As extreme weather worsens, Black and Hispanic homeowners are paying more for insurance

A new report from the Consumer Federation of America, a nonprofit representing consumer groups, finds that homeowners in predominantly Hispanic ZIP codes pay 30 percent more for home insurance on average than those in white communities, an extra $950 a year. Homeowners in predominantly Black ZIP codes pay 16 percent more, or about $500 a year. The analysis compared identical policies, so the gaps aren't explained by differences in the homes themselves. Over a 30-year mortgage, that adds up to roughly $28,500 in extra costs for homeowners in Hispanic communities and $15,000 for those in Black communities.

The disparities vary widely by state. In Florida, homeowners in Hispanic communities pay 58 percent more, over $5,000 a year, with smaller but still notable gaps in New York, Washington, Massachusetts, and Kansas. For Black communities, the widest gaps are in Michigan (74 percent more) and Pennsylvania (57 percent more), with additional disparities in New Jersey, Massachusetts, and New York. Insurance industry representatives say premiums reflect risk and rebuilding costs in these areas, not race, and note that using race to set rates is illegal everywhere. Report authors counter that factors like credit scores and newer pricing tools, including some using artificial intelligence, may unintentionally disadvantage these communities.

For homeowners, the takeaway is that where you live and your community's demographics may be tied to what you pay for coverage, on top of the 24 percent rise in average insurance costs nationwide between 2021 and 2024. It may be worth checking how your own premium compares with others in your area and asking your insurer what factors are driving your rate.