When shopping for homeowners insurance or reviewing your current home insurance policy to get the best price, you'll come across a number of factors that can help you save money. The average costs of home insurance vary by policy, location, and type of home.
Learn what the cost of home insurance is, how the price is impacted, and ways to save.
How Much Is Home Insurance?
While all of this gives you a good idea of what the national average costs are for home insurance, you need to look at more information before deciding what the average cost of home insurance will be for you.
What Impacts the Cost of Home Insurance?
Even 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 the additional factors that determine the premium of homeowners insurance aside from coverage limits on the declaration page of your insurance policy:
- Location: This is affected by the claims experiences and the risks or perils in your neighborhood.
- Personal insurance score or credit scoring: How high or low your score is can make a huge difference in price, depending on the insurance provider.
- Discounts you personally qualify for: You could bundle home and auto insurance, for example, among other coverages.
- Coverage options you choose: For example, an all-risk vs. named perils policy, or actual cash value vs. replacement cost coverage.
- Deductible: How much of the insurance risk you take on yourself versus 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.
You cannot compare average premiums if the coverage options are not the same. Some policies are cheaper than others because they have much less coverage. Policies will always be personalized to the home and the homeowner.
Average Cost of Home Insurance by State
Understanding 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 renters insurance, based on the latest data from the Insurance Information Institute. The map below shows a breakdown of home insurance and renters insurance by state. Hover over each state to see its figures.
Top 5 Most Expensive States for Home Insurance
- Rhode Island
Top 5 Least Expensive States for Home Insurance
|Average Cost of Home Insurance By State and Average Renters Insurance Premium Comparison, 2018|
|State||Home Insurance Average Cost||Renters Insurance Average Cost|
This coverage is based on an all-risk coverage on building, but a named perils coverage on contents policy form. This means that it is not the best coverage available, only a standard coverage as seen in an Ho3 policy. An all-risk on building and contents policy is a better form of insurance and will cost more.
The Real Value of 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, the national or state averages may be way off from what you are paying. For example, if the average cost is $1,918, but this is for a $200,000 home, 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.
Why the Cost of Home Insurance Could Be Higher or Lower in Some Areas
Several factors may affect the cost of home insurance in your area, such as:
- Levels of crime in the area
- Weather patterns such as flooding, hurricanes, snowstorms, windstorms, etc.
- Incidents of lawsuits for liability risks
- Newer construction or well-maintained homes
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 instance, 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 up the cost of your insurance. A home built in 2015 may have less chance of leaky roofs or other problems than one built in the 1960s that hasn't been renovated. Usually, homes in a certain area are built around the same time, so the zip code you are in will have data associated with it at the insurance company level. 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 to limit the amount of insurance payable due to claims in certain areas. For example, an insurance company might limit 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.
Fortunately, many insurance companies specialize in "target" profiles of homes or clients. Often, 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. From there, the company will add in discounts for other factors that may be particular to your specific situation, which will help bring your cost down.
Shop for home insurance with a few different companies in your area to get the best idea of what kinds of prices you can expect.
National Association of Insurance Commissioners. "NAIC Releases Homeowners Insurance Report." Accessed Jan. 5, 2022.