How much does homeowners insurance cost?
National averages come in just under $1,900 per year, but you could pay more
Buying a new home is an exciting milestone, but ownership also comes with its fair share of responsibilities — like ensuring your property is protected from the unpredictable. Homeowners insurance is a necessary protection policy that covers damage caused by fires, theft and natural disasters.
You may take out a policy to keep your assets safe, to avoid liability for injuries that take place on your property or to comply with a mortgage lender’s requirements. Here we’ll give you the rundown on what home insurance expenses look like depending on your location, the type of coverage you prefer, whether you’re viewed as a high-risk customer and more.
- If you live in a state prone to dangerous weather and natural disasters, such as Oklahoma, your homeowners insurance costs will spike.
- To cut costs on insurance, research and gather quotes from various companies and consider choosing a higher deductible over a higher premium.
- If you have a mortgage, insurance is required — however, you can customize your plan by selecting what you want covered.
- If you’re unmarried, live in an area with frequent crime or have filed multiple claims in a year, you may be labeled a high-risk customer.
Average cost of homeowners insurance by state
According to Policygenius, the 2023 national average for homeowners insurance sits at $1,899 annually, or $158 per month. There’s no one-size-fits-all number, though, since rates vary significantly based on your region, the amount of coverage you need and personal factors.
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What determines the cost of homeowners insurance?
Several factors can influence your final cost for homeowners insurance. These include your location, types of coverage available, deductibles, credit history and more. Some are more likely than others to raise or lower your costs.
Your ZIP code plays a role in your insurance rates. Insurance costs tend to soar in regions of the country prone to natural disasters, such as Louisiana and Oklahoma. Prices even vary by town or county, with city dwellers paying higher rates than people in rural areas. The bumped-up fees are due to the greater likelihood of crimes such as theft and property damage in places with greater population density.
Type of home
Heavily customized houses with unique features such as fireplaces tend to veer toward the higher end. In general, these elevated homes call for expensive policies to cover the potential for rebuilding: the bigger the home, the more expensive the materials and labor to rebuild and repair.
The age of your home may also affect your final price tag. Older houses pose a higher risk of issues, especially those with outdated plumbing and electrical systems. While you’re inspecting your house, pay attention to the roof; insurance companies may be concerned with a faulty roof that’s vulnerable to expensive leaks.
On the other hand, newer homes with updated security systems and fire alarms benefit from reduced prices. These safety features assure your policy supplier that your home is less susceptible to crimes and undetected disasters. Some companies even offer discounted premiums for well-protected properties.
» COMPARE: Best home security cameras
Types of coverage and riders
Though most homeowners need an insurance plan, the type and amount of coverage you purchase is up to you. There are three major coverages available: personal belongings, liabilities against lawsuits and additional living expenses (which offset the cost of alternative housing during repairs). You can scale the amount of coverage you receive up or down for each of these policies. If you choose to upgrade, expect a raised premium.
Riders can also help you customize your policy. Think of an insurance rider as an extension pack to a game — they let you add extra features to a basic plan for increased coverage. Popular riders include water backup, identity theft, eco-friendly reimbursements and building codes.
A deductible is the sum of money you pay toward a claim before your insurer takes over. For example, if your deductible is $1,000, you’d only pay that much even if you undergo $2,000 worth of damage. If you’re willing to set a higher deductible, the policy seller may offer a lower premium. Homes that don’t experience frequent damage will likely save money in the long run.
Credit is one of the biggest factors in any major financial decision, and purchasing homeowners insurance is no exception. In some states, insurers are even permitted to use credit-based insurance scores to decide your premium. This means your payment history and amount of debt might be taken into account. Paying bills on time and keeping your credit score up can help you when applying for homeowners insurance.
» NEED HELP? How to fix your credit
Newlywed life brings lots of changes, including your insurance. Married couples can expect cheaper pricing on homeowners insurance, since they’re perceived by companies as more financially stable.
Actual cash value vs. replacement cost
Actual cash value (ACV) and replacement cost value (RCV) are two different options within your policy that reimburse you for property damage after a covered loss. While both help you to rebuild your home or replace lost and stolen items, ACV policies are based on the items' depreciated value; RCV doesn’t factor in depreciation.
While ACV is more cost-effective upfront, it may not adequately cover the total costs of your damaged house or belongings. Replacement costs, on the other hand, tend to be more expensive at first but pay off in the long run, since you’ll likely receive larger sums from your insurer in the event of a claim. Most policies apply RCV to homes and ACV to belongings.
TIP: Make sure you know whether you have ACV or RCV coverage. Several reviewers on our site said they didn’t think to ask, then ended up with only ACV rather than coverage for the full cost of replacement. This happened to Henry of Texas: “They issue you ACV (Actual Cash value) option to your roof instead of RCV (replacement cost value). You won't know what this is about until you file your claim unless you have the knowledge of it.”
Cost of higher-risk coverage
Not all homeowners receive the same rates. If your house is in an area prone to harsh weather conditions or high crime, insurance companies may consider your place high-risk. Vacation homes or properties you occupy only part of the year also raise eyebrows, since they’re more susceptible to break-ins and unnoticed-yet-ongoing issues. You’ll also likely experience difficulties securing coverage if you have a thick file of claims with past insurers.
Can you negotiate homeowners insurance?
Typically, you can’t negotiate homeowners insurance — and can’t forego coverage if you have a mortgage, since lenders require borrowers to protect their investments. If you don’t have a mortgage, homeowners insurance is still highly advised in the event something happens to your property beyond your control. However, you do have a choice in which insurer you select and the changes you make to your policy.
» LEARN: Home warranty vs. home insurance
What are waivers of deductible in home insurance?
When a homeowners insurance deductible is waived, it means the policyholder doesn’t need to pay the deductible typically required by the insurance company. A waiver may occur in instances of extreme loss, such as in the case of a destructive house fire. Most companies offer deductible waivers, though amounts vary among providers.
Does homeowners insurance go up after a claim?
Filing just one claim can increase your insurance by 7% to 10%, but this depends on where you live, what kind of claim you make and how frequently you’ve filed in the past. While weather-related incidents typically keep your insurance steady, water damage and fires can cause a spike in price. States have laws in place that restrict insurers from increasing rates unfairly.
How do you shop for home insurance?
To ensure you’re doing business with a reputable company, research insurers’ information and consumer feedback through the National Association of Insurance Commissioners (NAIC). Try to reach out to at least three different insurers for quotes to compare deals and financial stability. You may want to shop around every three years or so to see whether fairer prices have arrived on the market.
How can I save on homeowners insurance?
One way to save on insurance is to raise your deductible, which will lower your premium, since you’ll pay more out of pocket if you file a claim.
If you don’t want to take that gamble, there are other preemptive ways to cut costs. For instance, make sure you’re only paying for what you need. Some companies’ basic policies may offer a wider range of coverage but include less affordable fees; a quick chat with a local insurance agent can help determine what you actually need. Another simple and easy tip: If you can cover the damage yourself, don’t file a claim — racking up claims will label you as high-risk.
» LEARN: How to save on homeowners insurance
Tim Doman, an investment analyst and CEO of Top Mobile Banks, told us: “You know what they say: the more, the merrier! The same goes for insurance policies. If you have multiple policies, such as home and auto insurance, bundling them together with the same provider can often result in significant discounts. This is because insurers are eager to keep your business and reward you for being a loyal customer.”
- Policygenius, “ Average homeowners insurance cost in May 2023 .” Accessed May 10, 2023.
- NAIC, “ Homeowners Insurance .” Accessed May 10, 2023.
- American Express, “ 10 Factors That Affect Home Insurance Costs .” Accessed May 10, 2023.
- Credible, “ What Is a Homeowners Insurance Rider? ” Accessed May 10, 2023.
- HUB SmartCoverage, “ Does your marital status affect your insurance rates? ” Accessed May 10, 2023.
- Allstate, “ What to do if you get turned down for homeowners insurance .” Accessed May 10, 2023.
- Allstate, “ Homeowners insurance replacement cost vs. actual cash value .” Accessed May 10, 2023.
- Progressive, “ Replacement cost vs. actual cash value .” Accessed May 10, 2023.
- Fund My Deductible, “ What Is a Deductible Waiver in Home Insurance? ” Accessed May 10, 2023.
- InsuraMatch, “ Is Homeowners Insurance Negotiable? ” Accessed May 10, 2023.
- Policygenius, “ Does homeowners insurance go up after a claim? ” Accessed May 10, 2023.
- This Old House, “ 15 Ways to Lower Your Homeowners Insurance Premium .” Accessed May 10, 2023.
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