The Average Cost of Home Insurance and How Much You Can Expect to Pay

Home Insurance
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When you are shopping for home insurance, or reviewing your current insurance policy to get the best price, there are a number of factors that can help you save money. These are the average costs of home insurance: based on an All Risk on building but Named Perils on contents policy form, HO-3 type of home insurance. The national average cost for home insurance was $1,192 as of the latest data from the Insurance Information Institute and the average cost of renter insurance was $185; Insurance.com cites the average cost of condo insurance as $389 nationwide.

This gives you a good idea of what the national average costs are for home insurance, but there is more information you need to look at before deciding what the average cost of home insurance will be for you.

5 Things That Impact the Average Cost of Home Insurance

If all things are equal in the level of coverage and policy limits like the insured dwelling value, there are still several factors that affect how much you pay on your home insurance. These are five additional factors that determine the premium of house insurance aside from coverage limits on the declaration page of your insurance policy:

You cannot compare average premiums if the coverage options are not the same. This is because some policies are cheaper than others as they have much less coverage.

  • Deductible: How much of the insurance risk you take on yourself, vs. the insurance company? You can use your insurance deductible to save money on your insurance in many cases, which would lower your cost compared to the national average.

Average Cost of Home Insurance By State

Understanding what the average cost of home insurance in your area is important because the rates vary based on a number of factors. Here are the average costs of home insurance by state compared to the average cost of renter insurance, based on data from the Insurance Information Institute Fact Sheet. The map below shows a breakdown of home insurance and renters insurance by state. Hover over each state to see its figures.

The Top 5 Most Expensive States for Home Insurance

  1. Louisiana
  2. Texas
  3. Florida
  4. Oklahoma
  5. Kansas

The 5 Least Expensive States for Home Insurance

  1. Oregon
  2. Utah
  3. Idaho
  4. Nevada
  5. Wisconsin
Average Cost of Home Insurance By State and Average Renter Insurance Premium Comparison
State Home Insurance Average Cost Renter Insurance Average Cost
Louisiana $1967 $252
Texas $1937 $241
Florida $1918 $181
Oklahoma $1875 $247
Kansas $1548 $177
Mississippi $1525 $275
Rhode Island $1496 $180
Connecticut $1455 $196
Massachusetts $1451 $198
Colorado $1446 $156
Nebraska $1402 $141
Alabama $1386 $245
Arkansas $1348 $223
Minnesota $1340 $142
New York $1309 $198
South Carolina $1285 $188
Missouri $1280 $181
North Dakota $1239 $113
D.C. $1225 $163
Georgia $1200 $230
Tennessee $1185 $207
New Jersey $1174 $163
Montana $1130 $145
South Dakota $1125 $114
Wyoming $1120 $150
North Carolina $1098 $157
Kentucky $1085 $169
Illinois $1042 $167
Hawaii $1026 $154
Maryland $1022 $161
Indiana $1003 $179
California $1000 $200
New Mexico $996 $198
Alaska $974 $148
Virginia $966 $151
New Hampshire $965 $154
Michigan $952 $197
Iowa $945 $141
Pennsylvania $927 $157
West Virginia $917 $196
Vermont $898 $158
Maine $866 $151
Ohio $850 $182
Washington $822 $157
Delaware $816 $159
Arizona $803 $181
Wisconsin $762 $132
Nevada $742 $182
Idaho $703 $150
Utah $664 $141
Oregon $659 $159
     
United States $1192 $185

The Kind of Coverage Average Home Insurance Cost Is Based On

It is important to note that this coverage is based on an All Risk on building, but named perils on contents policy form. This means that it is not the best coverage available, only a standard coverage as seen in an HO-3 policy. An all risk on building and contents policy is a better form of insurance and will cost more.

The Real Value Your Home Will Impact Cost of Insurance

If you are in a neighborhood with homes that have higher than average reconstruction cost value or dwelling value, then the national or state averages may be way off what you are paying. For example, if the average cost is $1918, but this is for a $200,000 home, then you can not reasonably expect to be paying close to an average price on home insurance if your home reconstruction value is $500,000 or over $1,000,000. If you aren't sure of the value of your home for insurance purposes, insurance companies will sometimes provide a home inspection, especially if you are with a high-value home insurance company that specializes in higher than average value homes.

Examples of Why Home Insurance Pricing Could Be Lower or Higher in Some Areas

  • Lower levels of crime in the area
  • Less severe weather patterns, such as flooding, hurricanes, snowstorms, windstorms, etc.
  • Lower incidents of lawsuits for liability risks
  • Newer construction or well-maintained homes
  • Updated infrastructure (water service pipes, sewer lines, etc) avoiding water claims.

Depending on the average age of homes in your area, and the condition of the infrastructure of your county, costs of home insurance may be higher than average if for example the city sewer lines are older, and are causing more water damage claims.

Another example is if all the homes in your area are older than average, then the claims may be higher driving the cost of your insurance up. A home built in 2015 will have less chances of leaky roofs or other problems than one built in the 1960's that hasn't had renovations. Usually certain areas are built around the same time, so the zip code you are in will have data associated with it at the insurance company level, and even though you may have a solid home, if the general loss experience (claims paid) in the area is heavier for certain claims, the rates for insurance in that area may be higher.

Insurance companies may decide that in certain areas they will limit the amount of insurance payable due to claims, for example when an insurance company limits the insurance on the roof. The insurance there may be less expensive, but the coverage may be very limited. Less expensive does not always mean "good insurance"

Luckily many insurance companies have "target" profiles of homes or clients they are specializing in. Oftentimes an older construction may be more solid than a newer one, but the insurance company underwriting will set their pricing to reflect their experience as a base rate, then from there, they will add in discounts for other factors that may be particular to your specific situation which will help bring your cost down.

Shopping with a few different companies in your area will give you the best idea of what kinds of prices you can expect.