Black and Hispanic homeowners are paying a disproportionate share of soaring home insurance premiums, a new analysis finds, deepening financial strain as extreme weather grows more frequent and severe.
The report, published in July by the Consumer Federation of America, compared identical policies across communities and found homeowners in predominantly Hispanic ZIP codes pay on average 30 percent more, or about $950 extra each year, than homeowners in predominantly white areas. In predominantly Black ZIP codes, premiums average 16 percent higher, or roughly $500 more annually.
Researchers said the analysis controlled for coverage features to rule out differences tied to the policyholder, the home or the items insured. Local risk can explain some variation, they noted, but sizable gaps remained even after accounting for it.
“We’ve talked a lot about our insurance affordability crisis,” said Sharon Cornelissen, the group’s housing director and a report co-author. “What we haven’t really talked about is the racially inequitable impacts of that, and that Black and Hispanic homeowners are particularly struggling.”
Over a 30-year mortgage, those disparities amount to at least $28,500 more in premiums for homeowners in Hispanic communities and about $15,000 more in Black communities, according to the report. The findings reflect a lingering legacy of redlining in home insurance markets. While explicit discrimination has been outlawed for decades, the report suggests inequities can persist through modern pricing practices.
Black and Hispanic homeowners and redlining’s legacy
Redlining once labeled certain neighborhoods as “hazardous” for mortgage lending, often based on the race of residents. That history depressed home values, limited ownership and entrenched disparities that continue to affect health, education, incarceration, food access and public investment.
It also has left many communities more exposed to climate impacts such as extreme heat. Those heat risks are intensifying as August ties as one of the hottest months on record, amplifying pressure on already vulnerable neighborhoods.
Industry representatives say rates are driven by risk, not race. Premium setting is actuarially based and tightly regulated, said Mark Friedlander of the Insurance Information Institute. “Using race, or any proxy for race, to set insurance rates is illegal in every U.S. jurisdiction,” he said, adding that many of the cited communities face higher catastrophe exposure or rebuilding costs.
The report identified the largest disparities for predominantly Hispanic ZIP codes in Florida, where homeowners pay on average 58 percent more, or $5,014 annually, for the same coverage compared with white communities. Other notable gaps include 20 percent, or $431, in New York, 18 percent, or $278, in Washington, 16 percent, or $244, in Massachusetts and 15 percent, or $633, in Kansas.
For predominantly Black ZIP codes, the widest gaps were in Michigan at 74 percent, or $1,768 annually, followed by Pennsylvania at 57 percent, or $1,048, New Jersey at 22 percent, or $332, Massachusetts at 20 percent, or $321 and New York at 19 percent, or $417.
Home insurance costs overall climbed 24 percent from 2021 to 2024, the report said, citing earlier research by the Consumer Federation of America. As greenhouse gas emissions warm the planet and intensify disasters such as hurricanes and wildfires, insurers have raised rates to reflect higher expected losses.
The analysis also notes that companies have historically offered fewer, more expensive options in communities of color. It cites past settlements totaling tens of millions of dollars, including cases against Nationwide and American Family Mutual Insurance Company, involving allegations of discouraging sales in Black neighborhoods, inferior coverage offerings and racial profiling.
More recently, insurers have adopted proprietary pricing and claims models, some using artificial intelligence, that consumer advocates warn could unintentionally embed bias. Previous Consumer Federation research found homeowners with lower credit scores pay an average penalty of $1,996 per year, or 99 percent more, a burden that can fall more heavily on communities of color because of longstanding structural inequities.
“I’m not saying that they have some secret race factor that they put into their model,” Cornelissen said. “A lot of this bias can kind of creep in if they’re not paying attention to potential unequal impacts. A lot of this could be through AI models or other factors that have a disproportionate impact on Black and Hispanic communities.”
Friedlander said the most effective path to affordability and equity is reducing risk through resilience measures such as stronger building codes and more mitigation funding.
The report urges states to enforce fair housing laws, increase transparency and strengthen accountability across insurance markets. “Unless the insurance industry wants to give us more information about why this is happening,” said Moira Birss of the Climate and Community Institute, “it’s pretty hard not to interpret this as pretty serious racial discrimination.”
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