida has the most expensive homeowners insurance in the country, averaging $10,996 in 2023 — 421% higher than the national average.

Fewer options, more anxiety

Florida and California are both grappling with a home insurance crisis, as multiple insurers have either limited business in the states, withdrawn completely, or gone insolvent in the past few years.

Both Redfin’s and Insurify’s surveys underscore the effect that rising rates and fewer options are having on homeowners across the country.

In Florida, 12% of respondents to Redfin’s survey said their insurer stopped offering coverage for their homes; in California, the percentage was 10.7%, and nationally, it was 8.3%. And nearly 28% of Florida homeowners and 13.5% of Californians said they’re worried their insurer might drop them.

The insurance crises are also taking an emotional toll on homeowners, Insurify’s survey reveals. More than 12% worry they won’t be able to afford their insurance in the future because of rising costs. Nearly 28% said they were nervous about the future, and 23.68% were angry they had to pay more.

What’s next: Some homeowners are leaving

Florida and California are far from the only states where home insurance rates are soaring. Insurify predicts that Louisiana, which already has the second-highest homeowners insurance rates, will see a 23% increase in rates during 2024. Maine, Michigan, Utah, Montana, South Carolina, North Carolina, and Illinois will also see double-digit increases this year, Insurify predicts.

High insurance rates, and the natural disasters that are contributing to higher rates, may push even more people to relocate away from high-risk areas.

“Homeowners living in areas where insurance premiums are surging are at risk of seeing their properties gain less value than homeowners in areas with stable premiums — and in some cases, they may even lose money,” Daryl Fairweather, chief economist at Redfin, said in a news release. “Homes with low disaster risk and low insurance costs will likely become increasingly popular, and thus more valuable, as the dangers of climate change intensify.”