UPDATED: SEPTEMBER 05, 2023 | 3 MIN READ
Some mortgage lenders require homeowner’s insurance with loans, which leaves potential homeowners scrambling for the best rates. Keep reading for the average cost of homeowner’s insurance, what it involves, and how to save on premiums.
What’s the Average Cost of Home Insurance
For a home with $300,000 worth of dwelling coverage and $100,000 in liability coverage, the national average cost of homeowner’s insurance is $1,854. However, this figure might differ. Your payment varies based on your home, insurer, and other factors. Consider using a home insurance calculator to determine how much your might need to pay for coverage.
What main factors contribute to the average cost of home insurance?
Insurers use home replacement costs and the following factors:
- Square footage
- Location
- Home price and age
- Coverage amount
- Proximity to fire stations
Expect to pay more if you have a swimming pool or trampoline, as these additions have higher risks of injury and accident.
Your background and history may also contribute to the cost of home insurance. These details may include:
- Marital status
- Credit history and credit score (certain states limit how much information insurance agents can access)
- Whether you own dogs and if so, what breed(s)
- Past insurance claims, if applicable
- Your employment status
What does home insurance cover?
A typical home insurance policy is for your home and property. This usually extends to your home, belongings, and sometimes, liability for injuries or damage to another homeowners property.
These coverage types are Dwelling and Personal Property, meaning you receive enough to repair or replace your home.
Damage coverage includes:
- Fire
- Lightning
- Wind
- Hail
Your policy may specify or exclude other disaster protections. These are the basics of a standard policy.
You may receive 50% to 70% of your dwelling coverage to replace damaged or stolen belongings. Appliances, toys, clothing, electronics, jewelry, and valuables often are personal property.
If you’re temporarily displaced, Additional Living Expenses (ALE) can cover food and hotel stays.
How do you save money on home insurance?
You can save on home insurance premiums by comparing rates from multiple insurance companies. You may want to raise your deductible if you already have a policy. Some auto insurance companies also offer bundles when policyholders insure their homes.
Insurance companies may offer discounts for updating your home’s electric system, HVAC, old appliances, or roof. Additional discounts may be available by adding security systems, storm windows, and sprinklers.
What’s the Average Cost of Homeowner’s Insurance By Company
Home insurance rates vary with national and regional companies. You should compare rates from area companies.
5 Most Expensive States For Homeowner’s Insurance
Your home’s location influences insurance rates. If your state is prone to natural disasters, you won’t pay the average cost of home insurance. Insurance companies charge higher rates for these states’ increased damage risk.
Oklahoma
Oklahoma homeowners pay the country’s highest rates from the state’s increased risk of tornadoes, hail, and wind.
Louisiana
Louisiana’s at risk for hurricanes with its coastal location, but hurricanes aren’t the only disaster for the state. Increased tornadoes and a high chance of flooding lead to higher insurance rates.
Florida
Floridians already pay around $2,000 or higher in annual premiums. The cost of Florida homeowner’s insurance is increasing thanks to insurance fraud, increased catastrophic damage, and inflation.
Kansas
Kansas often bears the damage of tornadoes, snowstorms, and hail. A Kansas homeowner can pay around $3,035 annually.
Texas
Nicknamed “Flash Flood Alley,” nearly every major part of Texas is located in a flood-prone area. Gulf Coast hurricanes also pose a threat. Texans pay around $3,013 in annual premiums.
5 Least Expensive States For Homeowner’s Insurance
You might pay below the national average if you live in the following states:
Hawaii
Hawaii’s low risk of natural disasters makes it the cheapest state for home insurance. The average policy is around $376 for $250,000 in dwelling coverage.
Utah
Utah homeowners insurance is $715 cheaper than average. While there may be flooding in the Southern and Southeastern parts of Utah, the state’s overall disaster risk is low.
Vermont
Vermonters don’t have to worry about hurricanes or other disasters, though wildfires and flooding may occur. Like Utah homeowners, they have lower rates.
Alaska
Alaska doesn’t see many natural disasters compared to other areas. The state’s homeowners pay nearly $300 less than the national average.
New Hampshire
Disaster risks for New Hampshire include flooding and harsh winters, but homeowners still pay some of the lowest rates in the U.S.
Homeowner’s Insurance Premiums By State
Analysis of the insurance premiums by state reveals rates vary; location and weather patterns are good indicators of high or low rates. Hawaii has the cheapest premiums overall at an annual rate of $558, while Oklahoma is the highest at $4,122.
Home Insurance Coverage Types
Every home insurance policy has different coverage sections. These include:
- Dwelling coverage covers your house and any attached structures, such as an attached garage or deck.
- Other structures coverage covers structures not attached to your houses such as a garage or shed.
- Personal property coverage covers your belongings.
- Additional living expenses coverage, also known as loss of use coverage, covers any extra expenses you incur due to a loss.
- Medical payments coverage covers the cost of medical bills incurred by someone who injures themselves on your property.
- Personal liability coverage protects you from being sued if you’re found liable for an injury or property damage.
FAQs
Why is home insurance so expensive?
Home insurance is expensive because of replacement costs for your home and belongings under a covered event. Construction fees, materials, labor, and location affect the replacement costs. If you think your home insurance is expensive, talk to your insurer about how to reduce your bill.
How much is insurance on a $250,000 house?
Insurance rates for a $250,000 house will run around $110 monthly, or $1,319 a year. You may pay more, and this figure is only a baseline. Your insurance rate also depends on how much coverage you request.
How much is insurance on a $500k house?
A ballpark figure for insurance rates on a $500k home is over the average homeowner insurance cost at $1,500. However, rates vary. The insurance rate depends on the home’s value and the coverage amount.
You’ll have a higher rate if your home is located in one of the most expensive states for home insurance. An Alaska homeowner will pay significantly lower rates than a homeowner in Florida on a $500k home.
Why did my home insurance go up?
Your rates may increase from the risk of hurricanes, flooding, or wildfires. The premium rates also change as your home ages because your plumbing or HVAC is more likely to break. As labor and material costs rise, these increases also bring a higher price tag for replacing your home.
If you renovate your home, you might see a rate increase, especially if you build an addition or add a swimming pool. A rate increase might arise from past insurance claims or when your credit score drops.
What’s the 80% rule in insurance?
The 80% rule means insurers will only fully cover a home or property if the homeowner has coverage equal to at least 80% of the home replacement cost. When your home’s value improves, you must increase your coverage to 80% of the new value.
Finding Great Rates On Homeowner’s Insurance
Whether buying your first home or the 7th, you should know what your home insurance policy covers. It may be daunting to read the policy language, but you’ll know what the insurance company will pay in the case of an accident, theft, or damage.
Various factors can influence your average cost of home insurance, so research. When shopping for home insurance, remember your situation differs from other homeowners. Comparing home insurance rates is best to find the best deal for your needs.
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