Homeowners Insurance

Bankrate's insurance experts guide you through the basics of homeowners insurance. Our exclusive approach can help you feel more confident in your insurance decisions.

How to compare home insurance rates

Homeowners insurance exists to help cover one of your largest investments. At its most basic level, home insurance provides financial protection against various perils or damaging events that may affect your home, such as theft, fire, storms and incidents that happen on your property. If you have a mortgage, your lender will require you to carry homeowners insurance. When you purchase a homeowners insurance policy, you pay either a monthly or annual fee.

Typically, insurance experts recommend purchasing enough coverage to rebuild your home and replace the value of the assets inside in the event that it is destroyed. By doing so, you reduce the chance of being left with costly out-of-pocket expenses and allow yourself to recoup your losses more quickly. It is important to note that the cost to rebuild your home is not the same as your home’s market value.

While the core purpose of homeowners insurance is consistent regardless of the home insurance company you choose, every provider is unique in its policy offerings. You have the ability to personalize your policy by choosing your coverage limits and endorsements and taking advantage of any available discounts. Factoring in these variables, along with your personal and financial situation, you will likely see a range of premiums when getting home insurance quotes from different companies. To compare quotes effectively, it might help to know more about home insurance.

Homeowners insurance coverages

The average annual cost of homeowners insurance in the U.S. is $1,312 based on a home with a dwelling coverage limit of $250,000. Several types of coverage are included in most standard policies to ensure your home insurance financially protects you in certain situations:
  • Dwelling coverage, also known as home structure coverage, protects your home’s physical structure as well as attached structures like a garage.
  • Personal property coverage makes up a large portion of your homeowners insurance and is designed to replace your home’s contents, including clothing, furniture, appliances and more. Standard personal property coverage may not offer enough coverage for particularly valuable items, however, so you may want to consider adding scheduled personal property insurance to your policy for high-value items.
  • Personal liability coverage helps financially protect you against potential legal fees from someone getting injured on your property.
  • Medical payments coverage operates similarly to personal liability, but specifically covers the medical bills of someone injured on or in your property, regardless of fault.
  • Additional living expenses (ALE), also known as loss of use coverage, helps cover food and temporary living expenses when you are displaced due to a covered peril. Covered expenses could include hotel, restaurant and laundry expenses.

Types of home insurance policies

There are several types of home insurance policies available, including:
  • HO-1 policies provide bare-bones coverage for a home for perils such as fire, theft and vandalism. This kind of policy only covers specifically named perils and excludes liability coverage.
  • HO-2 policies provide slightly more coverage than HO-1 policies and include some liability protection. HO-2 policies will cover detached structures, personal belongings and additional living expenses, but only from perils named in the policy.
  • HO-3 policies are the most common homeowners insurance policy type and include all the basic coverages. The key difference between HO-3 and HO-2 policies is that an HO-3 policy covers the physical structure of your home from open perils, or any that are not explicitly excluded from your policy.
  • HO-4 policies are designed for renters rather than homeowners. As renters insurance, HO-4s typically include many of the same coverages such as theft, explosions and additional living expenses, but coverage is limited to your personal property and does not include the actual structure since you do not own it.
  • HO-5 policies are the most comprehensive homeowners insurance policies available, and cover open perils for both your dwelling and personal property. As noted, coverage for open perils means any peril not specifically excluded, and your insurance company will provide a list of perils that are not covered, such as damage due to neglect.
  • HO-6 policies provide coverage for condominiums and have specific distinctions to account for what is covered — and not covered — by HOA policies. These policies, also known as condo insurance, typically cover the interior of your unit, personal property, personal liability, guest medical payments and loss of use.
 

Factors that affect homeowners insurance rates

Where you live, the condition of your home and the cost to replace it play the most significant role in determining your home insurance premium, but certain personal and financial factors, such as your marital status and claims history may also influence your rate. The insurance company’s goal is to collect information that helps determine risk to calculate your premium. When you start looking for a home insurance policy, it may help to do some research to determine your home’s replacement cost and the total value of your personal belongings to calculate how much coverage you will need. You might want to speak with a licensed insurance agent to determine what you actually need and what coverage options are available.

Homeowners insurance rates by state

Every state has unique factors, such as extreme weather events, that could affect your homeowners insurance premium. To start your home insurance search, it may help to know how your state compares to others in the nation. Afterward, consider looking into the common weather hazards and other factors associated with your ZIP code that may further influence your premium.
State Average annual cost Percent of median household income
Alabama $1,624 2.89%
Alaska $1,040 1.33%
Arizona $1,189 1.68%
Arkansas $2,142 3.93%
California $1,014 1.30%
Colorado $1,659 2.29%
Connecticut $1,184 1.36%
Delaware $680 0.92%
Florida $1,353 2.32%
Georgia $1,376 2.43%
Hawaii $376 0.43%
Idaho $835 1.27%
Illinois $1,322 1.78%
Indiana $1,150 1.72%
Iowa $1,289 1.95%
Kansas $2,694 3.68%
Kentucky $1,839 3.30%
Louisiana $1,813 3.51%
Maine $956 1.44%
Maryland $1,124 1.18%
Massachusetts $1,307 1.49%
Michigan $1,120 1.75%
Minnesota $1,785 2.19%
Mississippi $1,773 3.96%
Missouri $1,558 2.57%
Montana $1,826 3.03%
Nebraska $2,816 3.85%
Nevada $822 1.16%
New Hampshire $724 0.83%
New Jersey $751 0.86%
New Mexico $2,024 3.81%
New York $987 1.37%
North Carolina $1,295 2.12%
North Dakota $1,841 2.63%
Ohio $1,111 1.72%
Oklahoma $3,519 5.92%
Oregon $712 0.96%
Pennsylvania $730 1.03%
Rhode Island $1,193 1.70%
South Carolina $1,142 1.84%
South Dakota $1,917 2.98%
Tennessee $1,625 2.87%
Texas $1,863 2.76%
Utah $647 0.77%
Vermont $686 0.92%
Virginia $1,013 1.25%
Washington $863 1.05%
Washington, D.C. $902 1.06%
West Virginia $1,124 2.09%
Wisconsin $986 1.46%
Wyoming $805 1.24%

Homeowners insurance rates by carrier

Each carrier has a unique underwriting process and coverage offerings, so do not be surprised if you get different quotes from different insurance companies for the same coverage options. That is why it is a good idea to get quotes from multiple carriers so you can see which ones offer you the best coverage for your money. The table below showcases average annual premiums for a home insurance policy with a $250,000 dwelling coverage limit from the top providers in the U.S., listed in order of market share.
Home insurance company Average annual premium
State Farm $1,503
Allstate $1,458
USAA $992
Farmers $1,980
Travelers $1,269
American Family $1,295
Nationwide $1,042
Chubb $1,630
Progressive $1,026

Flood insurance for homes

Damage from floods is not covered under standard homeowner’s insurance policies, but flood insurance is available through the National Flood Insurance Program (NFIP) and some private insurers. Flooding can cause costly damage to your home and belongings and could happen at any time. If you live in an area prone to flooding, your lender may require you to purchase flood insurance. On average, U.S. homeowners spend $700 per year on flood insurance, although like any insurance policy, your actual rates will vary. Flood policies usually require payment in full, so it is a good idea to research any area you plan to move to so you know in advance if flood insurance will be necessary.

Renters insurance

If you rent a home or apartment, you may want to consider purchasing renters insurance. Rather than covering the structure of a home, renters insurance primarily covers your personal property, since renters do not own their homes or apartments. Liability and loss of use coverage are also typically included and endorsements can be added to customize the coverage. Renters insurance is generally cheaper than homeowners insurance.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on 40-year-old male and female homeowners with a clean claim history, good credit and the following coverage limits:

  • Coverage A, Dwelling: $250,000
  • Coverage B, Other Structures: $25,000
  • Coverage C, Personal Property: $125,000
  • Coverage D, Loss of Use: $50,000
  • Coverage E, Liability: $300,000
  • Coverage F, Medical Payments: $1,000

The homeowners also have a $1,000 deductible and a separate wind and hail deductible (if required).>br> These are sample rates and should be used for comparative purposes only. Your quotes will differ.

Home Insurance Basics

Types of homeowners insurance

Buying a house is a big investment. To protect your new home, it is important to get homeowners insurance. Basic insurance policies cover your home and your belongings against damage and destruction from [...]

7 min read

Home Insurance Resources

Latest Articles

The trusted source for financial information, used by

The New York Times
CNBC
AP
The Wall Street Journal
CNN
Forbes