How much does homeowners insurance cost?

According to the National Association of Insurance Commissioners, the average annual homeowners insurance premium is $1,249. Homeowners insurance costs differ from state to state for a number of reasons. If a state has a lot of major cities and more densely populated areas, it’s more likely to have a higher average premium, as home values are generally higher. States in areas with a higher incidence of natural disasters also generally have higher premiums than states that don’t. Homeowners insurance premiums are also dependent on the age and rebuild value of your home and the insured limits in your policy.

Selecting a homeowners insurance policy is one of the more important purchasing decisions you’ll make after finding a new home. Homeowners insurance protects your assets — the home itself, personal property within the home, and legal and medical bills if someone is injured on your property. It's also required by most mortgage companies.

Average homeowners insurance cost by state

Home insurance premiums can vary greatly from state to state and between ZIP codes. Even two homeowners on the same block might see very different rates because of differences like whether their houses are brick or stucco, or whether they’ve filed multiple claims in the past few years. Check out our state-by-state homeowners insurance guide to learn more about homeowners insurance in your state and what to keep in mind when shopping for coverage.

The most expensive states for homeowners insurance

Highest Average Premium by State

Extreme weather is a common theme in states with high homeowners insurance premiums. Louisiana, Texas, Rhode Island, and Florida are coastal states and are more susceptible to strong storms, and Oklahoma is right in the middle of Tornado Alley.

1. Louisiana: $1,987

2. Florida: $1,960

3. Texas: $1,955

4. Oklahoma: $1,944

5. Rhode Island: $1,630

The cheapest states for homeowners insurance

Lowest Average Premium by State

On the flip side, you may find that homeowners insurance is more affordable if you live in a state that experiences milder weather.

Because you’re at less risk for weather damage, your premiums are going to be cheaper. And while we don’t advise moving somewhere strictly based on how high homeowners insurance premiums run, it’s helpful to understand why policies are cheaper in certain states and more expensive in others. As you can see, the following states aren’t likely to experience tropical storms and aren’t as prone to catastrophic tornadoes or other disasters.

1. Oregon: $706

2. Utah: $730

3. Idaho: $772

4. Nevada: $776

5. Wisconsin: $814

Average homeowners insurance rates by company

Some insurance companies simply charge less for homeowners insurance than other companies. If you choose a premiere tier of coverage from a company that offers multiple levels of protection — like MetLife or Encompass — you’ll pay more for coverage simply because the insurance products and customer service are more comprehensive and personalized.

Certain insurance companies also have a different risk tolerance than others, and that can mean lower rates. For example, if a carrier doesn’t insure homes that are at high risk of being damaged by a natural disaster then rates might be lower across the board.

Of the homeowners insurance companies offered by Policygenius, Plymouth Rock quoted customers the lowest rates, while MetLife quoted customers the highest rates.

Average annual premium courtesy of Policygenius quoting data

Average homeowners insurance premium by coverage amount

Your homeowners insurance costs are largely determined by your home’s insured value, or the dwelling coverage limit in your policy. This is the part of your policy that reimburses you for covered damage to the structure of the home. The more dwelling coverage you have, the higher your homeowners insurance premiums will be.

Below is the average annual premium for a standard homeowners insurance policy by insured value range, according to the NAIC.

What factors determine the cost of homeowners insurance?

Similar to life insurance, underwriting, your homeowners insurance company will examine potential risks when determining your rates. Some of these risks you have control over, and some are simply beyond your control.

Circumstantial homeowners insurance cost factors

• Location – Location is one of the biggest homeowners insurance premium cost factors. Weather, population density, proximity to fire-prone forested areas or car accident-prone intersections and roads, and proximity to a fire station are all taken into account when determining rates.

• Insurance claim history — If you’ve filed past claims or live in an area with a high number of insurance claims, you’ll have higher premiums.

• Credit history – Most states allow homeowners insurance companies to check an individual’s credit history to determine their premium.

• Age of your home – That Victorian you just bought in a historic neighborhood may be charming, but chances are it has older wiring and plumbing, meaning your rates will be higher due to the heightened risk of fire and plumbing hazards. Homes with aluminum wiring are typically excluded from dwelling coverage unless proper safety modifications are made by a licensed electrician. Companies will also suggest a complete copper rewiring to minimize risk.

• Attractive nuisances : Insurers consider additions like a pool, tree house, or trampoline to be an “attractive nuisance.” Attractive nuisances may result in increased personal liability coverage requirements or a company may deny you coverage altogether.

Customizable homeowners insurance cost factors

• How much coverage you have – When buying homeowners insurance, the insurance company largely determines your dwelling coverage amount (along with three other components that are set as a percentage of your dwelling coverage limit), but you also have the option of customizing the policy to suit your needs. That could mean upgrading your personal property coverage to replacement cost rather than actual cash value or opting for a higher maximum personal liability coverage amount than $500,000. Insurance companies also offer a wide range of additional protections, or coverage endorsements, to make your policy more comprehensive. The more robust your policy is, the higher your premiums will run you.

• Deductible amount – The amount you pay out of pocket in the event of a claim. A standard policy deductible is typically anywhere from $500 to $2,000, but some companies may offer even higher deductible options. The general rule of thumb in insurance is lower deductible-higher premiums; higher deductible-lower premiums.

• Homeowners insurance discounts – Homeowners insurance companies offer numerous discounts and bundles that can decrease your premiums. A few common ways to save are with home and auto insurance bundling discounts; loyalty discounts if you’re with the same company for a set number of years; and discounts for infrequent or zero claims.

How much homeowners insurance coverage do you need?

A standard homeowners insurance policy is made up of six different components of coverage, and each component offers a different type of protection.

Below is an example of coverage limits in a standard HO-3 homeowners insurance policy:

• Dwelling coverage – Coverage for your home should equal its full replacement cost. Not to be confused with the home’s purchase price or market value, the replacement cost should reflect what it’d cost for a full rebuild.

• Other structures coverage – Protects the garage, guesthouse, fences and driveways. Other structures coverage is typically insured for 10% of your dwelling coverage limit.

• Personal property coverage – Protects personal belongings both inside and outside of the home. Personal property coverage is typically insured for 50% of your dwelling coverage limit.

• Loss-of-use coverage – Covers additional living expenses while your home is being repaired or rebuilt. Loss-of-use coverage is typically insured for 20% of your dwelling coverage.

• Liability coverage – Should be enough to cover all of your financial assets — like the home itself, investments, and automobiles in the event you’re sued. If $500k isn’t enough coverage, you can add an umbrella policy to increase your liability protection.

• Medical payments to others – The amount you’ll pay out if someone is injured in your home and requires medical expenses on your behalf. Policies should typically have anywhere from $1,000-5,000 in medical payments coverage.

➞ Learn more about what homeowners insurance covers here.

Supplemental coverage options

In addition to the six basic protections that come with every standard homeowners insurance policy, most insurers offer optional coverage add-ons that you can purchase to supplement coverage gaps in your policy. Below are few common homeowners insurance endorsements:

• Water backup coverage – Standard homeowners insurance does not cover water damage from sump pump or sewer backup. You can add water backup coverage to your policy to supplement that gap in coverage and protect your home from drain, sewer, or sump pump backups. It costs anywhere from $30 to $70 a year for $5,000 worth of coverage. 

• Extended replacement cost – By upgrading your policy with extended replacement cost coverage, you’re ensuring that your insurance company will pay for your home to be repaired or rebuilt to its condition before the loss, even if you’ve exceeded your dwelling coverage limit. You can typically extend coverage to an additional 25% to 50% of your dwelling coverage limit for around an extra $25 to $50 a year.

• Equipment breakdown coverage – This is a type of coverage designed to help pay for repairs to your appliances, like your washing machine, boiler, refrigerator, and heating and air conditioning systems if they break down due to mechanical or electrical failure, like if a power surge fries your home’s HVAC. Most insurers offer up to $50,000 worth of coverage for an additional $25 to $50 a year. 

• Identity theft coverage – Many insurers offer identity theft protection, which can help pay for the costs associated with recovering your identity. Identity theft coverage can help pay for identity restoration services, ID replacement, and attorney and administrative fees. 

• Home business coverage – The maximum coverage for home business equipment in a standard home policy is usually capped at $2,500. Home business coverage can extend that protection and also help pay for liability expenses if a client or employee gets injured in your home.  

➞ Learn more about homeowners insurance endorsements

How to save on homeowners insurance

Along with insurance bundles, loyalty discounts, and infrequent claims, you can also lower your homeowners insurance premiums by increasing the number of safety and security features in your residence. Installing any of these features in your home can help reduce the cost of your homeowners insurance:

• Smoke detectors

• Security alarms

• Sprinkler system

• Deadbolts on doors

• Fire extinguishers

• Wind protection

If you’re looking to lower your homeowners insurance rates, you should consider shopping around. Policygenius will look at your policy, compare your coverage and cost with other insurers, and help you determine if you can get a better deal with another company.

"Average homeowners insurance rate":  Based on 2018 state-specific premium and exposure information for homeowner occupied policy forms HO-3 as compiled in the NAIC's 2020 Dwelling Fire, Homeowners Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner's Insurance Report.