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Cost of homeowners insurance

Fact-checked with HomeInsurance.com

    Article Highlights

    Once you’ve built your dream home or found your fixer-upper, one of the key steps in homeownership is purchasing a homeowners insurance policy. Not only does the right policy protect the structure of your home from an event such as fire or theft, but it also helps protect your belongings inside your home. Knowing you need a policy is one thing, but many homeowners have lots of questions when it comes to policy coverage and costs of premiums. 

    The average annual premium lands around $1,124 for dwelling coverage of $200,000. It’s worth noting homeowner’s insurance costs have been trending upwards over the last several years, with wind and hail damage causing the most claims. Asking questions such as “what does home insurance cover?” and “how much is homeowners insurance?” are to be expected when you’re reviewing homeowners insurance rates. As you start researching, you may be surprised at the number of factors that impact your insurance rates, including ones you can control.

    The average cost of homeowners insurance by state

    One of the biggest factors influencing how much you pay for homeowner’s insurance is your location. If you compare the average costs between each state, you’ll quickly notice how much a premium can vary from one state to another. You have less expensive premiums in states such as Vermont and Delaware, while other states like Oklahoma are more than double the national average. 

    StateAverage cost ($200,000 dwelling coverage)
    Alabama$1,629
    Alaska$904
    Arizona$1,103
    Arkansas$1,918
    California$928
    Colorado$1,702
    Connecticut$892
    Delaware$489
    Washington, D.C.$753
    Florida$1,419
    Georgia$1,258
    Hawaii$320
    Idaho$789
    Illinois$1,209
    Indiana$1,080
    Iowa$1,262
    Kansas$2,552
    Kentucky$1,606
    Louisiana$1,904
    Maine$801
    Maryland$924
    Massachusetts$1,071
    Michigan$947
    Minnesota$1,395
    Mississippi$1,443
    Missouri$1,706
    Montana$1,499
    Nebraska$2,361
    Nevada$680
    New Hampshire$590
    New Jersey$671
    New Mexico$1,279
    New York$786
    North Carolina$1,124
    North Dakota$1,578
    Ohio$756
    Oklahoma$3,342
    Oregon$661
    Pennsylvania$661
    Rhode Island$918
    South Carolina$1,284
    South Dakota$1,678
    Tennessee$1,389
    Texas$2,105
    Utah$718
    Vermont$553
    Virginia$823
    Washington$809
    West Virginia$867
    Wisconsin$884
    Wyoming$949

    Highest average premium by state

    According to average rates from Quadrant Information Services, Oklahoma, Kansas and Nebraska have the highest premium rates for homeowners insurance costs. Oklahoma remains the most expensive, due to the stormy and volatile nature of the weather of the Sooner State. The same is true for Kansas and Nebraska. All three of these states have some of the highest rates of tornadoes across the entire country, making it more likely to incur damage to a home from volatile weather.

    Cheapest states for homeowners insurance

    On the other end of the spectrum, you have Hawaii, Delaware and Vermont with the lowest costs for homeowners insurance. Not only are all three of these states smaller in land mass, but all three are less likely to experience severe weather conditions like hurricanes, hailstorms and tornadoes.

    Average home insurance rates by company

    Insurance providers ultimately make their decisions about risk and the likelihood of a peril falling upon you and your family, which is one reason why rates vary from one carrier to the next. For example, one carrier might determine a person who lives in an old house is more likely to have structural issues after a hard winter versus another carrier. Providers need to maintain a certain profit margin in order to provide service and protection to its customers, and this impacts rates too.

    CompanyAverage annual premium ($200,000 dwelling coverage)
    Allstate$1,211
    American Family$1,239
    Amica$1,637
    Auto-Owners$1,270
    Chubb$1,142
    Erie$884
    Farmers$1,254
    GEICON/A
    Liberty MutualN/A
    MetLife$1,044
    Nationwide$1,126
    Progressive$955
    State Farm$1,211
    The Hartford$1,426
    Travelers$1,053
    USAA$1,210

    Factors that can affect home insurance rates

    As you’re gathering quotes and information on your home insurance rates, there are several factors influencing the home insurance estimate. Not only does the insurance carrier you select make a difference, but so do several other variables.

    Location

    Location is a major factor when determining the amount you pay for homeowners insurance. Not only does it vary by state, but the location on a smaller scale has an impact too. For example, if you live in a ZIP code with a higher crime rate or you’re located near a fire department, your rate is impacted to a higher or lesser degree based on proximity.

    Amount of coverage you choose

    Naturally, the amount of coverage you choose for your policy affects your rate. For instance, if you choose a $200,000 dwelling coverage, you’re going to pay less than a homeowner who needs $300,000 in dwelling coverage to rebuild their home. Other categories of coverage, such as liability amounts also make a difference. If you have the minimum liability coverage of $100,000 then you’ll pay less versus choosing a $300,000 limit.

    Credit score

    Your credit score is another important factor in determining your home insurance rate. A higher credit score mixed with a low debt-to-income ratio means you’re likely to pay less each month.

    To ensure your credit doesn’t unnecessarily hurt your insurance premium, request a free copy of your credit reports. Check for errors with all three credit bureaus and diligently monitor your score. If you see a mistake, which could ultimately affect your homeowners insurance rate, follow the Federal Trade Commission’s advice on disputing an error.

    Age of home

    The age of your home is considered a risk factor for insurance companies because it suggests how likely your home is going to need work sooner versus later. The younger your home, the lower you will pay for homeowners insurance since it’s less likely you’ll need work in the near future.

    How to get the best rates for homeowners insurance

    There are steps you can take to get the most competitive rate for your homeowners insurance. 

    Comparison shop

    Shopping around with multiple carriers is one of the best ways to get the most competitive rates for your policy, especially considering how much rates can vary from one carrier to the next. As you’re doing so, make sure you’re comparing exact coverage options so you’re getting a true head-to-head cost comparison. 

    Increase your deductible

    Your deductible is the amount you’re responsible for paying out of pocket if you need to make a claim. The lower your deductible, the higher your insurance rate will be. If you increase your deductible, you are taking on more risk and can often get a more competitive rate. If you do choose to raise your deductible, make sure you have savings set aside to cover the amount in case you find yourself making a claim.

    How much homeowners insurance coverage do you need?

    Knowing how much homeowners insurance coverage you need is helpful as you’re comparing carriers and policies. First, to determine the appropriate dwelling coverage, figure out how much it would cost to rebuild your home based on today’s construction costs and your square footage. Remember, you’re not including the cost of your land, only your structure. Some banks require you to have the coverage amount equal to your mortgage. Depending on the carrier, you may find an online tool useful for this estimation.

    Secondly, your personal property is equally important. Conduct a home inventory to adequately assess how much your belongings are worth, and what it would cost to replace them. You will have to choose between an Actual Cash Value (ACV) policy, which replaces the cost based on what your belongings are worth today, or Replacement Cost Coverage, which is what you paid for your item. 

    Last, your liability coverage is vital. Policy limits begin at $100,000, but if you own other properties or have additional assets worth more, it’s recommended you carry at least $300,000 in coverage. You could even add an excess liability policy if you feel you need more.

    Types of home insurance

    • Dwelling coverage: This protects the structure of your home (floors, walls, appliances, ceilings) and any attached structures against a host of perils, including theft, vandalism, fire and hail. If your policy includes a $200,000 dwelling limit and your home needs to be rebuilt, $200,000 of dwelling coverage would be paid out to rebuild your home.
    • Other structures coverage: Should an outside structure (such as a fence, shed or garage) be damaged, other structures coverage may help pay for any needed repairs. 
    • Personal belongings This protects the contents of your home. Should a covered incident happen and affect your personal property, your insurance provider would provide you funds to cover for the value of your insured items. You might want to opt for extra coverage for certain items like jewelry or musical instruments that have limits you might exceed.
    • Loss-of-use: If you’re unable to use your home due to a covered event, loss-of-use coverage would pay for any additional living expenses you need. For example, if you normally spend $400 a month on groceries but have to eat out more since your home is damaged,your insurance provider pays the difference.  
    • Liability coverage: This protects you against lawsuits for personal injury or property damage that you, your family members, or your pets may cause. Liability limits typically start around $100,000 and can be increased based on needs. 
    • Medical payments to others: Whether considered your fault or not, this type of coverage protects you if a guest is hurt while at your home. 

    How to save on home insurance

    There are many ways to save on homeowners insurance. Some are easy while others are more tedious. It’s often tempting to many homeowners to simply choose a less expensive policy, but this is often not the best course. As a homeowner, you need to protect your investment, and this means getting the best coverage you can afford.

    To get the best coverage, see if you can save with these strategies.

    Bundle with auto-insurance

    Many homeowners insurance companies also offer auto-insurance. By choosing the same company for both, you can often save money on your premiums.

    Secure your home 

    Making a few safety enhancements to your home can make your property look less risky to insure. Here are some things you can add to possibly get a discount:

    • Smoke detector: Your first line of defense against any fire is a working smoke detector. The requirements for getting a discount for a smoke detector are different for each company (and yours may not even offer it). Because you should have a smoke detector for safety anyway, see if you can also save money in the process.
    • Fire extinguishers: Having a fire extinguisher on every floor is an important safety habit— especially if you heat your home with a woodstove. Whether your insurance company will give you a discount for having fire extinguishers depends, but you should ask.
    • Wind protection: Storm shutters can help protect your home against high winds. Get them professionally installed, and your provider might give you a discount for reducing your home’s risk.
    • Sprinkler system: It will likely take you some time to recoup the money you spend on a sprinkler system from any savings you’ll get from your insurance provider. Nevertheless, sprinkler systems provide an immense amount of safety from fire hazards. You can even get your system to automatically call 911 should it deploy, which should give some peace of mind. 
    • Security system: Security systems deter home burglaries, and because many policies protect homeowners against theft and vandalism, getting a home security system can often get you a substantial discount on your policy. 
    • Deadbolts on doors: Along with security systems, a deadbolt can drastically deter any would-be thieves to your home. Install a deadbolt lock on every major entranceway to your home, and your insurance provider might give you a small discount on your premium.
    • Raise your deductible: Raising your deductible will often reduce your premium. Just make sure you have the money set aside should disaster strike.

    Improve your credit score

    Not every insurance provider uses credit scores as a risk indicator, but many do in most states. Improve your credit score by paying your bills on time, reducing your overall debt and keeping your cards open. You should also look into your credit report for any errors.

    Look into discounts

    Many insurance providers have a variety of ways for their policyholders to get discounts. For example, you may get a discount for not smoking or signing up for automatic payments. Ask your provider what discounts you could be eligible for.

    Takeaway

    Asking how much is homeowners insurance is only the beginning of finding the right policy to fit within your budget. Rates are based on a variety of factors, including:

    • Insurance carrier
    • Amount of coverage selected
    • Location
    • Your credit score
    • The age of your home
    • The amount of your deductible

    Even with the numerous influences on insurance rates, you can lower your rates by looking for policy discounts, comparison shopping between carriers and securing your home with smoke detectors and other safety measures. 

    Methodology 

    Coverage utilizes Quadrant Information Services to analyze 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 and the following coverage limits:

    • Coverage A, Dwelling: $200,000
    • Coverage B, Other Structures: $20,000
    • Coverage C, Personal Property: $100,000
    • Coverage D, Loss of Use: $40,000
    • Coverage E, Liability: $300,000
    • Coverage F, Medical Payments: $1,000

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

    These are sample rates and should be used for comparative purposes only. Your quotes may be different. 

    Rates are determined based on 2020 Quadrant Information Services data.

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