The Average Homeowners Insurance Cost

Homeowners Insurance Cost

 

Homeowners Insurance Cost

If you have a mortgage or other type of home loan, you’ll be required to carry a homeowners insurance policy. Even if you own your home outright, home insurance is a smart purchase. Bankrate’s insurance team monitors the latest data and industry trends to help you understand the average home insurance cost, which can give you a starting point when shopping for a policy. But keep in mind that your annual cost could be higher or lower than the average due to unique factors related to you and your house.

The cost of insuring a home has continued to rise steadily throughout the country. According to the National Association of Insurance Commissioners, home insurance rates are up almost 47% in the last 10 years alone. To help you understand the market, we did some digging to discover which states are the most and least expensive.

Summary of Bankrate’s homeowners insurance cost analysis

  • The average homeowner spends $1,312 on homeowners insurance per year for a policy with $250,000 in dwelling coverage.
  • Homeowners spend about 1.91% of their household income on home insurance, based on average premiums and median household income.
  • Homeowners insurance costs are rising, having increased about 42% since 2009 when the average premium was $880, according to the Insurance Information Institute (Triple-I).

How much is homeowners insurance?

The national average home insurance cost is $1,312 per year for $250,000 in dwelling coverage. However, your home insurance policy premium depends on several factors. Geographic location plays a significant role in premiums. Some areas of the country are more prone to natural disasters, for example, while some areas could have higher rebuilding costs.

We collected thousands of homeowners insurance quotes and calculated the average premium for each state. The following table shows our findings, from the most expensive to the most affordable states for home insurance.

homeowners insurance

homeowners insurance

The most expensive states for homeowners insurance

Homeowners insurance costs an average of $1,445 annually, but premiums vary greatly by state, from $598 annually in the least expensive state to $2,559 annually in the most expensive state.

We collected thousands of homeowners insurance quotes and calculated the average premium for each state. The following table shows our findings, from the most expensive to the most affordable states for home insurance.

Insurance Plan

What does homeowners insurance cover?

If you want to lower your rates, you need to know what your homeowners insurance policy covers in the first place. Individual policies will differ, but most consist of four standard coverages:

Dwelling coverage pays for the cost of repairs or replacement if the structure of your home is damaged by a covered event. Coverage can pay for damage to:

  • Roofing
  • Walls
  • Floors
  • Foundation
  • Built-in appliances
  • Garages, sheds and other structures (usually)

Personal property coverage protects the contents of your home from any damage caused by a covered peril. A standard HO-3 will likely include coverage for:

  • Furniture
  • Clothing
  • Electronics
  • Jewelry

Liability coverage deals with your legal liability for property damage or bodily injury to others. This could cover:

  • Legal expenses you incur if your dog bites a guest and you are sued
  • Legal expenses you incur if your tree falls and damages your neighbor’s roof
  • Repairs to your neighbor’s window if you break it while playing ball

Loss of use coverage covers any unusual expenses you incur while living away from your home after it’s made uninhabitable by a covered peril. These could include:

  • Costs of living in a hotel or motel
  • Costs of meals out while living in temporary housing
  • A credit check fee for renting out a temporary home
  • Transportation reimbursement for increased mileage to your workplace

Factors that affect homeowners insurance cost

Insuring your home is a gamble for an insurance company. Like auto insurance, certain types of houses — and houses located in certain areas — create a higher likelihood that the company will have to pay claims. Average home insurance rates vary based on several rating factors. Understanding the most significant factors that impact your home insurance premium might help to guide you when shopping for a home.

Home characteristics

Every home is different, which means insurance companies rate each home on a case-by-case basis. Your home’s specific characteristics will play a role in determining how much you pay for homeowners insurance.

  • Year built: Older houses often cost more to insure because repair costs may be higher than they would for newer homes. Repairing or replacing features such as custom molding, plaster walls and wood floors could require specialists, making these features more expensive to repair in the event of a claim.
  • Roof condition: The age and condition of a home’s roof play a role in homeowners insurance rates. Older roofs may not withstand windstorms or hail damage as well as newer roofs. Likewise, roof materials can affect your homeowners insurance rate. Some types of roofing material may be more resistant to damage, which could lower your premium, and other types may be more expensive to repair or replace, which could increase your premium.
  • Construction quality: Many homeowners policies do not cover the expense of bringing a home up to the current building code following a claim. Insurance companies typically offer an optional ordinance or law endorsement, which can help pay for expenses related to code upgrades made during covered repairs.
  • Special features: Features such as hot tubs and swimming pools can make a home more appealing, but they can also increase homeowners insurance premiums if they raise repair and replacement costs and add liability risks. Homes with recreational features such a pool, spa or jacuzzi might need higher liability coverage in case a guest sustains an injury.

Location characteristics

Geographic location typically impacts your insurance rates because every area of the country has a different risk level for potential damages. Some areas may have a higher risk of wind damage, for example, while other areas of the country often sustain damage from fires.

  • Weather-related risks: Standard homeowners policies generally do not cover flood damage or damage from earthquakes. In fact, some insurance companies do not cover homes in flood zones at all. Other insurance companies sell private flood insurance or offer earthquake coverage in separate policies or endorsements to protect against these types of disasters.
  • Fire risk: According to the Triple-I, structure fires caused over $12 billion worth of property damage in 2019. Insurance companies rate homeowners premiums based on proximity to a fire station and fire hydrants because rapid emergency response often minimizes damage.
  • Crime risk: If you live in a high-crime neighborhood, your insurance rates might be impacted. You can help offset this cost to your premiums by installing additional safety features in your home, such as deadbolts and a security alarm system.

How can you reduce the cost of your homeowners insurance?

The best, easiest way to reduce your homeowners insurance cost is to get quotes from multiple insurers. It’s especially easy to do this when your policy is up for renewal or if you’ve made major changes to your policy.

Another option is to raise your deductible — the amount you pay before insurance kicks in — since a higher deductible directly results in a lower premium. However, you should only raise your deductible to an amount you can cover if you experience a loss. If you couldn’t afford an unexpected $5,000 expense, you should keep your deductible below that amount.

Lastly, be sure to ask after homeowners insurance discounts. While discounts vary from company to company, some common ones include:

  • Multi-policy discounts for bundling home and auto insurance
  • A loyalty discount, particularly for customers who have remained claim-free
  • A discount for hail-resistant roofs
  • A discount for security technology, such as smart smoke alarms, a lightning protection system or a central alarm system
  • A discount for retiring, as being at home more often decreases your likelihood of experiencing a burglary

Frequently asked questions

What are the main factors that affect how much home insurance costs?

The three main factors that affect home insurance cost are your home’s location, how much it’s insured for and how susceptible it is to damage. For example, a home located along the coast would have higher insurance costs than one that’s inland, and a home made with expensive or fragile materials costs more to insure than one made with more affordable or sturdy materials.

What is covered by homeowners insurance?

It depends on what kind of policy you buy, but in general homeowners insurance covers liability, damage to the structure of your home and damage to your personal property. Liability coverage pays for damages to others if you’re deemed responsible.

What sources of damage are covered by homeowners insurance?

Most homeowners insurance policies have a list of perils (sources of damage) that are covered. The most common perils include fire, wind, theft, vandalism, freezing and damage from vehicles. Some insurance policies are “open perils,” which means you’re covered for everything that’s not explicitly excluded.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on 40-year-old male and female homeowners with a clean claim history, good credit. Our base profile includes the following coverage limits:

  • Coverage A, Dwelling: $250,000
  • Coverage B, Other Structures: $25,000
  • Coverage C, Personal Property: $125,000
  • Coverage D, Loss of Use: $50,000
  • Coverage E, Liability: $300,000
  • Coverage F, Medical Payments: $1,000

Different coverage levels

For the various coverage levels we shared, these limits were used:

$150,000 dwelling coverage profile:

  • Coverage A, Dwelling: $150,000
  • Coverage B, Other Structures: $15,000
  • Coverage C, Personal Property: $75,000
  • Coverage D, Loss of Use: $30,000
  • Coverage E, Liability: $300,000
  • Coverage F, Medical Payments: $1,000

$350,000 dwelling coverage profile:

  • Coverage A, Dwelling: $350,000
  • Coverage B, Other Structures: $35,000
  • Coverage C, Personal Property: $175,000
  • Coverage D, Loss of Use: $70,000
  • Coverage E, Liability: $300,000
  • Coverage F, Medical Payments: $1,000

$450,000 dwelling coverage profile:

  • Coverage A, Dwelling: $450,000
  • Coverage B, Other Structures: $45,000
  • Coverage C, Personal Property: $225,000
  • Coverage D, Loss of Use: $90,000
  • Coverage E, Liability: $300,000
  • Coverage F, Medical Payments: $1,000

The homeowners also have a $1,000 deductible (unless indicated otherwise) and a separate wind and hail deductible (if required).

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