How much does homeowners insurance cost?
National averages come in at just over $1,200 per year, but you may pay more based on where you live
Homeowners insurance covers your physical home structure and your personal belongings. It provides financial protection for loss of or damages to the home and personal items in the event of fire, storms, vandalism and other covered events. Homeowners insurance also covers liability costs if someone is injured in your home, and it pays for additional living expenses if your home is temporarily uninhabitable. If you have a mortgage, your lender probably requires you to carry homeowners insurance.
Average homeowners insurance cost
According to the National Association of Insurance Commissioners, the average cost for a typical homeowners insurance policy is $1,249 per year nationally. These costs can vary quite widely by state, ranging from $706 in Oregon to $1,987 in Louisiana.
|State||Average annual cost|
|District of Columbia||$1,264|
What determines the cost of homeowners insurance?
HO-3 policies are the
most common homeowners insurance packages.
First and foremost, the cost of homeowners insurance depends on the level of coverage you select. To make comparison easier, the insurance industry refers to the levels of homeowners insurance as HO-1 to HO-8.
The most basic and least expensive HO-1 and HO-2 plans cover only named perils, or risks, for the home, meaning that anything not specifically mentioned is not covered. An HO-3 plan has open-peril coverage for your home — only specifically named risks are not covered — and named-peril coverage for your personal possessions. Upgrade to a costlier HO-5 plan for open-peril coverage of both your home and possessions. HO-3 policies are the most common among homeowners in the U.S.
Other factors that affect the cost of home insurance include:
- The state and city where you live
- The types of coverage you buy
- The amount of coverage you purchase
- The type of home you have
- The deductible you choose
- Any riders you have on your policy
- Credit history
- Marital status
- Age of home
- Condition of roof
- Claims history for you and the home itself, even under previous owners
- Safety and security features in your home
Actual cash value vs. replacement cost
Most insurance companies allow the customer to choose between personal property coverage, which offers cash value for belongings that are lost or damaged, taking depreciation into account, or replacement value coverage, which covers the cost to purchase an item at today’s prices. A policy with replacement value coverage costs slightly more because the insurance company assumes, for example, that buying a new TV costs more than paying the policyholder cash for the depreciated value of the old TV.
Higher cost for higher-risk coverage
Homeowners who pose a higher risk to an insurance company will pay higher rates. Insurance companies consider some things more risky, such as certain dog breeds, a swimming pool or an in-home wood-burning stove, and increase rates accordingly. Certain other factors, like marital status and good credit history, indicate to an insurer that the customer poses less risk, which helps reduce the premium.
Home insurance cost FAQ
Can you negotiate homeowners insurance?
What are waivers of deductible in home insurance?
Does homeowners insurance go up after a claim?
How do you shop for home insurance?
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