High-cost home insurance penalizes everyone, but it really takes its toll in states where there are many different types of losses.
The concept of insurance was created to spread the risk of loss among a large group of people, so that each person bears a small part of the risks. So when we’re discussing the kinds of risks that drive up homeowners insurance costs, that means the person who pays the premiums on their home in Northern Michigan is partially subsidizing the person who has a home on the coast. from louisiana
Hurricanes and tornadoes are just big wind storms. But they are not the only disasters that drive up insurance premiums. Fires, hail, and floods all contribute to higher premiums, and insurance companies pay more claims each year for smaller risks combined than they do for hurricanes.
A big risk that insurance companies no longer fear is mold. Until 2003, policyholders filed as many mold claims each year as fire claims. And, the trend for mold claims was on the rise. But, after the tragedy of September 11, 2001, insurance companies quietly convinced every insurance commissioner in America to allow them to exclude mold claims from coverage.
But, even though insurance companies get rid of most mold exposures, they still have to insure the other risks to homes. So, here are the ten most expensive states to insure a home. We will start with the smallest and proceed to number one.
10.Kansas – Author Frank Baum placed the book “The Wizard of Oz” in Kansas for good reason… it’s considered “tornado alley.”
9.Alabama – This state experiences tornadoes, hail, major thunderstorms, and hurricanes. Also, their building codes are stricter than those of their neighbors, which increases repair costs.
8. Rhode Island – Small state, long coastal exposure. So hurricanes that sweep up the east coast hit this state.
7.California – “Central Earthquake” plus wildfires, mudslides and coastal storms make this state an expensive place to insure a home.
6.Florida – sticks out into the Caribbean like a sore thumb and is hit often by hurricanes. One of the main reasons insurance is so expensive here is that dozens of insurers have pulled out of Florida. The biggest player in the market is Citizens Property, a state-operated hedge fund. His numbers don’t add up to Florida’s totals, or he’d probably be number one.
5. Mississippi – Lax building codes increase risks, as well as being a coastal state with hurricanes, tornadoes, hail and flooding.
4. District of Columbia – Construction costs in DC are higher than most places in the nation, as well as being considered Ground Zero for terrorism risks.
3.Oklahoma – High winds and large tornadoes make this state one of the states with the highest prices.
2. Louisiana – shares the same challenges as Mississippi, but adds a large population center below sea level.
And, in the first place (or in the worst place!)… Texas! Here, you can find all disasters in one place. Hurricanes, floods, hail, windstorms, and earthquakes make it difficult for insurance companies to remain profitable in Texas.
Target, take heart, insurance company fanatics! With new policy language called the “Anti-Competing Causation Clause,” insurance companies can now deny ALL claims where damage is caused by two or more risks. For more information, read “The Insurance Industry’s Latest Scam” in this forum.
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