If you’re a homeowner, you know that little is more valuable and precious than the investment of your home. The best way to protect this investment is with a solid homeowners insurance policy that helps you repair or replace your home in case of a fire or other unexpected situation.
Homeowners insurance premiums vary greatly depending on how much your home is worth, where you live, the risk factors you face, your preferred deductible, and more.
Average Homeowners Insurance Cost by State
Susceptibility to natural disasters such as hurricanes, earthquakes, and wildfires is just one way your geographic location can impact your premium costs. In addition, states with bigger cities often have higher premiums as home values are higher in those areas. Finally, state requirements for insurance vary, which can also influence premium costs.
|Avg Cost by State||Average Annual Premium|
The Most Expensive States for Homeowners Insurance
The Cheapest States for Homeowners Insurance
Average Premium by Age of Home
Older homes have older heating, plumbing, and electrical systems, putting them at greater risk for fire or accidental flooding. Aging materials, especially on the roof, can also make it more likely that owners of older homes will need to file insurance claims. These factors can raise premiums for older homes.
|Construction Year||Average Annual Premium|
|Average Across tiers||$1,914|
Average Premium by Credit Tier
Some insurance companies use customer credit history to predict the likelihood that you’ll file claims. Poor credit history typically corresponds to higher claims because of risk.
However, some states, including California, Maryland, and Massachusetts, have made it illegal for insurance companies to use credit scores to determine premiums.
Average Premium by Deductible
The deductible is the amount you must pay before your insurance covers any costs on a claim. Higher deductibles lower the cost of your premiums, but it’s best to have a healthy amount of savings in the event you do have to file a claim.
|Deductible Amount||Average Annual Premium|
|Average Across tiers||$1,867|
Other Cost Factors
Your personal, as well as your property’s claim history, may be checked to determine your homeowners insurance costs. The more claims you have in your history, the more likely it is your premium will be higher. For example, homes with a history of claims may reflect poor construction materials, making it more likely that additional claims will be made in the future.
Value of Home and Belongings
Valuable homes are more expensive to replace, which results in higher premiums. Furthermore, if your policy covers your belongings, having more possessions also usually results in higher premiums.
Essentially, the more insurance coverage you require, the more your premium costs increase. The Insurance Information Institute (III) provides this introductory guide to calculating the amount of coverage you may need.
Types of Home Insurance Coverage
- Structural Coverage: In the event of a fire, hurricane, lightning, fallen tree, or some other disaster, this part of the policy covers the cost of repairing or rebuilding your home.
- Other Structures: Though many policies include coverage for unattached structures in the main policy, some providers only offer this coverage as an add-on.
- Liability: Liability coverage helps if someone is injured on your property, or if your pet causes damage to someone’s property.
- Alternative Living Expenses (ALE): If you can’t live in your home while repairs or renovations are taking place, ALE coverage is designed to pay for living expenses such as hotel costs and meals.
- Flood Insurance: Since flood insurance is excluded from most home insurance policies, it has to be purchased as a separate policy from FEMA or a private insurance provider.
- Medical Payments: Should someone be injured on your property or hurt by one of your pets, medical payments coverage covers the associated medical bills.
You can lower your premium costs by bundling your services — buying your homeowners and auto insurance from the same provider. Other companies provide discounts to those who make improvements to their homes or install security systems. Additional discounts may apply to those who are retired, or people who are in certain professions.
Now that you know how homeowners insurance costs are determined, the next step is to find your provider. Shop around for a few quotes before making your final decision so that you can find the best insurance company and with premiums that fit your budget.