Even if you live in a safe neighborhood and your home was built with the sturdiest of materials, homeowners insurance is one of the best investments you can make to protect your investment in your home. If you plan to finance your home purchase with a mortgage, you’ll need to have your insurance in place before you can close on the loan.

                By                    Daria Uhlig
  • Homeowners Insurance
  • Cost
  • Rate Factors
  • How To Get
  • How To Save Money

Keep reading to learn more about homeowners insurance and how much it costs.

What Is Homeowners Insurance and What Does It Cover?

Homeowners insurance is a type of policy that covers damage and losses to your home and your belongings from certain situations, called perils, like theft, fire or wind. A standard policy typically covers:

  • The structure of your home
  • Your belongings, i.e., personal property
  • Liability against lawsuits resulting from injury or property damage suffered by other people while on your property or caused by a member of your household
  • Additional living expenses while your home is being repaired or rebuilt after covered damage

How Much Is Homeowners Insurance?

The average cost of homeowners insurance in the U.S. is $1,824 per year as of 2021, according to an Insurance.com analysis. That’s for a standard policy offering $200,000 in coverage for the home itself with a $1,000 deductible. However, homeowners insurance rates can vary significantly by property and location as well as the amount of your deductible and the types of coverage you have.

Good To Know

These coverages might be limited to a dollar amount or percentage of the value of the damaged items, and they’re also limited in scope, but you can add optional coverages if a standard policy doesn’t provide all the protection you need. For example, you’ll need a separate policy for flood or earthquake coverage. You might also have to purchase additional coverage if you want to insure expensive items such as artwork, jewelry or collectibles.

The typical deductible for a standard homeowners insurance policy can range anywhere from $500 to $1,500. In the event you file a claim, you’ll have to pay that much out of pocket before the insurance company pays or reimburses you for covered damage.

The Cost of Homeowners Insurance by State

Insurance.com analyzed homeowners insurance rates to find the average annual premium for each state. Here’s what it found for a $300,000 home with $1,000 deductible, plus a breakdown showing the monthly cost of homeowners insurance rounded to the nearest dollar.

States With the Lowest Homeowners Insurance Premiums

You’ll pay anywhere from 37% to 78% less than the national average in the five states with the lowest homeowners insurance premiums, according to Insurance.com.

States With the Highest Homeowners Insurance Premiums

In the states with the highest rates, homeowners insurance will cost you 49% to 93% more than the national average, according to Insurance.com data.

Factors That Determine Homeowners Insurance Rates

Homeowners insurance companies calculate premiums based on several factors, including:

  • Location
  • Smoking or non-smoking home
  • Structure and characteristics of the home
  • Safety and security features installed on the property
  • Homeowner’s credit history
  • Homeowner’s claims history

How To Obtain Homeowners Insurance

You’ll find homeowners insurance plans with a variety of coverage options through a property and casualty insurance provider. You might have to do some research to compare reviews and ratings to find the best home insurers in your state.

You can request a quote or estimate after you’ve found a few insurance companies you think you might want to work with. You should review all exclusions and terms of coverage to ensure you’re getting exactly the coverage you need for your property.

How To Save Money on Homeowners Insurance

Homeowners insurance is relatively inexpensive compared to the cost of paying out of pocket to repair or rebuild your home, but you can bring the price down even more.

One thing to remember when you’re looking at homeowners insurance prices: Two-thirds of Americans are underinsured by about 22%, on average, according to Nationwide, and that average includes homes that are underinsured by 60% or more. While keeping your premiums low is a good thing, skimping on coverage can cost you more than decades of homeowners insurance premiums in the event of a fire or other catastrophe.

Some Tips

  • Increase your deductible: The lowest deductible you can get is usually $500. Increasing that to $1,000 can knock 25% off your premium, according to the Insurance Information Institute Even though increasing the deductible also increases your out-of-pocket expense in the event of a claim, a homeowner paying the $1,824 would break even the first year with a 25% discount.
  • Bundle your insurance policies: Many companies offer discounts to customers who have more than one policy with the company, so consider using the same insurer for your home and auto policies.
  • Don’t overinsure: When you’re deciding how much dwelling coverage you need, think in terms of how much it would cost to rebuild your home, not how much you paid for it or how much it was appraised for. Both of those valuations include the land, which, as the III notes, isn’t subject to the same kind of damage as a structure.
  • Improve your home’s safety and security: Adding anti-theft devices and fire safety equipment and upgrading plumbing and electrical systems can reduce your premium. If your roof needs replacement, go for premium construction designed to resist fire and wind.

Sabah Karimi contributed to the reporting for this article.

  • 7 Things You Should Know Before Buying a House
  • How Much Should You Save for a Down Payment on a House?
  • Condo vs. House: Which Option Is Best For You?
  • Home Inspection Costs and Why You Need One
  • House Hacking 101: Top Tips and Advice
  • Home Inspection Checklist: The Ultimate List of Items to Look For
  • How To Flip a House: Your Step-By-Step Guide
  • What Is Mortgage Insurance and How Does It Work?
  • How To Refinance a Mortgage
  • Mortgage Closing Costs: What They Are and How Much You Can Expect To Pay
  • How To Find Small Home Loans Under $50K
  • How To Rent Out a House in 9 Steps
  • What Does It Mean To Be House Poor?