Homeowners of color pay higher insurance costs in WA, nationwide

Homeowners all over the country are feeling the crush of rising insurance costs. But that burden isn’t distributed evenly.

Property owners in predominantly Black and Hispanic corners of the country pay higher home insurance premiums than those in mostly white areas, even when factoring for environmental risk, the Consumer Federation of America found in a report released this week.

Washington had one of the country’s worst gaps between white and Hispanic homeowners, a finding that left the state’s insurance oversight office “deeply concerned.”

The disparity represents one of the many ways homeownership remains far from equal in America, even decades after the country banned redlining and other forms of explicit housing discrimination.

Other research finds homeowners of color and especially Black homeowners can face higher mortgage rates, higher mortgage denial rates, and discrimination during the property appraisal process. Although homeownership rates have climbed across all racial and ethnic groups in the last decade, a higher share of white people own their homes than other racial groups, contributing to the wealth gap.

And the findings come as all homeowners are facing rising costs. Home insurance rates soared 46% from 2020 through 2025 amid more natural disasters and rising construction costs, according to LendingTree.

Consumer Federation of America researchers compared census data on race to private data on insurance costs to analyze identical policies across different locations. The private data estimated the cost of a typical homeowner’s insurance policy in tens of thousands of ZIP codes.

Nationally, homeowners in predominantly Hispanic areas paid 30% more on average than those in white areas. Homeowners in Black communities paid 16% more.

Here in Washington, homeowners in predominantly Hispanic ZIP codes paid 18% more, an extra cost of $278 per year, the third-largest gap among the 17 states they analyzed. Florida and New York had larger gaps, of 58% and 20%, respectively. (Researchers did not analyze the Black-white gap in Washington because too few ZIP codes here are predominantly Black.)

Those gaps narrowed some after controlling for local factors like environmental risk, housing age and density and claim frequency — common factors that can affect the cost of a homeowner’s premium. But the gaps did not disappear. Homeowners still faced 11% higher costs in Hispanic communities and 10% more in Black areas.

The result? “We end up with a truly unfair marketplace for homeownership,” said Douglas Heller, director of insurance at the Consumer Federation of America.

While homeowners everywhere are facing “severe premium increases,” Heller said, “the pain is particularly acute in those communities that bear the brunt of this legacy of redlining.”

The insurance industry pushed back on implications that its policies are unfair, defending its practices for assessing risk.

The National Association of Mutual Insurance Companies, a trade association, took issue with the Consumer Federation of America’s research in part because it used third-party estimates of quotes, rather than data on existing homeowners’ costs.

The group defended using geography as a factor in pricing insurance because it “captures real, measurable differences in risk exposure for homes in different locations,” said Erica Weyhenmeyer, a senior policy vice president at the association.

The Washington state office of the insurance commissioner said in a statement that it is “deeply concerned” about the report’s findings.

“The evidence that Black and Hispanic communities are paying significantly more for identical coverage raises serious questions about fairness, transparency and equity within insurance rating practices,” the office said.

It’s difficult to pinpoint exactly what could be causing disparities. Heller theorizes that some elements of redlining, the early 20th century practice of banks and other institutions discriminating against homebuyers of color, could remain “lodged in the more modern rating models” or that insurance companies might offer lower rates in higher-income communities where they hope to sell other insurance products, such as car insurance or life insurance.

Another theory: The gap may reflect a lack of competition among insurance companies in some Black and Hispanic neighborhoods, allowing them to charge higher prices, said Joe LaBriola, a University of Michigan researcher who has studied racial inequalities in housing and wealth and was not involved in the CFA report.

Because homeownership is a key tool for building wealth, disparities can undercut wealth-building potential for people of color.

Research shows that white households get a larger wealth benefit from each year of homeownership than do Black or Hispanic households. There are a lot of reasons why this might be," he said. "This research suggests that higher home insurance burdens for Black and Hispanic households may be one piece of the puzzle.

It’s not clear why Washington ranked among the worst for the gap between white and Hispanic communities, Heller said. He hopes local regulators will dive into the issue more deeply.

The findings come amid a rise in Hispanic homeownership nationwide and in Washington.

The consumer group recommends that states require several new steps from insurance companies: testing their underwriting models for disparate impacts and sharing the results publicly, using geographic areas larger than ZIP codes when setting prices, and sharing detailed data on insurance transactions, similar to the data that mortgage lenders share.

“The ball is really now in court of the policymakers and regulators that consumers rely upon to protect them in this market,” Heller said.

Those proposals would face pushback from insurance providers.

Banning rating by ZIP code, as the consumer group recommends, “would force lower-risk homeowners to subsidize higher-risk ones, reduce insurer availability in the most vulnerable markets, and only increase affordability challenges,” said Weyhenmeyer, from the National Association of Mutual Insurance Companies.

Washington is already reviewing some related issues. State lawmakers in 2024 earmarked about $500,000 for the insurance commissioner to study how insurance companies’ use of credit history and “other rate factors” affect consumers of various races and ethnicities. That report is due next summer.

The office of the insurance commissioner said it “constantly” examines insurers’ pricing practices and algorithms for potential bias.

“Washington consumers should be charged premiums based on risk, not characteristics that function as proxies for race or socioeconomic status,” the office said.

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