I agree with Z. Its all about self control. I started on a 750, against everyones suggestions, but I took it really easy and did alright. I'm not saying go out and get a bigger bike, but Im also not saying you couldn't do it. Why are you paying $2000 for insurance? Do you have full converage or something?!?! If you jump up a few CC's dont go full insurance unless you buy a brand new bike. I only have liability which is all that FL law requires. It costs me $250 for the year.
If your interested in a higher CC bike take your friend for a ride on your 500, or have him follow you on his 1000, and see what he thinks. Anouther route is to take an objective observation of your progression thus far and see if you think you are ready for it. Most people tend to be their own worst critic. I know I am. Your the final and only person that you need to convince when your ready for a new bike, everyone else can just offer opinions.