How Much Does Homeowners Insurance Cost? What Is The Average Cost?
How much is homeowners insurance? The average home insurance price depends on the state you live in and many other factors which we will discuss below. The national average annual cost of homeowners insurance in the US extends between $781 and $3,383.
Home insurance is required if you have a mortgage and should even be carried when you pay your mortgage off.
Some common questions people have about homeowners insurance policy are:
- What are the types of homeowners insurance?
- What does it cover?
- How are the rates determined?
- What is the national average cost?
- How can I lower my premiums?
You’ll get the answer to these -and many more questions – so let’s read through this article together!
Average Home Insurance Cost By State
In general, the average annual premiums of home insurance coverage depend mainly on the state.
Take a look at the following annual premiums for homeowner’s insurance coverage:
- Alabama: $1,624
- Alaska: $1,040
- Arizona: $1,189
- Arkansas: $2,142
- California: $1,014
- Colorado: $1,659
- Connecticut: $1,184
- Delaware: $680
- Florida: $1,353
- Georgia: $1,376
- Hawaii: $376
- Idaho: $835
- Illinois: $1,322
- Indiana: $1,150
- Iowa: $1,289
- Kansas: $2,694
- Kentucky: $1,839
- Louisiana: $1,813
- Maine: $956
- Maryland: $1,124
- Massachusetts: $1,307
- Michigan: $1,120
- Minnesota: $1,785
- Mississippi: $1,773
- Missouri: $1,558
- Montana: $1,826
- Nebraska: $2,816
- Nevada: $822
- New Hampshire: $724
- New Jersey: $751
- New Mexico: $2,024
- New York: $987
- North Carolina: $1,295
- North Dakota: $1,841
- Ohio: $1,111
- Oklahoma: $3,519
- Oregon: $712
- Pennsylvania: $730
- Rhode Island: $1,193
- South Carolina: $1,142
- South Dakota: $1,917
- Tennessee: $1,625
- Texas: $1,863
- Utah: $647
- Vermont: $686
- Virginia: $1,013
- Washington: $863
- Washington, D.C.: $902
- West Virginia: $1,124
- Wisconsin: $986
- Wyoming: $805
Home Insurance Costs: The Top 5 Most Expensive States
States with the highest cost of home insurance are Oklahoma, Nebraska, Kansas, Arkansas, and New Mexico. Why do these states have higher insurance premiums?
If you glance through the list, you’ll notice most of these areas have something important in common:
They’re either coastal states affected by hurricanes or, in the case of Oklahoma, they’re smack dab in the middle of tornado alley. States with more exposure to catastrophic natural disasters – including hurricanes, brush fires, hail, tornadoes, etc. – generally have higher homeowners insurance premiums.
Home Insurance Costs: The Top 5 Least Expensive States
States with the lowest homeowners insurance rates are Utah, Hawaii, Delaware, Vermont, and Oregon.
The above states aren’t at a higher risk of hurricane, tornado, or bush fire damage compared to other states in the US. That’s an opportunity for residents of these states to save money on their insurance policy compared with the national average home insurance cost.
House Insurance Cost by Insurance Companies
Now, it’s time to look at the leading insurance industry carriers – and the real cost of homeowners insurance policies. Here are the average costs for some of the largest homeowners insurance companies in the US ($250,00o dwelling coverage):
- Allstate: $1,458
- American Family: $1,295
- Amica: $2,644
- Auto-Owners: $1,165
- Chubb: $1,630
- Erie: $897
- Farmers: $1,980
- The Hartford: $1,609
- Nationwide: $1,042
- Progressive: $1,026
- State Farm: $1,503
- Travelers: $1,269
- USAA: $992
How are Home Insurance Premiums Determined?
First things first, the underwriting process takes a number of universal factors into consideration. While each person’s situation is different, the means to measure what a person should pay are pretty standard.
Below, we’ll dig into each of these top premium factors and give you an idea about how they could affect your total overall cost for the long haul.
This term refers to a 1-10 rating system underwriting uses to determine the risk of fire damage to your home. Generally, this metric is related to the proximity of your home to the fire station and to available and accessible hydrants or water sources.
As you might imagine, the further away your home is from protective measures against fire, the greater the risk of losing the home structure and related structures – along with your personal belongings.
The greater your fire protection class (1 and lower numbers on the scale), the more your home is viewed as “being at risk” – which implies a higher home insurance cost.
Protection Classes Are Usually Broken Down In This Way:
1-4: The home is located in a city or municipality, with fire plugs and a fire department able to respond.
5-8: The homes in the district are not unprotected. The fire department may be volunteer-led; the primary water source may be the fire truck.
9-10: These homes don’t have immediate access to a fire station or hydrants, resulting in delayed response times and difficulty putting out a fire, resulting in a more severe loss.
Your home’s materials matter.
For instance, if you live in the so-called tornado alley and your home isn’t constructed of sounder building materials, the risk of total loss is higher. It doesn’t always necessarily matter if your home is older or not.
Upon purchasing your home, details of its construction materials and quality are a part of the sales process – and construction materials are a matter of public record.
5 Year Loss History And Credit Score
Your financial and insurance purchasing habits also come into play when determining the cost of a home insurance premium.
Underwriters will want to know if you’ve had any home losses in the past five years. A pattern of loss in your owner’s history may point to a pattern that indicates a larger risk – and that could bring the average cost of home insurance up.
Your personal financial habits also matter. Having a good credit score indicates you’ll be more likely to keep up with your mortgage payments.
Determining And Understanding Homeowners Reconstruction Costs
Replacement cost coverage is a term that refers to one of the methods that help establish the value of your property in the case it needs to be rebuilt, and just replacement cost is the total amount required to rebuild your home.
Marshall and Swift® is a leading valuation homeowners insurance estimate cost software in our industry. We use the information they provide to assess the cost of replacing your structure based on its actual cash value and key factors. Insurance companies will make you carry 100% replacement cost coverage on the dwelling.
To best assess the cost of reconstruction for your home in the event of a loss, we need to know what your home is built out of, the square footage, the quality of your home’s construction (Track, Custom, and Special are typical quality ratings) and info such as the number of bathrooms, fireplaces, and other special features.
Answering these questions gives us a better way to assess the amount of money it will take to replace your home, or part of it, in the event of a loss. Carriers want to help policyholders protect their homes – and making sure your home is insured to its actual cash value is very important to assure a proper coverage amount and claim settlement.
Year Built Or Remodeled
It stands to reason that as structures age, exposure to the elements, use, and the nature of changing building codes influences the way they hold up.
Newer homes get discounts on home insurance policies. That said, remodeled homes don’t always mean lower premiums for policyholders – even though newer homes are often constructed with the most modern safety in mind and newer materials.
Fire & Burglar Alarm Protection
Ensuring safety is in place to protect you against some of the most common losses just makes sense. If you’re able to protect your home with fire and burglar alarms, the chance of a loss decreases – and the underwriters take this into consideration when determining your typical home insurance cost.
What Does Homeowners Insurance Cover?
You’re all settled on your home insurance coverage and average premiums, but what are you actually paying for here?
Here are some things homeowners insurance coverage helps pay for:
Damage To Your Interior And Exterior
This type of damage includes accidents such as fire, hurricanes, lightning, vandalism, and any other disasters that are included in the dwelling coverage limit. Your insurance provider should compensate you for the damage caused and help get your house repaired or totally rebuilt – whichever is needed.
On a related note, the destruction resulting from floods, earthquakes, or just poor home maintenance is usually not included in the dwelling coverage amount, but you can inquire about additional “riders” if you’re looking for that type of additional coverage.
If you have freestanding garages within your household, you should also inquire about separate coverage levels.
Personal property such as your furniture, appliances, and other gadgets will also be covered. However, if you have a valuable set of jewelry, you can look for “off-premise” coverage limits that help protect your jewels if it gets caught in the fire, for example.
Note that there might be a limit to which you can get reimbursed in these situations. Most insurance carriers have the following coverage limits:
If your home is insured for $200,000, you’ll get $140,000 worth of coverage for personal property or contents.
And since we’re speaking of interior property damage, if you have other valuables – such as antiques – you might want to put them on the itemized schedule.
Personal Liability For Injury Or Damage
This liability coverage is useful because it protects you from lawsuits that others filed against you – or even against your pet.
If you damage someone’s special possession or your dog bites your neighbor, your insurance company will pay for the damage or injury caused (medical payments) based on your liability coverage. Accordingly, the medical payments coverage helps you pay for medical expenses from injuries that happen on your property.
Insurance commissioners recommend getting a higher insurance premium – such as $300,000 – if you want to save yourself from going to court or paying out of your pocket.
Your house could be repaired or entirely rebuilt, depending on the personal property damage coverage. In such cases, home insurance helps you pay for hotels (or renting another house) while your property is being repaired. This part of the personal property coverage is generally known as “additional living expenses.”
Know that the home insurance policy puts certain limits on the coverage limit, so make sure to choose your stay wisely. You can always broaden those limits, but you’ll have to purchase a larger coverage.
What Is Not Covered?
Typically, the so-called “Acts Of God” – uncontrollable events, such as floods, or tsunamis – are not covered. As we said, you should look for additional coverages that can help you if this befalls you.
Factors That Increase Homeowners Insurance
If you have two or more home claims over time, it can be difficult for us to place coverage with you from any of our carriers. Companies often consider you “high risk.” Not to worry – it will be pricier, but generally, a state FAIR plan can help. These shared-market plans allow “high-risk” homeowners to receive access to homeowners insurance.
Poor credit or poor property maintenance indicates a greater risk of not being able to maintain the property – which also affects the average cost of home insurance per year.
Factors That Save on Homeowners Insurance
Looking to save money? No problem – there are ways to get that premium down!
First, many policyholders opt to go with a higher deductible. The higher your deductible, the less you’ll pay monthly. Home insurance policyholders typically opt for $1000, $2500, or $5000 deductibles. Before you file a claim and receive a payout, you’ll need to make sure your deductible is met.
You can add optional wind/hail deductibles to your home insurance policy. That said, if your property is damaged by wind or hail, you’ll need to pay a separate deductible before you’re able to recover your loss.
One of the best ways to save is to bundle your policies:
We can write auto, fire, RV, or life insurance policies along with your homeowners policy. That’ll help you save on your homeowners’ insurance costs through your carrier.
How To Lower Your Home Insurance Premium?
If you’re looking to save money and lower average home insurance rates, know that you can do so by trying out our homeowners insurance calculator:
- Maintaining a security system: Homeowners with actual cash value in their house could use a burglar alarm that’s tied directly to the police station. By implementing this, you can lower your home and auto insurance premiums by 5%.
- Raising your deductibles: You can choose to raise your home insurance deductible and cut down on your annual premiums. Accordingly, a higher deductible could lower your home insurance. However, the problem here is that claims of about a couple hundred dollars will be absorbed by the homeowner, and this can add up.
- Looking for home insurance discounts: Clients that have more than one contract with the insurance company (health or car insurance) can obtain a 10% discount on their current cost of home insurance. In the best-case scenario, you’ll end up saving on two premiums.
- Paying off your mortgage in time: It’s certainly not an easy thing to do, but people who actually own the residence in which they live can save a lot on premiums and watch their average cost of homeowners’ insurance go down significantly.
- Planning ahead of renovation: If you’re planning on renovating your house or having something added to the property, think about the materials that will be used in the process because they can affect the average annual cost of home insurance. Naturally, wooden structures can cost a lot more to insure. Instead, go with cement or steel structures because they’re cheaper to insure and less likely to get caught in the disaster.
- Regularly reviewing your policy: Regardless of the average annual premium you settled on, you should review the details and cost of homeowners insurance – even after buying the policy. Compare your quote to other home insurance companies at least once a year.
As pointed out, the average homeowners insurance per year depends on the country you live in. All things considered, homeowners insurance policies can cost anywhere between $781 and $3,383 a year.
Your homeowners’ premium can be affected by protection class, construction materials, and even your credit history. Within these, there are factors that can subsequently increase – or lower – the price you pay for your home insurance.
Essentially, your home insurance policy covers personal property damage (to the interior and exterior of your house), personal liability, and hotel rentals while you’re home is being repaired or rebuilt. This coverage, however, doesn’t apply to “Acts of God.“
Lastly, if you’re looking for ways to save up some money – which is reasonable – and cut down on your costs, you can do so by comparing your policy to other insurance companies, paying off your mortgage in a timely manner, raising your deductibles, and looking for discounts.
How To Determine Your Premium Cost?
Are you looking forward to a simple, easy and straightforward way to get you a quote that will save you on your premium cost? All you have to do is enter your home data JUST one time – and we’ll send that information to best home carriers to determine your costs!
We provide real-time quotes from multiple carriers using the info you provide. You can finally put an end to those never-ending conversations that don’t even give you valuable information.
Be sure to check out our quote tool to compare home insurance rates to see how much is homeowners insurance costs and let us help you lower your premiums today!