Obtaining insurance is an important aspect of homeownership. But how much is homeowners insurance? According to 2021 insurance carrier data, the average annual premium for homeowners insurance is $1,312 (about $109 monthly), based on a policy with a dwelling coverage limit of $250,000. Homeowners spend about 1.91% of their income on home insurance. However, due to your specific rating factors and the state and ZIP code you live in, average prices can range from several hundred dollars a year to more than $3,000 per year.
Homeowners insurance is designed to protect your finances against the threat of having to pay for costly repairs to your home when disaster strikes. If you have a mortgage or other type of home loan, you will be required to carry a homeowners insurance policy. Even if you own your home outright, home insurance is a smart purchase. Bankrate’s insurance team monitors the latest data and industry trends to help you understand how much you can expect to pay for your home insurance policy.
- How much does homeowners insurance cost?
- The most expensive states for homeowners insurance
- The least expensive states for homeowners insurance
- Average homeowners insurance cost by company
- Components of homeowners insurance policies
- Factors that affect homeowners insurance cost
- How to reduce the cost of homeowners insurance
- The national average cost of homeowners insurance is $1,312 a year or about $109 per month.
- Homeowners spend about 1.91% of their household income on home insurance, based on average premiums and median household income.
- Homeowners insurance costs are rising, having increased about 42% since 2009, according to the Insurance Information Institute.
How much is homeowners insurance?
How much is homeowners insurance? It depends on several factors, but the national average for home insurance is $1,312 per year for $250,000 in dwelling coverage. However, geographic location plays a significant role in your premiums. Some areas of the country are more prone to natural disasters, for example, while some areas may have higher rebuilding costs. The average rates in the table below can give you a guideline for how much you can expect to pay in your state for a home with a $250,000 dwelling coverage amount.
Cost of homeowners insurance by state
|State||Average annual premium||Average monthly premium||Percent of median household income spent|
The most expensive states for homeowners insurance
The states with the most expensive average annual home insurance premiums are Oklahoma, Nebraska, Kansas, Arkansas and New Mexico.
|State||Average annual premium||Average monthly premium||Percent more than average|
Among other factors, the threat of natural disasters plays a large role in determining home insurance premiums. States that border the Atlantic and Gulf coasts are more at risk for widespread damage caused by hurricanes. States in “Tornado Alley” tend to have high premiums due to the catastrophic damage caused by summer storms. And Western states may experience wildfires that can utterly destroy homes. Knowing the risks associated with your state and ZIP code can be helpful in making informed home insurance decisions.
The least expensive states for homeowners insurance
The states with the least expensive average annual homeowners insurance premiums are Hawaii, Utah, Delaware, Vermont and Oregon.
|State||Average annual premium||Average monthly premium||Percent more than average|
These states may have a lower risk for natural disasters, and some could also have low premiums due to general low cost of living. The price of materials and labor may be lower in certain areas, which means you need less coverage to repair or rebuild your home if it is damaged.
Average homeowners insurance cost by company
Based on the homeowners insurance providers we reviewed, Erie Insurance is generally the least expensive insurance company for $250,000 in dwelling coverage, followed closely by USAA and Nationwide. The most expensive homeowners insurance company is Farmers, followed by Chubb and State Farm. In addition to rate considerations, we reviewed these particular providers based on market share, customer satisfaction and coverage options, among other variables.
|Home insurance company||Average annual premium||Average monthly premium|
Each homeowners insurance company sets its own rates, so homeowners insurance premiums will vary from carrier to carrier even within the same state and ZIP code.
This illustrates the benefit of obtaining home insurance quotes from multiple insurance providers when shopping for insurance. Since each carrier has its own rates, comparing multiple quotes will help you decide which carrier can offer you the coverage and price that best fits your needs.
Components of homeowners insurance policies
Every homeowners insurance policy provides specific protections, which help guard against substantial financial loss due to fire, storms, theft, vandalism and legal liability. The most common forms of home insurance policies include:
- Dwelling insurance, equal to your home’s rebuilding cost: This pays for covered damages, up to your dwelling coverage limit, that affect your home’s primary structure and attached structures such as carports or garages. This coverage can be set at replacement cost or actual cash value, so review your policy details to make sure you have the right coverage for you.
- Other structures, usually 10-20% of your dwelling coverage limit: This coverage provides property damage protection for structures not attached to your home, such as a detached garage, driveway, fences or shed.
- Personal property insurance, usually 50-75% of your dwelling limit: This protects the contents of your home, including clothing, furniture and electronics. There are typically additional limits within your personal property coverage. For example, you may only have 10% of your personal property coverage for items stored at other locations, and you may have a cap on coverage for certain items, like fine art and money. It is a good idea to review your policy to make sure you have the coverage needed for your items.
- Personal liability insurance, usually between $100,000 and $500,000: This pays for medical expenses or property damage if a court rules you are financially responsible for injuries occurring on your property, incidents that happen away from your property or damage to the property of others.
- Medical payments insurance, usually between $1,000 and $5,000: This covers the medical expenses for someone outside your household who sustains an injury on your property, regardless of who is at fault.
- Loss of use coverage, usually between 10-20% of your dwelling coverage: This provides coverage for additional living expenses should you need to temporarily stay elsewhere while your home is being repaired after a covered claim.
Not every homeowners insurance policy contains the same components. If you are unsure what your policy covers, talk to your agent or insurance company for clarification.
Factors that affect homeowners insurance cost
Insuring your home is a gamble for an insurance company. Like auto insurance, certain types of houses — and houses located in certain areas — create a higher likelihood that the company will have to pay claims. Insurance industry statistics paint a clear picture of why companies charge higher premiums for some types of houses. Understanding homeowners insurance rating factors may help to guide you when shopping for a home.
Every home is different, which means insurance companies rate each home on a case-by-case basis. Your home’s specific characteristics will play a role in determining how much you pay for homeowners insurance.
- Year built: Old houses often cost more to insure because repair costs may run higher than they would for newer homes. Repairing or replacing features such as custom molding, plaster walls and wood floors could require specialists, which can make these features more expensive to repair in the event of a claim.
- Roof condition: The age and condition of a home’s roof plays a role in homeowners insurance rates. Older roofs may not withstand windstorm or hail damage as well as newer roofs. Likewise, roof materials can affect your homeowners insurance rate. Some types of roofing material may be more resistant to damage, which could lower your premium, and other types may be more expensive to repair or replace, which could increase your premium.
- Construction quality: Many homeowners policies do not cover the expense of bringing a home up to the current building code following a claim. Insurance companies typically offer an optional ordinance or law endorsement, which can help pay for expenses related to code upgrades made during covered repairs.
- Special features: Features such as hot tubs and swimming pools can make a home more appealing, but they can also increase homeowners insurance premiums if they raise repair and replacement costs and add liability risks. Homes with recreational features might need higher liability coverage in case a guest sustains an injury.
Geographic location impacts your insurance rates because every area of the country has a different risk level for potential damages. Some areas may have a higher risk of wind damage, for example, while other areas of the country often sustain damage from fires.
- Weather-related risks: Standard homeowners policies generally do not cover flood damage or damage from earthquakes. In fact, some insurance companies do not cover homes in flood zones at all. Other insurance companies sell private flood insurance or offer earthquake coverage in separate policies or endorsements to protect against these types of disasters.
- Fire risk: According to the Insurance Information Institute, structure fires caused over $12 billion worth of property damage in 2019. Insurance companies rate homeowners premiums based on proximity to a fire station and proximity to fire hydrants, because rapid emergency response often minimizes damage.
- Crime risk: If you live in a high-crime neighborhood, your insurance rates might be impacted. You can help offset this cost to your premiums by installing additional safety features to your home, such as deadbolts and a security alarm system.
How to reduce the cost of homeowners insurance
Some quick ways to save on homeowners insurance could include:
- Bundle your insurance policies with one carrier
- Shop around
- Ask for discounts
- Choose appropriate coverages
- Increase your deductible
- Improve your credit score
- Get an agent
- Make updates to your home
Frequently asked questions
Why did my home insurance go up?
There are a lot of reasons that home insurance premiums can change. If you have made any changes to your coverage, that will change your premium. If you filed a claim during your last policy term, you will likely see an increase in your premium at your renewal. Even if nothing has changed, you may still see some fluctuation in your price. This is because insurance companies use new rates every year, so when your policy renews, the price may change even if everything else is the same. A company’s rates are based on several factors, including the number and amount of claims paid out in the previous year, the projected likelihood of claims in your area and the price of materials and labor in your state and ZIP code.
Can I make changes to my home that will lower my insurance cost?
Yes, you may be able to make some changes to your home that could lower your premium. Many companies offer a discount for having a new roof. Even if you do not get a discount, many companies simply rate newer roofs with a lower price because the likelihood of damage is lower with a new roof. A security system that includes fire and burglar monitoring can also lower your premium. Some companies offer savings for other improvements, like updated plumbing, electrical and HVAC systems.
Can I lower my coverage to decrease my premium?
Lowering your coverage limits or removing optional coverages will likely decrease your premium, but it may not be the smartest financial decision. Higher coverage limits provide more financial protection against disasters, so lower limits could leave you with more out-of-pocket expenses if something happens. Removing optional coverages that you do not need may be a good way to trim your costs, but be sure to review your situation with your agent so that you do not remove coverages that you may need.
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).
These are sample rates and should be used for comparative purposes only. Your quotes will differ.