September 2, 2025
Arkansas home insurance premiums jumped 15–20% amid severe weather and insurer exits, with rates among the highest in the U.S. due to tornado risks.
Arkansas homeowners face mounting challenges as insurance premiums surge amid increasing severe weather risks and market disruptions. With rates climbing an average of 15 to 20 percent last year alone, understanding the current landscape is crucial for property owners seeking adequate coverage at reasonable costs.
Bottom Line Up Front: Arkansas homeowners pay significantly more than the national average for coverage, with annual premiums averaging between $3,103 to $4,607 depending on coverage levels. Recent analyses rank Arkansas among the higher-cost states for homeowners insurance.
The Arkansas homeowners insurance market is experiencing unprecedented stress. State Farm offers the cheapest homeowners insurance in the state, with an average annual premium of $1,997, while other carriers can charge substantially more. Travelers had the most expensive in Arkansas, with an average annual rate of $10,930, highlighting the dramatic range in pricing across providers.
The average cost of homeowners insurance in Arkansas is $3,103 per year for $300,000 in dwelling coverage, which is 29 percent more than the national average. Some analyses place Arkansas rates ranging from $4,087 to over $33,000 in high-risk or high-value property scenarios, depending on individual circumstances.
The Arkansas market faces significant challenges as insurance companies struggle with profitability. Arkansas property insurance companies had a loss ratio of 130 percent last year, meaning insurers paid out $1.30 in claims for every dollar collected in premiums. This financial pressure has led to market exits, with at least 10 insurance providers have opted leave the state due to increases in payouts to policyholders.
The ripple effects extend beyond rate increases. Companies are also raising home valuations, forcing owners to purchase higher coverage limits to meet replacement cost requirements, while simultaneously increasing deductibles to manage their exposure.
Arkansas sits squarely within what meteorologists call "Dixie Alley," a region experiencing increased tornado activity as severe weather patterns shift eastward. Arkansas has become more prone to tornadoes and hail storms as climate change and other weather phenomenon shift storms farther east and south.
Recent tornado activity demonstrates this trend dramatically. In the 30 days after several damaging twisters hit Arkansas on March 14, the state saw nearly four times as many tornado warnings as Texas did, with the National Weather Service issuing 144 warnings in Arkansas compared to just 39 in Texas during the same period.
The state has already confirmed 35 tornadoes through April 2025, approaching its annual average of 42 twisters. More concerning, Arkansas was hit with two EF-4 tornadoes on March 14 in Jackson County and Izard County, the strongest tornadoes to hit the state in over a decade.
Arkansas recently became the last state to allow split deductibles for wind and hail damage. Arkansas was the last state in the country to allow split deductibles, which have been routine in other states. This change means homeowners now face separate, often percentage-based deductibles specifically for wind and hail claims.
Separate wind or hail deductibles may be expressed as a percentage of your home's insured value (e.g., 1 to 5 percent). For example, if your home is insured for $300,000 and you have a 2 percent wind/hail deductible, you'll pay $6,000 out of pocket before coverage kicks in after a storm.
The Arkansas Insurance Department has also expanded actual cash value (ACV) settlements for roof claims. Going forward, insurers are permitted to apply an ACV settlement endorsement, with prior notice, on replacement cost policies for wind and/or hail-damaged roofs after age 7, previously limited to roofs over 15 years old. Homeowners should review whether alternative carriers or endorsements remain available.
Arkansas faces significant flood exposure, particularly in Delta regions and areas near major rivers. According to the Environmental Protection Agency, rainfall and flooding will continue to increase in the state due to climate change. The state experienced severe flooding as recently as April 2025, when Arkansas declared a state of emergency due to catastrophic flooding due to heaving rains and an overwhelmed Mississippi River.
Standard homeowners policies exclude flood coverage, making separate NFIP or private flood insurance essential for properties in high-risk zones. This additional coverage requirement further increases the total cost of protecting Arkansas homes.
While not as prominent as tornado risks, wildfire exposure affects rural properties, particularly in the Ozark and Ouachita Mountains. Rural properties also face challenges with ISO Protection Class ratings, often falling into Class 9 or 10 due to limited fire protection infrastructure, resulting in coverage restrictions or surcharges.
Arkansas' clay-heavy soils, particularly in central regions, create foundation settlement problems that standard policies typically exclude unless caused by a covered peril. Homeowners should consider optional foundation water damage endorsements where available.
Given the complexity of Arkansas' evolving insurance landscape, mortgage servicers can provide value by connecting homeowners with licensed insurance professionals. Covered connects Arkansas homeowners with licensed insurance professionals who can assist with policy selection and risk awareness. By coordinating with insurance advisors, servicers may improve customer satisfaction and help streamline communications by directing customers to appropriate licensed professionals.
Arkansas homeowners pay more than residents in most neighboring states, though less than some high-risk areas:
*Based on $300,000 dwelling coverage
**Estimated based on regional data
***Louisiana rates vary significantly by parish
Homeowners insurance in Arkansas is about average compared to its neighboring states. Missouri and Mississippi are slightly cheaper, at around $3,000 per year. But Oklahoma, where a typical policy costs $4,799 per year, is almost twice as much as Arkansas.
Weather Risks: Wind and hail cause the most damage to homes in Arkansas every year, with the state experiencing 97 natural disasters with losses exceeding $1 billion each between 1980 and 2024.
Credit Score Impact: In Arkansas, those with poor credit pay an average of $6,710 per year for homeowners insurance, according to NerdWallet's rate analysis. That's 109 percent more than what those with good credit pay.
Claims History: On average, for $100K in dwelling coverage, homeowners who were claims-free in the past five years pay an annual premium of $2,509. In contrast, those with two claims pay $3,261.
Arkansas lawmakers are actively addressing the insurance crisis. Arkansas legislators have been hearing from constituents about the rising costs of homeowners insurance premiums, so during the 2025 session they will explore numerous options for holding down rate increases.
Potential solutions under consideration include storm mitigation programs similar to neighboring states. In Alabama homeowners can apply for $10,000 to retrofit houses with features that can better withstand the high winds and flying debris caused by hurricanes. Insurance companies discount rates for homes with those features.
The Arkansas homeowners insurance market faces continued challenges through 2025. Insurify projects high home insurance costs will continue in Arkansas. In both 2022 and 2023, insurers lost money in the state, paying out more in claims than they took in through premiums.
However, regulatory changes and potential mitigation programs may provide some relief. The transparency requirements for deductible disclosure and the allowance of split deductibles, while increasing out-of-pocket costs for some claims, may help stabilize base premiums by allowing insurers to better manage their wind and hail exposure.
Arkansas homeowners must remain vigilant in managing their insurance needs, regularly reviewing coverage and shopping for competitive rates as the market continues to evolve in response to increasing weather risks and changing regulatory landscape.
Insurance rates, policy terms, and regulatory changes vary by carrier and location. Consumers should consult a licensed insurance advisor for guidance specific to their situation. Rate data reflects general market conditions and may not represent individual circumstances.
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*Savings claim based upon averaging actual anonymized savings data for dwelling-only insurance rates paid (from July 2023 - June 2024) by customers of two of Covered’s largest mortgage industry partners across twenty-seven (27) US states. Bundles and non-dwelling insurance coverages were excluded.
† Net Promoter Score (“NPS”)® calculation averages post-purchase customer satisfaction surveys from 9/24/2024 - 2/28/2025. NPS® is a market research metric measuring customer satisfaction with a scoring calculation that incorporates both detractor and promoter customer feedback.
Quotes are presented solely for your convenience. Savings may vary. Rates are subject to change based upon the specific coverage you select and other factors that apply to your situation. CA License #0M81402, doing business as Cubbard Insurance Solutions in California.
