What is a homeowners insurance premium?

A homeowners insurance premium is the amount of money you pay your insurance company to keep your policy active. Find out how your insurance premium is determined and different ways to pay.

Pat Howard 1600Kara McGinley

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Pat Howard

Pat Howard

Managing Editor & Licensed Home Insurance Expert

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

&Kara McGinley

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

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Michael Reynolds, CSRIC®, AIF®, CFT-I™

Michael Reynolds, CSRIC®, AIF®, CFT-I™

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Michael Reynolds, CSRIC®, AIF®, CFT-I™, is a financial advisor, principal and founder of Elevation Financial, host of the weekly personal finance podcast Wealth Redefined®, and a member of the Financial Review Council at Policygenius.

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When you purchase a homeowners insurance policy, you have to pay your policy premium. This is the amount you need to pay your insurance company to keep your homeowners policy active. You can typically pay your premiums monthly, quarterly, or annually. In this guide, we’ll walk you through what a home insurance premium is, how it’s paid, the average annual premium in your state, and the various factors that can impact your rate.

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What is a home insurance premium?

A homeowners insurance premium is the amount you pay to your insurance company to keep your policy active and your house protected. 

You can generally pay insurance premiums in one of two ways: 

  1. Pay directly. You make payments directly to the insurance company with one-time or recurring payments.

  2. Pay through escrow. You make your payments through an escrow account as part of your monthly mortgage payment

Pay your homeowners insurance premium on time to avoid a lapse in coverage

In the event you stop paying your premiums, you’ll generally have 10 to 30 days to pay down the balance. If you don’t, your policy will lapse, meaning your house will be unprotected against fire, theft, or any other unexpected disasters. Insurance companies generally charge higher premiums if you have a policy lapse or coverage gap on your record.

How much does does the average home insurance premium cost?

The average homeowners insurance premium in the U.S. is $1,899 a year or about $158 a month — but the price of coverage will vary depending on your home’s location, size, age, and the amount of coverage in your policy. 

But homeowners insurance premiums are going up nationwide — from May 2021 to May 2022, 90% of homeowners saw their quoted annual premium increase from the year before, according to the Policygenius Home Insurance Pricing Report.

Homeowners insurance premiums by state

A major factor in how much your premiums will cost depends on where your home is located. If you live in an area that experiences frequent wildfires, like parts of California, you'll likely see higher rates than states with more mild climates.

Here’s the average monthly and annual homeowners insurance premium in each state.

State

Average annual cost

Average monthly cost

Alabama

$2,063

$172

Alaska

$1,446

$120

Arizona

$1,897

$158

Arkansas

$3,391

$283

California

$1,565

$130

Colorado

$2,496

$208

Connecticut

$1,571

$131

Delaware

$980

$82

District of Columbia

$1,154

$96

Florida

$2,643

$220

Georgia

$1,988

$166

Hawaii

$486

$40

Idaho

$1,363

$114

Illinois

$2,053

$171

Indiana

$2,045

$170

Iowa

$1,830

$153

Kansas

$3,159

$263

Kentucky

$2,705

$225

Louisiana

$2,719

$227

Maine

$1,103

$92

Maryland

$1,733

$144

Massachusetts

$1,382

$115

Michigan

$1,712

$143

Minnesota

$1,966

$164

Mississippi

$2,919

$243

Missouri

$2,876

$240

Montana

$2,778

$231

Nebraska

$4,567

$381

Nevada

$1,239

$103

New Hampshire

$974

$81

New Jersey

$926

$77

New Mexico

$1,792

$149

New York

$1,186

$99

North Carolina

$1,678

$140

North Dakota

$1,908

$159

Ohio

$1,586

$132

Oklahoma

$4,331

$361

Oregon

$943

$79

Pennsylvania

$1,303

$109

Rhode Island

$1,470

$122

South Carolina

$1,793

$149

South Dakota

$2,426

$202

Tennessee

$2,526

$211

Texas

$3,080

$257

Utah

$949

$79

Vermont

$1,046

$87

Virginia

$1,516

$126

Washington

$1,280

$107

West Virginia

$1,499

$125

Wisconsin

$1,211

$101

Wyoming

$1,599

$133

Home insurance premiums rising faster than inflation in some states

Home insurance premiums are rising faster than inflation in many states throughout the U.S., according to our July 2022 analysis of internal policyholder data.

From May 2021 to May 2022, 90% of homeowners saw their quoted annual premium increase compared to the previous year. And in Arkansas, Washington, and Colorado, homeowners saw their rates increase over 17% — more than double the rate of inflation — making inflation guard coverage even more important to add to your home insurance policy.

Find out how much premiums increased in your state by reading our full 2022 Home Insurance Pricing Report.

Homeowners insurance premiums by coverage amount

You should purchase enough dwelling coverage to be able to rebuild your home from the ground up using similar materials. How much dwelling coverage you purchase will directly affect how much your premiums are. 

Below is a look at how much home insurance premiums cost by different dwelling coverage amounts. 

Dwelling coverage amount

Average annual cost

Average monthly cost

$100,000

$946

$79

$200,000

$1,442

$120

$300,000

$1,899

$158

$400,000

$2,481

$207

$500,000

$3,066

$256

7 factors that impact your homeowners insurance premiums

Homeowners insurance premiums are a calculation of multiple factors related to you and your home. Insurance companies will consider your home’s location and characteristics; policy details like coverage and deductible amounts; and policyholder-specific factors such as your credit score, claims history, and any dangerous pets in your home.

Understanding how insurance companies determine rates will help you better understand your bill and identify different cost-saving opportunities. 

Here are the biggest factors impacting your homeowners insurance rates.

1. Location

One of the biggest home insurance cost factors is the location of your home. If your home is in an area prone to wildfires, tornadoes, or hurricanes, you’ll generally have to pay higher premiums compared to someone living in an area with milder weather.

2. Home characteristics

Your home’s size, architectural style, and the year it was built are all calculated into your home insurance premium. Homes that are larger, older, or constructed with less durable materials usually cost more to insure.

Here's a look at how much annual home insurance rates vary for popular insurers based on the age of your home:

Company

New home

10-year-old home

20-year-old home

50-year-old home

Allstate

$947

$1,580

$1,726

$1,717

ASI Progressive

$659

$1,354

$1,796

$1,850

Erie

$709

$1,179

$1,492

$1,589

State Farm

$1,143

$1,727

$1,931

$1,939

USAA

$836

$1,251

$1,501

$1,566

3. Coverage amounts

Your homeowners insurance premium is primarily driven by your policy’s dwelling coverage limit. Generally speaking, the higher your dwelling coverage limit, the higher your rates. Adding optional coverages to your policy like extended replacement cost or extra coverage for valuable items like jewelry or instruments can also impact your policy premium.

4. Deductible 

Your policy deductible is the amount you’re responsible for paying out on a claim before your insurance kicks in to cover the remainder of the loss. Raising your home insurance deductible is probably the easiest and most immediate way to lower your insurance premium. Just be mindful that a higher deductible means more out-of-pocket expenses if something bad happens to your home or belongings.

Here’s how a few popular insurers charge for a $500 vs. $1,000 vs. $2,000 deductible.

Company

$500 deductible

$1,000 deductible

$2,000 deductible

State Farm

$2,327

$2,039

$1,551

Allstate

$1,776

$1,596

$1,104

USAA

$1,090

$1,432

$332

Nationwide

$1,951

$1,955

$1,781

Chubb

$2,190

$1,922

N/A

5. Insurance score

Your insurance company will also consider your insurance score, or your credit-based insurance score, when determining your premiums. Your insurance score is a calculation of some (but not all) of the factors in your credit history as a way to measure how likely you are to file a claim. The higher your credit score, the lower your homeowners insurance premium.

For example, ASI Progressive charges an average premium of $3,487 per year if you have bad credit, versus $2,618 per year for those with good credit. 

6. Claims history

If you’ve never filed a home insurance claim or you’ve only filed one within a three- to five-year span, your premiums likely won’t be impacted. But if you’ve filed multiple claims — particularly ones related to theft, water damage, or foundation issues — your insurance company will likely increase your premiums.

Here's a look at how much annual home insurance rates vary for popular insurance companies based on the number of claims filed over a five-year period.

Company

No claims

1 claim

3 claims

5 claims

AIG

$1,266

$1,452

$1,959

$2,188

Allstate

$1,717

$1,930

$2,904

$4,446

ASI Progressive

$1,884

$2,040

$2,665

$3,005

Erie

$1,465

$1,534

$2,440

$3,919

USAA

$1,547

$1,634

$2,174

$2,842

7. Dangerous dog breeds

Insurance companies view certain dog breeds, like pit bulls or Rottweilers, as a higher risk for dog bites and expensive liability claims. If you have one of these breeds or any other that insurers consider “dangerous,” you may be quoted a higher rate.

For example, American Family charges $1,491 per year on average for homeowners insurance. But if you own a high-risk dog, you can expect that to go up to $1,568 per year.

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How to pay your homeowners insurance premium

If you’re financing your home with a mortgage, your lender will likely require you to pay for a year’s worth of homeowners insurance up front — either before or at closing.  

If you put down less than 20%, your mortgage lender may also require you to pay for homeowners insurance as part of your monthly mortgage payment via an escrow account. 

When your mortgage is escrowed, a portion of your monthly payment goes toward paying off your loan, and the other goes into an escrow account to pay for things like insurance and property taxes. If you put down more than 20%, you’ll likely be given the option of paying your homeowners insurance company directly. 

If you do pay your premiums directly, you can typically pay the following ways before your closing date:

  • Automatic charge to your debit or credit card

  • One-time charge to your debit or credit card

  • Bank account withdrawal

  • Mailing a check

  • At your insurance company’s local office

Most insurers will give you the option of paying your premiums monthly, quarterly, or annually. While the monthly option gives you the most financial flexibility, insurance companies typically charge a reduced rate if you pay annually.

4 ways to lower your home insurance premiums

If your home insurance premium is more than you can afford, there are several things you can do to save on coverage and keep your rates down, including:

  1. Ask about homeowners insurance discounts. Ask your insurance agent if there are any discounts you’re eligible for. Many insurance companies offer discounts for not filing claims, owning a newer home, or making your house safer and more secure with security systems or smart home technology.

  2. Bundle your home and auto insurance. Bundling your home and auto insurance can save you up to 35% on your premiums.

  3. Raise your policy deductible. Opting for a higher deductible is one of the easiest and most immediate ways to lower your home insurance premiums. A higher deductible also means more out-of-pocket expenses when you file a claim, so tread carefully here. 

  4. Re-shop your homeowners insurance every year. It’s recommended that you re-shop your home insurance annually to make sure you’re not missing out on a better deal elsewhere. The agents at Policygenius can help you compare rates from multiple insurers to make sure you’re getting the best coverage at the best price.  

Can I pause my home insurance premiums?

In most cases, your insurance company won’t simply let you pause your premiums and continue insuring your home. But in extenuating circumstances, some insurers may offer flexible plans for policyholders facing financial hardship on a case-by-case basis.

Be sure to talk to your insurance company if you’re having a hard time paying your premiums. If they accommodate you with a payment plan and you’re still having difficulty affording coverage, consider raising your policy deductible and other rate-saving measures.

But whatever you do, don’t simply let your policy lapse — a lapse leaves your home without necessary protection, and having a policy cancellation on your record can make it difficult to get coverage going forward.

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Frequently asked questions

Is it better to pay homeowners insurance monthly, quarterly, or yearly?

Monthly or quarterly payments may provide more short-term financial flexibility, but it is generally cheaper to pay premiums for the year up front.

Are there any other home insurance costs?

Unlike health insurance, which involves premiums, deductibles, copays, and other out-of-pocket expenses, the homeowners insurance costs are a little more cut and dry: You pay premiums to keep your coverage active, and you pay a policy deductible before you’re reimbursed for a claim.

What if I'm struggling to pay my home insurance premium?

If you’re struggling to pay your premium and have exhausted all discounts options, try re-shopping your policy to find a cheaper deal elsewhere. The agents at Policygenius can help you compare multiple quotes at once — all for free with no impact to your credit score.

Methodology

The Policygenius editorial team focused on comparing rates from some of the largest home insurance companies in the industry, since they hold the majority of the market share.

Rates were provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C., for a 40-year-old homeowner with no claim history, good credit, a $1,000 deductible, and the following coverage limits:

  • Dwelling: $300,000

  • Other structures: $30,000

  • Personal property: $150,000

  • Loss of use: $60,000

  • Liability: $300,000

  • Medical: $1,000

All rates based on the above coverage limits except where otherwise noted.

Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of costs. Your actual quotes may differ.

Policygenius prides itself on providing transparent, unbiased reviews of home insurance companies. Though we make money when you purchase a policy through our site, this does not affect our editorial independence and rigorous editorial standards.

Authors

Managing Editor & Licensed Home Insurance Expert

Pat Howard

Managing Editor & Licensed Home Insurance Expert

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Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Senior Editor & Licensed Home Insurance Expert

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

gray linkedin icon link

Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

Expert reviewer

Michael Reynolds, CSRIC®, AIF®, CFT-I™, is a financial advisor, principal and founder of Elevation Financial, host of the weekly personal finance podcast Wealth Redefined®, and a member of the Financial Review Council at Policygenius.

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