Home and Auto Insurance Costs Reach 18.4% of Take-Home Pay in Some States

Where you live determines what you pay for home and auto insurance. The difference is staggering.

Americans pay anywhere from 2% to 18.4% of their take-home income for home and auto insurance, depending solely on geography. Louisiana families pay $11,324 annually (18.4% of take-home pay) while Virginia families pay just $3,841 for identical coverage.

This $7,483 difference isn't due to driving records, home values or coverage quality. Geography determines these costs. The average American household spends $9,985 on groceries and dining, meaning some families now spend more on mandatory insurance than food.

MoneyGeek's analysis of insurance costs in all 50 states and Washington, D.C., shows geography, climate risk and state regulations drive the widest cost gaps. Driving record and credit score matter, but location sets the floor for what everyone pays.

These differences reflect state-level risk factors, including natural disaster exposure, litigation costs and regulatory environments.

Below are complete rankings showing take-home income, insurance costs and burden percentages for all 51 jurisdictions.

The states with the highest costs share common factors: Louisiana and Florida experience coastal hurricane exposure and frequent flooding, Oklahoma deals with elevated tornado risk, and all three deal with above-average litigation costs.

Highest Insurance Burden States:

• Louisiana: 18.4% of take-home pay ($11,324 per year)
• Florida: 16.65% of take-home pay ($13,152 per year)
• Oklahoma: 15.32% of take-home pay ($9,282 per year)
• Mississippi: 12.91% of take-home pay ($6,638 per year)
• Texas: 10.97% of take-home pay ($8,653 per year)

These states benefit from lower natural disaster frequency, strict insurance regulations and competitive insurance markets.

Lowest Insurance Burden States:

• Hawaii: 2.05% of take-home pay ($1,584 per year)
• New Hampshire: 2.32% of take-home pay ($2,136 per year)
• Vermont: 2.64% of take-home pay ($1,956 per year)
• Washington: 2.79% of take-home pay ($2,780 per year)
• Alaska: 2.95% of take-home pay ($2,601 per year)

The average American household spends:

• Food: $9,985 yearly (groceries and dining)
• Utilities: $4,518 yearly
• Entertainment: $3,250 yearly
• Clothing: $2,071 yearly

Louisiana families pay $11,324 for insurance, exceeding typical food budgets. Florida families pay $13,152, more than four times the average entertainment spending. Oklahoma families pay $9,282, double the typical utility costs. Insurance costs in high-burden states consume spending that would otherwise go toward discretionary expenses or savings.

A family relocating from New Orleans to Houston (just 350 miles) saves $2,671 annually for identical coverage (Louisiana $11,324 vs. Texas $8,653).

Louisiana's average rates exceed Virginia's, meaning many Louisiana drivers with clean records pay more than Virginia drivers with accidents or violations.

Mississippi has the nation's lowest median homeowner income ($51,426) yet ranks fourth-highest for insurance burden (12.91%). California ranks 38th (3.79%) despite higher living costs — its higher incomes lower the percentage burden. This income effect explains why wealthy states like Massachusetts (3.22%) and Washington (2.79%) show low burden percentages despite absolute insurance costs exceeding many lower-burden states. High earners show lower burden rates when measured as a percentage of income.

State-level risk factors matter more than individual policyholder behavior when insurers set premiums. Three factors drive the cost differences:

Climate Risk and Natural Disasters

Louisiana and Florida experience frequent hurricanes, flooding and severe weather that generate billions in annual claims. National Oceanic and Atmospheric Administration (NOAA) reports that 2024's 28 billion-dollar disasters caused $182.7 billion in damages. Hurricanes and floods in coastal states like Louisiana and Florida drove most insured losses. Oklahoma deals with elevated tornado risk, leading to higher home insurance costs despite lower auto premiums.

States with minimal natural disaster exposure (Hawaii, Vermont and New Hampshire) maintain much lower home insurance costs. Hawaii's isolated geography protects it from hurricanes, tornadoes and most severe weather that impacts mainland states.

Litigation Costs and Legal Environment

States with plaintiff-friendly courts see higher average claim settlements, and costs are passed to all policyholders through increased premiums. Legal environments that encourage litigation create upward pressure on insurance rates independent of actual risk.

Average bodily injury settlements vary widely between states for similar accidents, driven by local legal precedents and jury verdicts rather than injury severity alone.

State Regulatory Environment

Insurance regulations vary widely across states. Some states cap rate increases, requiring insurers to spread costs across all policyholders. Other states allow market-based pricing that more directly reflects individual risk.

State insurance departments take different approaches to rate approvals, coverage mandates and which insurers can operate. These rules determine how many companies compete for customers. Lower premiums show up in states where multiple insurers vie for business. Costs climb when major carriers pull out and leave fewer options.

Consumer strategies vary based on regional insurance costs. Industry analysts identify different approaches for high-burden and low-burden markets.

High-Burden State Strategies:

Consumers in states with elevated insurance burdens use several cost-management tactics:

• Comparing quotes from multiple providers every 6 to 12 months rather than waiting for renewal, as insurance costs fluctuate
• Increasing deductibles to $1,000 to $2,000 for consumers with emergency savings, reducing monthly premiums by 15% to 30%
• Estimating home insurance costs using different coverage levels and deductibles to find the right balance between protection and affordability
• Bundling home and auto policies with the same insurer (saves 15% to 25% on combined premiums, according to industry analyses)
• Enrolling in telematics programs that monitor driving behavior and help safe drivers cut another 10% to 15% off premiums
• Checking policies each year to drop unnecessary coverage without sacrificing financial protection

Low-Burden State Strategies:

Consumers in low-cost markets focus on protection optimization rather than cost reduction:

• Tracking state insurance trends annually rather than assuming stable rates
• Raising coverage beyond minimum requirements while premiums remain affordable, as higher limits cost relatively little
• Building emergency funds to cover potential increases, as insurance costs trend upward nationally

Insurance costs continue rising nationally as a percentage of take-home pay. Louisiana and Florida now exceed thresholds where families spend more on mandatory insurance than food, and Oklahoma approaches similar levels.

Climate change continues to increase severe weather frequency and severity, litigation costs keep rising in plaintiff-friendly jurisdictions, and regulatory environments vary widely across states. Industry analysts emphasize the value of consumer education: regular rate shopping, risk-appropriate coverage and monitoring state-level policy changes that affect premiums.

For American families, geography has become the primary driver of insurance costs. Where they live determines what they pay.

This analysis calculated insurance burden as the percentage of take-home pay spent on combined homeowners and auto insurance premiums.

Income: We used median homeowner household income by state from the U.S. Census Bureau American Community Survey 2023 1-Year Estimates (Table B25119). We applied effective state and federal tax rates to determine take-home pay, including federal income tax, state income tax (where applicable), Social Security and Medicare taxes (FICA at 7.65%), and state disability insurance (where applicable). Tax calculations assume married filing jointly status with standard deductions.

Insurance Costs: We combined average annual homeowners and auto insurance premiums by state using MoneyGeek's proprietary 2025 data. Home insurance premiums reflect standardized coverage ($250,000 dwelling, $125,000 personal property, $200,000 liability, $1,000 deductible) for a 2000-built home with wood-frame construction and composite shingle roof. Auto insurance premiums reflect full coverage (100/300/100 liability plus comprehensive and collision with $1,000 deductible) for one vehicle per household.

Burden Calculation: We divided the total annual insurance costs by the calculated take-home pay. All income figures can be independently verified through the U.S. Census Bureau's data portal.