The Average Cost of Homeowners Insurance

We'll get right to it: The cost of home insurance varies greatly, but the average American homeowner pays $1,249 in premiums per year, according to the most recent available figures from the Insurance Information Institute.

(This is based on the HO-3 homeowner package policy, which applies to owner-occupied dwellings with one to four family units.) It is the most common package written, and it provides all risk coverage on buildings (except those specifically excluded in the policy) as well as broad named-peril coverage on personal property.)

Home insurance premiums can vary greatly due to a variety of factors, including:

• Your current location
• Your claim history
• Your credit rating
• Your house's age and condition

There are, however, ways for homeowners to save money on their insurance costs, which we will discuss. We'll also go over which areas in the United States are the cheapest and most expensive, as well as typical coverages and more.

What is the average cost of home insurance in each state?

The average home insurance premium varies greatly by state, as shown below. As you might expect, weather events play a significant role in the average annual premium by state, though other factors, such as your credit score and the age of the home, also play a role. The figures in this table are from the Insurance Information Institute's 2018 data.

According to the HO-3 homeowner package policy for owner-occupied dwellings with one to four family units. The most common package written, it provides all risk coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property.

Most expensive states in home insurance premiums

According to the Insurance Information Institute's 2018 data, the following states have the most expensive average home insurance premiums. Premiums can vary greatly within a state, and your premium is determined by factors other than your home's location.

• $1,987 in Louisiana
• $1,960 in Florida
• $1,955 in Texas
• $1,944 in Oklahoma
• $1,630 in Rhode Island

Cheapest states in home insurance premiums

According to the Insurance Information Institute's 2018 data, the following states have the lowest average home insurance premiums. Premiums can vary greatly between states, and your premium is determined by factors other than your home's location.

• $814 in Wisconsin
• $776 in Nevada
• $772 in Idaho
• $730 in Utah
• $706 in Oregon

What factors influence the cost of homeowners insurance?

A variety of factors influence the cost of an individual homeowners insurance policy. Some of these factors are under your control, while others are not.

Home insurance, for example, may be more expensive in areas prone to hurricanes or fires than in areas where natural disasters are uncommon. Insuring newer homes is often less expensive than insuring older homes. Insurance companies will also look at your personal credit history before covering your home, so people with good credit may pay a lower premium than those with bad credit.

Rates are calculated differently by each insurance company. Some carriers place a higher value on credit score and claims history, while others focus more on the home's condition and age. A more comprehensive list of the factors that may influence your homeowners insurance premium is provided below.

• State, city, and neighborhood: Some states are more vulnerable than others to wildfires, earthquakes, and hurricanes.
• Home address: This information is used to compile crime and claim statistics in your neighborhood.
• The home's construction: Is the house made of wood, brick, or vinyl siding?
• Heating system: Is the home heated by an HVAC system or a wood stove?
• Security system: Homes that have security systems are less likely to be broken into.
• Previous claims on the property: If the property has a history of water and electrical issues, the homeowner is more likely to file a future claim.
• Previous claims by the homeowner: If the homeowner has a history with other insurance companies, he or she is more likely to file a claim again in the not-too-distant future.
• Credit score: People with poor credit are more likely to file a claim.
• Nearest fire station: The distance between your home and the nearest fire station can be a factor.
• Marital status: According to statistics, married couples are less likely to file insurance claims.
• Replacement cost: The cost of replacing an older home and bringing it up to code can be more expensive than the cost of replacing a new home.
• Pets: Certain animals may pose a higher risk of liability claims.
• Outside structures: Such as pools, sheds, or greenhouses, can also have an impact on your policy rate.

Aside from these considerations, the cost of an individual policy is also affected by the features you choose to include in your coverage. Among the factors that can influence the price are:

• Deductible amount
• Extra coverage add-ons
• Bundled insurance policies
• Discounts

Types of coverage

There are numerous types of homeowners insurance coverage available. Some coverages, such as dwelling and liability coverage, may be included as standard with most policies. However, insurance companies frequently sell add-on endorsements that provide additional coverage in specific areas. The following are some of the most common home insurance coverages:

• Dwelling coverage is insurance that protects the home against qualified damages. If your home's siding was ripped off during a major storm, your dwelling insurance may cover the cost of repairs. Insurance companies may offer water backup/sump pump overflow and earthquake insurance as add-ons.
• Personal property coverage covers the cost of replacing items in your home, such as furniture. Personal property coverage may reimburse you if someone broke into your home and stole personal items. If you need to protect valuables, your agent may advise you to purchase a scheduled personal property endorsement for increased coverage limits.
• Personal liability coverage protects you from lawsuits for property damage or bodily harm. If a delivery driver slips and falls on your icy driveway, liability coverage would cover their medical bills and court costs if they sue you. Some insurance companies provide add-on policies that increase the limits of your liability coverage.
• Loss of use coverage may cover additional living expenses incurred as a result of damage to your home. While your home is being repaired, this could include hotel stays, groceries, and gas. If your house is under construction as a result of a covered claim, loss of use coverage may pay for temporary hotel and food expenses up to the limit of your policy.

In general, your agent may advise you to base your home insurance coverages on your lifestyle, where you live, and the value of your assets.

Keep in mind that your agent may advise you to increase your coverage as time goes on. If you buy antiques or artwork six months after purchasing your home insurance policy, your agent may advise you to add scheduled coverage for these items. Alternatively, if you accept a remote job, you can check with your insurance company to see if you should add home business coverage for a small fee.

Every homeowner's insurance policy has a policy limit. A policy limit is the most money your insurance company will pay you in the event of a covered loss. For example, if your dwelling coverage limit is $400,000, the amount paid out if your home is damaged or destroyed by a covered peril may be limited to no more than $400,000, though other factors such as your deductible may be considered.

You may be able to set your own policy limits when purchasing a home insurance policy. As a general rule, you should have enough dwelling coverage to rebuild your home in its current condition, enough personal property coverage to cover the full value of your personal belongings, and enough liability coverage to protect your personal assets.

Types of reimbursement coverage

Home insurance companies typically offer three different types of coverage. Each option has a different impact on your premium.

• Actual cash value (ACV) is calculated using the current market value, or how much your home and personal property are worth after depreciation. By default, most homeowners' insurance policies cover ACV. It may be the cheapest option.
• Replacement cost value (RCV) works similarly to ACV, but without depreciation. That means you'll get a bigger payout if you file a covered claim. RCV home insurance policies are typically more expensive than ACV policies, and you may be required to purchase an endorsement to obtain it.
• Guaranteed replacement cost (GRC), also known as extended replacement cost (ERC), can cover the entire cost of rebuilding the home, even if the cost exceeds the policy limit. GRC is the most expensive type of replacement cost, and it is not available from all insurance companies.

Home insurance discounts and ways to save

Homeowners insurance can be expensive, so shop around for the best deal based on your needs before deciding on a plan. To find companies with the lowest rates, it can be beneficial to consult an insurance agent, read consumer reviews, and compare online insurance quotes. Other ways to save money on home insurance include:

1. Inquire about available discounts: Some companies offer lower policy rates if you live in a gated community, if you bundle your insurance with your car insurance, or if you belong to a homeowner's association.
2. Bundle your insurance policies: Companies that sell home, auto, and life insurance may deduct up to 15% off your premium if you buy two or more policies from them.
3. Make your home safer: Some providers may provide a discount if you install fixtures that make your home safer, such as smoke alarms or a security system, which reduces the likelihood of damage or theft occurring in the first place.