How much does homeowners insurance cost?

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 before they’ll lend to you.

According to the National Association of Insurance Commissioners, the average annual homeowners insurance premium is $1,211. 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 higher premiums, 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 match that criteria. Homeowners insurance premiums are also dependent on the age and rebuild value of your home and the insured limits in your policy.

Read on:

• Average homeowners insurance cost by state
• The most expensive states for homeowners insurance
• The cheapest states for homeowners insurance
• Average homeowners insurance rates by company
• Average homeowners insurance premium by coverage amount
• What determines the cost of homeowners insurance?
• How much of each homeowners insurance component do you need?
• How to save on homeowners insurance

Average homeowners insurance cost by state

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, and Florida are coastal states and are more susceptible to strong storms, and Oklahoma and Kansas are right in the middle of Tornado Alley.

1. Louisiana: $1,967
2. Texas: $1,937
3. Florida: $1,918
4. Oklahoma: $1,875
5. Kansas: $1,548

The cheapest states for homeowners insurance

Lowest Average Premium by State

On the flip side, you can get a bargain deal on homeowners insurance if you live in a state that experiences milder weather.

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: $659
2. Utah: $664
3. Idaho: $703
4. Nevada: $742
5. Wisconsin: $762

Average homeowners insurance rates by company

Some insurance companies simply charge less for homeowners insurance than other companies. If you insure your home with a company intended for high-value homes owned by high-net-worth homeowners — like AIG or Chubb — you’ll pay more for coverage simply because the insurance products and customer service are more comprehensive and personalized than with a standard carrier like Travelers or Stillwater.

Certain insurance companies also have a different risk tolerance than others, and that can mean lower rates. For example, if they don’t insure homes with prior claims or homes at high risk of being damaged by a natural disaster, rates might be lower across the board.

Of the homeowners insurance companies offered by Policygenius, Stillwater quoted customers the lowest rates, while Chubb 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 homeowners insurance by insured value range.

What determines 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, proximity to a fire station, and 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) are all taken into account when determining rates.
• 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 house 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.

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 the maximum personal liability coverage amount ($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 of each homeowners insurance component do you need?

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.

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:

• Smoke detectors
• Security alarms
• Sprinkler system
• Deadbolts on doors
• Fire extinguishers
• Wind protection

Interested in reshopping into lower homeowners insurance rates? Look no further than Policygenius. We’ll 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.