Home insurance can vary in price from just below $1,000 per year to over $5,000, according to many factors. Understanding the rating factors that determine homeowners insurance premiums, the difference in premiums between insurers, and how personal rating factors impact rates will help homeowners find how much homeowners insurance is and how to get the best price. 

Key Takeaways

• The average cost of homeowners insurance is $2,801.
• Monthly homeowners insurance premiums may include a small monthly service charge.
• Hawaii has the lowest average annual homeowners insurance rate. Oklahoma is the most expensive state for home insurance. 
• Homeowners insurance premiums vary by insurance company.
• There are many ways to lower the cost of your homeowners insurance. 

What is the Average Cost of Home Insurance in the U.S.?

The average cost of homeowners insurance in the U.S. is $2,801. However, home insurance premiums vary by insurer, state, home, and individual. Homeowners premiums in Delaware will be quite different from those in Florida, and larger homes with complex architecture will see higher premiums than smaller homes. Your best homeowners insurance premium may be much more or less than the national average. 

How Much is Homeowners Insurance Per Month?

Homeowners insurance costs about $233 per month based on the average annual premium, not including service charges or fees. Usually, homeowners insurance policies are annual, but most insurers offer monthly payment options, so you don't have to pay for it all at once. Monthly payments may include a monthly service charge for processing.

If your homeowners premium is included in your home mortgage escrow, your annual premiums may be divided into a monthly amount that is added to your base mortgage payment. Your mortgage lender may also include an additional amount over your yearly premium to allow a cushion for rate increases. The amounts collected monthly through your escrow account pay your annual premium to your homeowners insurance company.

Home Insurance Rates By State

The state you live in can significantly impact your home insurance policy premium. The zip code you live in may also affect your rates. Some areas are more high-risk for storm-related claims, natural disasters, and other claims, such as wildfires and tornadoes. As a result, premiums are higher for homes in those states or areas. 

The following chart indicates average home insurance rates by state. 

Cost Data Source: Lending Tree

As you can see, homeowners insurance in Florida costs more than in other states, largely because of the frequency of natural disasters. 

State insurance laws and litigation costs can also impact the cost of insurance in various states. When shopping for home insurance quotes for a new home in a different state, make sure to shop for homeowners insurance at the same time to prevent any surprises in insurance premiums that could impact a successful closing. 

Home Insurance Costs by Insurer

Just as home insurance can vary by state and other rating factors, home insurance premiums differ from one insurance company to another. Comparing home insurance premiums can provide confidence that you have the best insurance rate available for your state and rating factors. 

Erie Insurance has an average annual homeowners insurance premium of $2,055, while Farmers’ annual average cost is $3,801. Part of the difference can be that some insurance carriers don’t write in more claim-prone states or offer coverages to homes that may not be eligible with other carriers.

Cost Data Source: Lending Tree

The difference in premiums from one insurer to the other is why shopping for your insurance is so important, not just initially, but also regularly. Rates change often. One insurance company may be the least expensive now but may not be the best value a few years down the road. 

What Affects Home Insurance Costs?

Home insurance costs are impacted by many factors, many of which you can't control. Fortunately, there are some factors that you can impact with small changes and attention to detail over time. 

• Age of Home: Homeowners tend to pay more to insure older homes, as they are more prone to issues.
• Location: Premiums are impacted by your home's state and zip code. Areas with significant loss history from extreme weather or high crime rates will have higher premiums than others.
• Home features: Building materials, architectural features, square footage, and more can affect premiums.
• Condition: A poorly maintained home is more susceptible to loss and usually has higher insurance costs. 
• Claims history: A history of claims for the individual or the home is a leading predictor of future claims activity.
• Credit: Poor credit has been shown to correlate with an increased risk of claims. Homeowners with good credit will see a benefit in homeowner's premiums.
• Fire protection: Proximity to fire hydrants and stations can lead to savings in homeowners insurance or increased costs if the distance is deemed too far.
• Coverage: Higher coverage limits, added endorsements, and replacement cost coverage would lead to more costly homeowners insurance premiums.
• Discounts: The wide range of available homeowners insurance discounts can help reduce home insurance costs. 

Understanding what affects home insurance costs before purchasing a home can prevent premium surprises or difficulty obtaining coverage. If an individual is looking to purchase a home in the future, working on credit history now will help when talking with lenders and in future home insurance premiums. 

How to Get a Lower Home Insurance Rate

Homeowners insurance is an important protection for one of your most valuable assets, and it's not cheap. However, getting great homeowners insurance at an affordable rate is possible. A few simple steps could lead to substantial savings on your homeowners insurance. 

• Shop around: Compare rates with various insurers often. Rates change, and what may be the cheapest insurance company for one person may not be the best rate for another based on different rating factors. 
• Bundle: Shop for homeowners insurance and other coverages at the same time. You can find bundling discounts when you purchase your home, auto, and other insurance from one company. Always look at your insurance as a portfolio.
• Improve your credit score: Insurers consider credit as a predictor of future losses. Poor credit could lead to higher rates on homeowners insurance. 
• Increase home security: Smoke detectors, deadbolt locks, and monitored fire, smoke, and burglary alarms may provide additional savings on your premium.
• Ask about discounts: Each company has a list of discounts. Ask your agent about available discounts and decide for yourself if there are any you would like to pursue. 
• Increase deductible: Your homeowners deductible is the amount you are responsible for paying when you file a claim before the insurance company pays out. Increasing your deductible reduces your premium because less money is at risk for the insurer, and smaller claims are less likely to be filed.
• Review your policy: Annual reviews of your policy with your insurance agent can help you find unnecessary coverage or additional ways to save. 
• Reduce claims: Consider the consequences of filing small claims that may impact your premiums. If you have a $1,500 deductible and a $2,000 potential claim, you may want to consider paying that one out of pocket. 

Talk with your agent and ask how to save your homeowners insurance money. Be specific with the examples listed above to see if they apply to you. A few minutes and a few questions asked of your insurance provider could lead to substantial homeowner insurance premium savings.

Save Money on Homeowners Insurance With Discounts

Discounts can significantly reduce your homeowners insurance premium. Available discounts vary by insurance company and aren't always well advertised. Advocate for yourself to see if any of the discounts below apply to you. 

Customer Related Discounts

Some discounts are customer-specific. Customer-related discounts include senior citizen discounts, occupation-based discounts, military discounts, loyalty discounts, bundling discounts, and claims-free discounts.

You may not have control over qualifying for some of these discounts, but for discounts like loyalty discounts, bundling, and claims-free discounts, you can work towards qualifying for over time. 

Home Related Discounts

Discounts specific to your home can also provide a valuable source of discounts, including security system discounts, smart home discounts, fire safety discounts, and green home discounts. While these discounts may require an investment to qualify, the added protection and safety are worth much more than the discount. 

Payment Related Discounts

There may also be discounts available based on how you pay your insurance. Pay-in-full, paperless billing, and discounts for paying on time can all help reduce your premium payments. While the savings may be small, it can add up over time.

There may be discounts you do not currently qualify for but would be worth investing in. Consider the discount amount and the cost of the upgrades to determine if they're worth investing in.

Preparing for a Homeowners Insurance Quote

Being prepared when getting homeowners insurance quotes will save you time, aggravation, and even money. Have the following information ready to get the best insurance quote possible in the shortest amount of time.

• Personal info: If more than one person is insured for the homeowners policy, you will likely need each person's name, date of birth, and social security number. 
• Home info: Providing the year built, building materials (brick, frame, etc.), age of your roof, architectural details, square footage, and other details of your home will speed up the quoting process and produce more accurate results. 
• Claims history: The dates and amount of damages for claims in the last three to five years can help you get a more accurate quote.
• Personal property: Completing a personal inventory of your belongings will help determine how much coverage you need and whether any high-value items require special coverage. 
• Desired coverages: Are you in an area with frequent earthquakes, sinkholes, or other special claims circumstances? Need to insure high-value items? Be prepared to discuss additional coverages that may not be included in a standard homeowners insurance policy. 

How the Coverages You Choose Affect Your Home Insurance Rate

The cheapest homeowners insurance premium is only as good as the coverage it provides and the insurance company that backs it. Many different homeowners policy forms cover various perils (causes of loss). Be sure to ask about the perils that are covered, those that are not covered, and coverages only offered by policy endorsement. 

Just as perils differ by insurer, coverage options vary as well. Most homeowners policies provide:

• Coverage for the dwelling (main structure)
• Extended dwelling (detached structures)
• Liability
• Medical payments
• Personal property damage
• Additional living expenses (loss of use)

Even these coverage will have coverage limits and exceptions. 

Another important aspect of your homeowners insurance coverage is the claims payment method. Options include replacement cost, actual cash value, and extended replacement cost.

Replacement cost repairs or replaces damage based on current costs up to the policy limit. 

Actual cash value pays replacement cost minus depreciation for age or wear and tear up to coverage limits. Extended replacement cost pays the replacement cost amount but, instead of up to the coverage limit, provides an additional percentage above the coverage limit if needed. 

Insuring your home for the right perils, amount of coverage, and payout method for your needs is just as important as getting the cheapest rate. The best rate is the one that provides everything you need to protect your home and financial assets at the best premium from a respected and well-rated insurer. 

Additional Policies You May Need to Supplement Your Homeowners Insurance

As expensive as homeowners insurance can be, there are some instances in which adequate coverage is not available under a homeowners insurance policy, and separate policies may be needed. 

Most additional perils can be added by endorsement to your existing homeowners insurance. These include things like earthquakes, sinkholes, and backup of sewers or drains, among others. However, some perils, such as flood insurance, can only be purchased as a separate policy through the National Flood Insurance Program or private insurers. 

Other supplemental additional policies you may consider include an umbrella policy and a personal articles policy. An umbrella policy provides additional personal liability coverage for events involving your home, auto, boats, etc. A personal articles policy provides increased and broader coverage for high-value personal property items like art, jewelry, collectibles, and more. 

Another area often misunderstood by homeowners is motorized vehicles, including golf carts, recreational vehicles, and boats. Most of these items are excluded from coverage on your homeowners and require separate insurance policies, even while in your garage. 

Ask your insurance agent about endorsements, exclusions, and whether options are available for separate coverage when applicable to prevent costly uncovered claims due to misunderstanding. 

FAQ: How Much is Home Insurance?

Who has the cheapest homeowners insurance?

Erie Insurance has the lowest average annual homeowners premium. However, the cheapest home insurance for one person may not be the best rate for another based on individual rating factors. Comparing rates based on your home, coverage needs, the insurance company's reputation, and rating factors will determine who has the cheapest homeowners insurance for you.

Consult rating agencies such as Standard & Poors, Moody's, AM Best, BBB, and others to aid in your search for a reputable insurance company. 

Is house insurance even worth it?

Your home is likely one of your greatest assets. Protecting it is not only a crucial part of an overall financial portfolio, but it also may be required if you have a mortgage. When you pay homeowners insurance for years without a claim, it can be easy to question whether home insurance is worth it. However, just one large uninsured claim can be financially devastating to homeowners. 

Ensuring that the home that protects your family is safeguarded against the unexpected provides peace of mind that is priceless. 

Why is homeowners insurance so high?

Homeowners insurance protects a much bigger asset than auto insurance, so it will have higher premiums. However, more frequent severe weather events, increased cost of building materials and labor, as well as supply chain issues have driven homeowners insurance premiums up substantially in recent years. Still, when compared to the expense of a large claim, the risk of not carrying homeowners insurance is just too great. 

Is a $2,500 deductible good for home insurance?

A $2,500 insurance deductible can provide as much as a 13% reduction in your homeowners insurance premium over a $1,000 deductible. However, if a $2,500 deductible would present a financial burden in the event of a claim, a $1,000 deductible may be a better choice. 

More and more insurers are offering percentage deductibles for even greater premium savings. In this case, your deductible would be a percentage of your dwelling coverage. So, a home insured for $300,000 with a 1% deductible would have a $3,000 deductible. Keep in mind that most homeowners policies have built-in raises in coverage annually to keep pace with inflation. 

Who decides how much insurance my home should have? 

You and your insurance company work together to determine the replacement cost of your home. Your insurance agent will have access to insurance calculator tools that accurately estimate replacement costs based on your home information. 

Your mortgage lender will also require a minimum amount of coverage based on your mortgage agreement. However, you might need additional coverage to properly protect all of your assets. 

Your insurance agent can provide guidance, but ultimately, you make the final decision on how much insurance you should have on your homeowners insurance policy. 

Article written by Shawnette Good. 

Shawnette is an insurance professional with 30 years of industry experience helping consumers understand complex insurance topics. Outside of writing, Shawnette enjoys long nature walks and volunteering in her community.