1-in-5 properties in Mississippi, Louisiana and New Mexico don’t have disaster insurance— And here’s why they should

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No one can predict when disaster will strike. But having the right type and amount of homeowners insurance could provide financial protection for your property and belongings if you become a victim of an unforeseen catastrophe. Of course, that protection is only effective if it’s in place before you need it.

The newest LendingTree study examines properties with fire, hazard or flood insurance — a combined look from the U.S. Census Bureau that we’re referencing as disaster insurance.

Read on to discover important details, including the percentage of properties without insurance, where premiums are highest, where property owners put the highest percentage of their household income toward these insurance types and more.

  • At least 20% of owner-occupied properties in Mississippi, Louisiana and New Mexico don’t have fire, hazard or flood insurance. Two of the states most at risk for flooding — Mississippi and Louisiana — have the highest share of properties without disaster insurance, at 22.2% and 20.5%, respectively. New Mexico — a state at increased risk for wildfires — joins them, also at 20.5%. The states with the smallest share of properties without disaster insurance are Oregon (8.1%), Utah (8.3%) and the District of Columbia (8.8%).
  • Florida property owners owe the highest annual disaster insurance premiums. Annual disaster insurance premiums on owner-occupied properties average $2,324 in Florida — another state at high risk for flooding — far ahead of Louisiana ($1,956) and Colorado ($1,920). West Virginia ($915) is the only state with average disaster insurance premiums below $1,000, beneath Wisconsin ($1,029) and Maine ($1,043).
  • The states where property owners spend the highest percentage of their household income on disaster insurance are Florida, Louisiana and Oklahoma. Florida (1.96%) and Louisiana (1.93%) join tornado alley state Oklahoma (1.83%) at the top. The states where property owners spend the smallest share of their household income on this are the District of Columbia (0.67%), Utah (0.82%) and New Hampshire (0.84%).
  • Property owners with disaster insurance have significantly higher property values in every state than those without it. The biggest difference is 102.0% in Louisiana, where property values average $278,613 for those with insurance and $137,955 for those without. At the bottom of the list is New Hampshire, at a still significant 12.9% difference — $448,861 (with) and $397,503 (without).

Our analysis examines U.S. Census Bureau 2022 American Community Survey (with one-year estimates) data. Specifically, the survey asks respondents about “fire, hazard and flood insurance.”

We’re defining this as “disaster insurance” in this study as an overarching term for insurance protections against disasters rather than a specific type of product.

The survey data doesn’t differentiate among the three types of insurance, so we can’t specify — for example — whether a property has hazard insurance but not flood and fire insurance.

Below are the three types of insurance examined in our study. As a reminder, these types of insurance collectively make up the definition of “disaster insurance” in our study.

  • Fire insurance: This provides financial coverage if your house or belongings are damaged or destroyed during a fire (including wildfires). In general, this type of coverage is included in a standard homeowners policy.
  • Hazard insurance: Hazard insurance is the part of your homeowners insurance policy that covers the structure of your home if you experience damage or loss from perils such as theft, fire, smoke, hailstorms, windstorms, explosions, lightning and more.
  • Flood insurance: This type of coverage can protect you if your home or belongings are damaged due to flooding. Renters can also purchase flood insurance (typically separate from traditional renters insurance). If you have a mortgage on your home and live in a flood-prone area, your lender may require you to purchase separate flood insurance on top of standard homeowners coverage.

Depending on where you live and the type of property you own, you may want to consider purchasing all three types of insurance. Yet despite the importance of having adequate coverage to protect your home and belongings, many homeowners and renters lack disaster insurance.

Three states at high risk for various natural disasters have the highest percentage of homeowners without disaster insurance coverage. Mississippi and Louisiana (at high risk for flooding) have a troubling number of owner-occupied properties without disaster insurance. In Mississippi, 22.2% of homeowners lack this coverage, along with 20.5% of homeowners in Louisiana. Meanwhile, 20.5% of New Mexico homeowners have no disaster insurance, even though the state experiences a higher-than-typical risk of wildfires.

There are many reasons why people may choose to go uninsured or underinsured, but cost is a common factor.

“When a family experiences financial hardship, they have to make tough financial decisions,” says Rob Bhatt, LendingTree insurance expert and a licensed insurance agent. “Insurance may be one of those things that gets dropped.”

The median household income in Mississippi, the state with the highest percentage of properties lacking disaster insurance, was $52,719 in 2022 — the lowest in the U.S. Mississippi, Louisiana and New Mexico are also among the 10 states with the highest poverty rates in the nation.

On the opposite end of the spectrum, the states with the lowest percentage of uninsured properties — aka those lacking disaster insurance — are:

  • Oregon: 8.1%
  • Utah: 8.3%
  • District of Columbia: 8.8%

In the District of Columbia, where the vast majority of homeowners (91.2%) have disaster insurance, the median household income in 2022 was nearly double that of Mississippi, at $101,027. This is a stark contrast to the states with lower median incomes where the percentage of uninsured homeowners is significantly higher.

Below is a deeper look at each state and the percentage of owner-occupied properties with and without disaster insurance:

Percentage of owner-occupied properties without disaster insurance by state

Rank State % of properties with disaster insurance % of properties without disaster insurance
N/A U.S. 87.4% 12.6%
1 Mississippi 77.8% 22.2%
2 Louisiana 79.5% 20.5%
2 New Mexico 79.5% 20.5%
4 West Virginia 80.7% 19.3%
5 Alaska 81.7% 18.3%
6 Alabama 82.5% 17.5%
7 Oklahoma 82.8% 17.2%
8 Florida 82.9% 17.1%
9 North Dakota 83.0% 17.0%
10 Texas 83.4% 16.6%
11 Arkansas 83.8% 16.2%
12 Kentucky 83.9% 16.1%
13 Wyoming 84.5% 15.5%
13 South Carolina 84.5% 15.5%
15 South Dakota 84.9% 15.1%
16 Kansas 85.1% 14.9%
16 Montana 85.1% 14.9%
18 Michigan 86.5% 13.5%
19 Tennessee 87.0% 13.0%
19 Indiana 87.0% 13.0%
21 Arizona 87.2% 12.8%
22 Missouri 87.5% 12.5%
23 Nebraska 87.7% 12.3%
24 Georgia 88.0% 12.0%
24 Iowa 88.0% 12.0%
26 Maine 88.2% 11.8%
27 North Carolina 88.3% 11.7%
28 Wisconsin 88.6% 11.4%
29 Hawaii 88.9% 11.1%
29 Ohio 88.9% 11.1%
29 Nevada 88.9% 11.1%
32 New York 89.0% 11.0%
33 Minnesota 89.4% 10.6%
34 Delaware 89.5% 10.5%
34 Pennsylvania 89.5% 10.5%
36 Connecticut 89.6% 10.4%
36 Vermont 89.6% 10.4%
38 Illinois 89.7% 10.3%
39 Idaho 89.9% 10.1%
40 Rhode Island 90.0% 10.0%
40 New Jersey 90.0% 10.0%
40 Virginia 90.0% 10.0%
43 Washington 90.3% 9.7%
44 Colorado 90.5% 9.5%
45 Massachusetts 90.6% 9.4%
45 California 90.6% 9.4%
47 Maryland 91.0% 9.0%
48 New Hampshire 91.1% 8.9%
49 District of Columbia 91.2% 8.8%
50 Utah 91.7% 8.3%
51 Oregon 91.9% 8.1%

Source: LendingTree analysis of U.S. Census Bureau 2022 American Community Survey (with one-year estimates) data.

It’s no secret that homeowners insurance rates have been rising across the country. But in some areas, insurance premiums are far more costly than in others. Florida property owners, for example, pay the highest annual disaster insurance rates ($2,324). The state with the second highest premiums is Louisiana ($1,956), followed closely by Colorado ($1,920).

Florida and Louisiana are two of the states with the highest risk of flooding in the country, thanks in large part to the powerful storms that have historically frequented these coastal areas. Therefore, it makes sense that insurers would charge higher premiums to offset the risks they face when insuring homeowners in these states.

Also, Colorado has experienced many wildfires in the recent past. These natural disasters have driven up insurance premiums and made it difficult for some homeowners to maintain disaster coverage.

“When these types of disasters strike, insurance companies have to pay out more money to rebuild homes,” Bhatt says. “They recoup these costs by charging higher rates in these areas, often spread out over an entire region or state.”

By comparison, the states where property owners pay the lowest annual disaster premiums are:

  • West Virginia: $915
  • Wisconsin: $1,029
  • Maine: $1,043

Average annual disaster insurance premiums by state

Rank State Average annual disaster insurance premiums
N/A U.S. $1,399
1 Florida $2,324
2 Louisiana $1,956
3 Colorado $1,920
4 Texas $1,901
5 Oklahoma $1,874
6 Kansas $1,733
7 Connecticut $1,727
8 Nebraska $1,682
8 Rhode Island $1,682
10 Massachusetts $1,677
11 Minnesota $1,628
12 Hawaii $1,586
13 California $1,585
14 Mississippi $1,558
15 Montana $1,548
16 South Dakota $1,507
17 North Dakota $1,503
18 Wyoming $1,502
19 New York $1,500
20 Missouri $1,496
21 Georgia $1,461
22 District of Columbia $1,419
23 New Jersey $1,412
23 Alabama $1,412
25 South Carolina $1,401
26 Maryland $1,361
27 Alaska $1,341
28 Tennessee $1,327
29 Washington $1,318
30 Arkansas $1,309
31 Virginia $1,284
32 Iowa $1,268
33 New Mexico $1,265
34 Kentucky $1,264
35 Illinois $1,261
36 North Carolina $1,258
37 Indiana $1,194
38 New Hampshire $1,132
39 Oregon $1,106
39 Vermont $1,106
41 Idaho $1,089
42 Michigan $1,083
43 Ohio $1,076
44 Arizona $1,075
45 Delaware $1,072
46 Pennsylvania $1,069
47 Nevada $1,065
48 Utah $1,064
49 Maine $1,043
50 Wisconsin $1,029
51 West Virginia $915

Source: LendingTree analysis of U.S. Census Bureau 2022 American Community Survey (with one-year estimates) data.

Of course, whether you live in a high-cost or low-cost state when it comes to disaster insurance premiums, numerous factors could affect your insurance rates. The size and age of your home, the estimated replacement cost of your property, the deductible you choose and your credit score might affect your insurance rates.

Total disaster insurance premiums paid by state

Rank State Total disaster insurance premiums paid
N/A U.S. $108,982,154,234
1 Florida $11,427,661,112
2 Texas $10,994,806,096
3 California $10,865,674,275
4 New York $5,608,350,000
5 Illinois $3,838,936,699
6 Pennsylvania $3,500,148,663
7 Georgia $3,462,214,977
8 North Carolina $3,193,209,076
9 Ohio $3,147,131,068
10 New Jersey $2,893,231,772
11 Michigan $2,805,487,674
12 Colorado $2,758,807,680
13 Massachusetts $2,647,796,853
14 Virginia $2,638,898,628
15 Minnesota $2,441,391,128
16 Washington $2,354,911,458
17 Missouri $2,233,650,672
18 Tennessee $2,215,671,995
19 Indiana $2,007,586,824
20 Maryland $1,996,346,103
21 Louisiana $1,915,190,016
22 South Carolina $1,821,011,394
23 Arizona $1,804,803,525
24 Alabama $1,649,327,548
25 Oklahoma $1,601,406,086
26 Wisconsin $1,552,096,266
27 Connecticut $1,471,642,326
28 Kentucky $1,342,950,704
29 Kansas $1,176,131,644
30 Oregon $1,102,664,304
31 Iowa $1,073,311,280
32 Mississippi $974,343,598
33 Arkansas $886,331,754
34 Utah $784,561,680
35 Nebraska $778,071,334
36 Nevada $686,004,840
37 New Mexico $607,840,090
38 Idaho $508,518,351
39 Hawaii $437,618,636
40 Rhode Island $427,110,260
41 Montana $423,901,224
42 New Hampshire $417,983,076
43 Maine $413,872,830
44 West Virginia $405,657,930
45 South Dakota $331,535,479
46 Delaware $286,822,176
47 North Dakota $267,999,930
48 Wyoming $225,900,800
49 Vermont $201,058,634
50 Alaska $200,089,269
51 District of Columbia $174,484,497

Source: LendingTree analysis of U.S. Census Bureau 2022 American Community Survey (with one-year estimates) data.

Any property owner with disaster insurance dedicates some portion of their household income toward paying for this expense. Yet in certain states, residents who carry disaster insurance spend a larger portion of their income on these costs.

The states where homeowners apply the biggest percentage of their household income toward disaster insurance are:

  • Florida: 1.96%
  • Louisiana: 1.93%
  • Oklahoma: 1.83%

It’s no surprise that the three states also rank among the top five with the highest disaster insurance premiums in the U.S. At the same time, Louisiana and Oklahoma are among the 10 states with the highest poverty rates in the nation.

Residents of states with a combination of lower disaster insurance premiums and higher household incomes, by comparison, may have different experiences. The cost of disaster insurance coverage in these states is less demanding, including in the three states where property owners spend the smallest percentage of their household incomes — the District of Columbia (0.67%), Utah (0.82%) and New Hampshire (0.84%).

The District of Columbia has the highest average household income among those with disaster insurance, at $211,504. The average household incomes among those with disaster insurance in Utah ($130,150) and New Hampshire ($134,045) are also above the U.S. average of $121,186.

Percentage of household income spent on disaster insurance

Rank State Average annual disaster insurance premiums Average household income among those with disaster insurance % of income toward premiums
N/A U.S. $1,399 $121,186 1.15%
1 Florida $2,324 $118,566 1.96%
2 Louisiana $1,956 $101,093 1.93%
3 Oklahoma $1,874 $102,385 1.83%
4 Mississippi $1,558 $89,463 1.74%
5 Kansas $1,733 $112,406 1.54%
6 Montana $1,548 $103,978 1.49%
7 Texas $1,901 $128,399 1.48%
8 Wyoming $1,502 $101,968 1.47%
8 Nebraska $1,682 $114,252 1.47%
10 Missouri $1,496 $105,888 1.41%
10 Alabama $1,412 $99,978 1.41%
12 South Dakota $1,507 $108,329 1.39%
12 Colorado $1,920 $138,255 1.39%
14 Arkansas $1,309 $95,329 1.37%
15 South Carolina $1,401 $104,808 1.34%
16 Rhode Island $1,682 $128,464 1.31%
17 Minnesota $1,628 $126,721 1.28%
18 Tennessee $1,327 $104,737 1.27%
19 New Mexico $1,265 $100,554 1.26%
20 Kentucky $1,264 $100,718 1.25%
20 North Dakota $1,503 $120,467 1.25%
22 Georgia $1,461 $119,396 1.22%
23 Iowa $1,268 $106,217 1.19%
24 Indiana $1,194 $103,557 1.15%
25 North Carolina $1,258 $111,797 1.13%
26 Hawaii $1,586 $142,196 1.12%
27 Connecticut $1,727 $156,695 1.10%
28 Massachusetts $1,677 $162,129 1.03%
28 Alaska $1,341 $130,376 1.03%
30 West Virginia $915 $90,150 1.01%
30 Michigan $1,083 $106,731 1.01%
30 New York $1,500 $147,964 1.01%
30 Idaho $1,089 $107,848 1.01%
34 Maine $1,043 $104,510 1.00%
34 Illinois $1,261 $126,554 1.00%
36 Ohio $1,076 $108,697 0.99%
36 Vermont $1,106 $111,764 0.99%
38 California $1,585 $161,324 0.98%
39 Wisconsin $1,029 $109,799 0.94%
40 Maryland $1,361 $146,995 0.93%
41 Arizona $1,075 $117,079 0.92%
41 Virginia $1,284 $139,861 0.92%
43 Pennsylvania $1,069 $117,032 0.91%
43 Delaware $1,072 $117,495 0.91%
45 Nevada $1,065 $119,203 0.89%
45 Washington $1,318 $147,878 0.89%
45 Oregon $1,106 $124,297 0.89%
48 New Jersey $1,412 $160,462 0.88%
49 New Hampshire $1,132 $134,045 0.84%
50 Utah $1,064 $130,150 0.82%
51 District of Columbia $1,419 $211,504 0.67%

Source: LendingTree analysis of U.S. Census Bureau 2022 American Community Survey (with one-year estimates) data.

There’s a meaningful difference in the average property values among homeowners with disaster insurance and those without. This trend holds true in every state, but more so in some than others.

In Louisiana, for example, the average property value for homeowners without disaster insurance is $137,955. But property owners with disaster insurance have an average property value that’s 102.0% higher — $278,613.

Property value differences for those who do and don’t carry disaster insurance are heavily pronounced in Texas and Mississippi. Average property values with disaster insurance in these states are $382,820 (Texas) and $228,162 (Mississippi), compared with $195,932 and $117,315 without coverage — differences of 95.4% and 94.5%, respectively.

The bottom three states where property values increase when disaster insurance is present are:

  • New Hampshire: $448,861 (with) and $397,503 (without disaster insurance) — a 12.9% difference
  • Rhode Island: $455,873 (with) and $401,496 (without disaster insurance) — a 13.5% difference
  • New York: $564,466 (with) and $479,327 (without disaster insurance) — a 17.8% difference

Here’s a fuller look:

Percentage change in property values among those with and without distance insurance by state

Rank State Average property values among those with disaster insurance Average property values among those without disaster insurance % difference between those with and without disaster insurance
N/A U.S. $419,716 $293,865 42.8%
1 Louisiana $278,613 $137,955 102.0%
2 Texas $382,820 $195,932 95.4%
3 Mississippi $228,162 $117,315 94.5%
4 Alabama $273,387 $141,914 92.6%
5 New Mexico $314,437 $168,112 87.0%
6 Kansas $272,788 $146,371 86.4%
7 South Carolina $352,342 $189,656 85.8%
8 Arkansas $244,853 $134,699 81.8%
9 Oklahoma $265,784 $150,855 76.2%
10 Kentucky $254,316 $153,372 65.8%
11 Wyoming $409,603 $247,742 65.3%
12 Alaska $380,654 $230,650 65.0%
13 West Virginia $200,475 $124,116 61.5%
14 South Dakota $322,942 $200,500 61.1%
15 Montana $514,554 $324,008 58.8%
16 Michigan $279,355 $176,321 58.4%
17 Maine $362,451 $229,577 57.9%
18 Florida $478,870 $303,397 57.8%
19 North Carolina $360,005 $230,633 56.1%
20 Missouri $277,280 $177,822 55.9%
21 Virginia $470,440 $305,858 53.8%
22 Georgia $367,417 $241,732 52.0%
23 Oregon $536,506 $354,987 51.1%
24 Colorado $647,274 $429,197 50.8%
25 Tennessee $369,728 $248,510 48.8%
26 Washington $702,379 $475,023 47.9%
27 Arizona $492,148 $336,887 46.1%
28 Ohio $255,140 $175,755 45.2%
29 Nevada $516,625 $358,860 44.0%
30 Idaho $515,556 $358,779 43.7%
31 Iowa $246,714 $174,544 41.3%
32 California $956,364 $686,215 39.4%
33 Illinois $314,150 $231,650 35.6%
34 Vermont $356,350 $263,419 35.3%
35 Pennsylvania $304,067 $224,934 35.2%
36 District of Columbia $903,821 $671,952 34.5%
37 Nebraska $275,727 $205,154 34.4%
38 Hawaii $962,592 $735,843 30.8%
39 Indiana $255,783 $196,007 30.5%
40 Wisconsin $307,957 $236,898 30.0%
41 Minnesota $369,213 $284,373 29.8%
42 Delaware $380,503 $298,611 27.4%
43 North Dakota $286,437 $225,490 27.0%
43 Connecticut $479,924 $377,914 27.0%
45 Utah $588,127 $468,889 25.4%
46 Massachusetts $642,097 $535,784 19.8%
47 Maryland $472,549 $396,471 19.2%
48 New Jersey $507,047 $428,100 18.4%
49 New York $564,466 $479,327 17.8%
50 Rhode Island $455,873 $401,496 13.5%
51 New Hampshire $448,861 $397,503 12.9%

Source: LendingTree analysis of U.S. Census Bureau 2022 American Community Survey (with one-year estimates) data.

As a homeowner, insuring your property against unforeseen disasters could provide essential financial protection. Yet there’s important information you should understand when it comes to disaster insurance.

Homeowners insurance may not cover all disaster-related damage

Standard homeowners insurance typically should protect you from the most common losses you might face as a property owner. Generally, this includes fire (including wildfires), lightning, falling objects, burst pipes and theft. Yet you might need to purchase separate insurance for certain types of natural disasters, especially if you live in certain parts of the country.

“Windstorm insurance is sold separately in areas susceptible to hurricanes and tropical storms,” says Bhatt, “including coastal areas in Florida and Texas. In these areas, you have to purchase a separate windstorm policy to cover wind and hail, in addition to regular home insurance for the other risks.”

Bhatt also says you may need extra coverage if you want protection from floods, earthquakes, landslides and other forms of earth movement. Standard homeowners insurance usually doesn’t cover you in these events.

Your mortgage company might require you to buy additional insurance

When you finance a home, your lender typically requires you to carry homeowners insurance to protect its investment. If you make less than a 20% down payment on a conventional loan, you might have to carry mortgage insurance. However, there are also situations where additional disaster coverage may be necessary.

“If you apply for a mortgage in a high-risk flood zone in FEMA’s maps,” says Bhatt, “your lender will require you to purchase flood insurance, in addition to standard homeowners insurance. The requirement extends to a loan issued by any federally regulated financial institution, which includes most lenders, including banks, credit unions and nonbanks.”

As a renter, you may need separate disaster insurance

When you rent a home or apartment, you’re not typically responsible for any structural damage to a property. But the insurance your landlord carries won’t cover your personal belongings. A standard renters policy might not be sufficient to cover you for certain types of natural disasters either.

“Renters insurance usually doesn’t cover damage your items sustain in a flood, earthquake or other excluded cause,” Bhatt says. “But contents coverage, which covers your possessions, is widely available for flood insurance, and some companies also offer contents-only earthquake insurance for renters.”

LendingTree researchers analyzed the U.S. Census Bureau 2022 American Community Survey (with one-year estimates) to determine the percentage of owner-occupied properties with and without fire, hazard or flood insurance.

Our study refers to this as disaster insurance based on the Census Bureau description that these are “policies that protect the property and its contents against loss due to damage by fire, lightning, winds, hail, flood, explosion, and so on.” We’re using this as an overarching term for insurance protections for disasters rather than a specific type of product. The Census Bureau has asked the same questions related to disaster insurance since 1996.

We divided the number of owner-occupied properties with disaster insurance by the total number of owner-occupied properties to determine the share of homes with this insurance. We multiplied average annual disaster insurance premiums by the number of owner-occupied properties with disaster insurance to determine total disaster insurance premiums paid.

We used average household incomes among those with and without disaster insurance to determine the percentage of household income that goes toward this insurance and calculate the percentage change between both.

Finally, we used average property values among those with and without disaster insurance to calculate the percentage change between both.

Source

This article originally appeared on LendingTree and was syndicated by MediaFeed.

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This article originally appeared on LendingTree and was syndicated by MediaFeed.

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