Is California Home Owner's Insurance the Most Expensive? Nope. Believe it or not the home owner's insurance in Oklahoma is more expensive! According to a recent blog post by Ethan Atkinson, OnlineEd, "In Oklahoma, the average homeowners insurance costs $5,858 per year, compared to $4,800 in Florida for the same amount of coverage." The article didn't say what size home was average but if we figure $500,000 for those two states (which is probably high) then California would be about $2200- $2300 for the same size home depending on which source you use.
So why the differnce? Well, California and Florida both have strict limits for the premiums for certain coverages; Oklahoma, however, regulates its insurance companies loosely. When it comes to regulating insurance providers, Atkinson's article said, "Oklahoma’s insurance commissioner Glen Mulready recently said 'We’re not reviewing to see if they’re charging too much' and that insurance rates are set only 'by market forces within a competitive free market.'"
We all know that weather and natural disasters drive insurance rates and if you think that Oklahoma’s tornadoes cause more damage than anything in other states you are incorrect. We lived in Tulsa for two years and saw the destruction caused each year during tornado season. Per the Atkinson article this is about $6 billion annually.
In California our insurance companies are tightly regulated. That can help keep costs down for consumers, but it also shifts the problem of rising costs elsewhere and forces insurers to drop customers in high-risk areas or leave the state altogether (as a result, California recently loosened its insurance rules).
According to an article on Yale Climate Connections, "A recent paper by three economists found that insurers also compensate for this effect by raising rates in less-regulated states like Oklahoma, distorting insurance prices. The authors concluded that if insurance in all states were equally regulated, rates would have grown 20 percentage points faster in high-risk states relative to other states.
Anyway you look at it insurance feels very expensive and rates will probably continue to rise. Something like 1 in 7 home owners nationwide are opting out of insurance but that is a topic for another post.
