Home Insurance Rates Make or Break the Best and Worst States To Retire

Your retirement years are usually when life becomes a little more predictable: daily routines are formed, social security benefits are secured, and you’ve likely put down roots somewhere. If you’re on a fixed retirement income, you’ve probably also ironed out any kinks in your budget. However, depending on where you’ve decided to spend your retirement years, your home insurance premium could throw off that balance. Bankrate’s 2025 Best and Worst States to Retire Study and 2025 Home Insurance Affordability Ranking confirm that homeowners in some of the worst states for retirement pay some of the highest average premiums.

Rising home insurance costs can harm retirees

“For those on fixed incomes, it’s hard to overstate the importance of keeping a tight rein on costs,” says Jim Royal, Bankrate’s principal investing and wealth management writer. “With many retirees on tight budgets and having little ability to generate other income, each expense is a trade-off with something else that might be just as important.”

In retirement, your main source of income changes from your paycheck to Social Security benefits, pension plans, annuities, personal savings, retirement accounts and other avenues. No matter where you get your money from, it’s typically the same amount per month. “If any major item of their budget starts swelling, retirees often need to trim back their costs elsewhere,” says Royal.

For some retirees, that bloated expense could be their homeowners insurance premium. Your rate isn’t set in stone; when your policy renews, your insurance company could jack up your rate, even if you haven’t filed a claim. Nationally, home insurance rates have gone up more than 9 percent, or $209 per year, from July 2023 to July 2025, according to Bankrate’s Home Insurance Affordability Ranking. It might not sound like much, but some states, like Nebraska, Louisiana, California and Michigan, have seen rates increase by more than $500 over two years — and that’s for homeowners who have maintained good credit and not filed a claim.

The worst states to retire in have some of the highest home insurance costs

Louisiana was ranked the worst state to retire in Bankrate’s Best and Worst States to Retire Study. A key factor in this ranking is that it’s the second-most expensive state for home insurance as of July 2025. The average cost of a policy with $300K in dwelling coverage is $6,184 per year. Nebraska topped Louisiana in terms of home insurance costs, with the average policy costing $6,245 annually, and was also ranked poorly in terms of retirement, taking the 46th spot. The average cost of policy in Nebraska increased by $881 from 2023 to 2025, the largest dollar amount of any state.

The other worst retirement states were concentrated in the Sun Belt. Texas, Oklahoma and Arkansas took rankings 49, 48 and 47, respectively, in Bankrate’s Best and Worst States to Retire Study, and all three have above-average home insurance costs.

What about Florida?

Florida has been a longtime retiree’s haven for its sunny weather and favorable tax environment. But, it ranked 41 out of 50 in the Best and Worst States to Retire Study. It also earned the third-worst score in the affordability category. As of July 2025, Florida is the third-most expensive state for home insurance, with the average policy costing $5,695 per year.

The Sunshine State’s beleaguered home insurance market has made headlines for years, with prices on the rise and insurance companies going belly up. Recent legislative reforms have helped current carriers turn a profit plus helped new ones enter the state — both firsts in several years — but change may not come swiftly enough for Florida homeowners who continue to shoulder sky-high insurance costs.

Extreme weather drives up home insurance rates in retirement hotspots

Even if you don’t file a claim or make any changes to your policy, why do home insurance costs keep going up? While much of your premium depends on factors unique to a policyholder and their home, there’s a lot that goes into pricing that’s out of your control.

Home insurance pays to rebuild your home from a covered loss, like a wildfire or hailstorm. When it becomes more expensive to rebuild, home insurance costs usually rise in tandem. Rebuilding costs grew by 4.2 percent from July 2025 to July 2025, according to data from Verisk. While this is down from 2023 to 2024’s 5.2 percent growth, it still costs more to rebuild a home now than it did a few years ago.

Home repairs aren’t just more expensive — in some areas of the country, they’re becoming more likely. In 2014, around 49 percent of newly built U.S. homes were in “severe” or “extreme” climate risk ZIP codes. By 2023, that figure grew to 57 percent, according to an analysis by the Financial Times. 39 percent of all homes, not just new builds, were in high-risk climate zones by the end of 2024 — around 4 million more than a decade earlier.

It’s not just future risk or numbers in a study; to a home insurance company, the climate crisis is a matter of dollars and cents. From 2013 to 2023, U.S. insurance companies paid out more than $655 billion in insured natural disaster losses.  During the three-year period from 2020 to 2022, losses totaled nearly $296 billion.

When setting premiums and filing for rate changes, insurance companies have to balance recouping cash from past claims and ensuring they’re financially prepared for future ones. With extreme weather showing no signs of slowing down, and more homes in the path of the storm, retirees may need to continue bracing for high insurance costs.

How to keep home insurance rates low in retirement

For most retirees, uprooting to a different state just for lower home insurance costs isn’t an option. Trimming back coverage on a home insurance policy isn’t a sound option for most homeowners, as underinsuring your property could leave you financially exposed to extreme weather events. But, for retirees with already-strained budgets, there can be a strong temptation to do so. Instead of slashing coverage to get a lower premium, these strategies can help keep your home insurance costs low: 

• Choose a high deductible: Your deductible represents your financial responsibility when you file a claim. Switching from a $1,000 to a $5,000 deductible lowered home insurance costs by an average of $463 per year, according to Bankrate’s Home Insurance Affordability Ranking. Putting these savings into a high-yield account can help you save in the short term and ensure you can afford to pay your deductible if you need to.
• Look for senior and loyalty discounts: Many carriers offer discounts for senior customers, but you may also be able to find loyalty discounts if you’ve been with the same carrier for a number of years.
• Save your claims for larger losses: Filing a claim is likely to raise your rate, and you’ll also lose whatever claims-free discount was applied to your policy. If you’re in a state where it’s hard to get coverage, like California or Texas, filing a claim could be enough to get you dropped from your policy. In some cases (like smaller losses), it may more financial sense to use a home equity line of credit or other alternative method to pay for repairs.
• Make insurance part of your retirement plan: Rising rates mean insurance can no longer be an afterthought for many homeowners. If you are planning to relocate or downsize for retirement, compare rates and risk in potential areas to anticipate future insurance expenses.