Once you’ve built your dream home or found your fixer-upper, one of the key steps in homeownership is purchasing a homeowners insurance policy. Not only does the right policy protect the structure of your home from an event such as fire or theft, but it also helps protect your belongings inside your home. Knowing you need a policy is one thing, but many homeowners have lots of questions when it comes to policy coverage and costs of premiums.
The average annual premium lands around $1,124 for dwelling coverage of $200,000. It’s worth noting homeowner’s insurance costs have been trending upwards over the last several years, with wind and hail damage causing the most claims. Asking questions such as “what does home insurance cover?” and “how much is homeowners insurance?” are to be expected when you’re reviewing homeowners insurance rates. As you start researching, you may be surprised at the number of factors that impact your insurance rates, including ones you can control.
One of the biggest factors influencing how much you pay for homeowner’s insurance is your location. If you compare the average costs between each state, you’ll quickly notice how much a premium can vary from one state to another. You have less expensive premiums in states such as Vermont and Delaware, while other states like Oklahoma are more than double the national average.
State | Average cost ($200,000 dwelling coverage) |
---|---|
Alabama | $1,629 |
Alaska | $904 |
Arizona | $1,103 |
Arkansas | $1,918 |
California | $928 |
Colorado | $1,702 |
Connecticut | $892 |
Delaware | $489 |
Washington, D.C. | $753 |
Florida | $1,419 |
Georgia | $1,258 |
Hawaii | $320 |
Idaho | $789 |
Illinois | $1,209 |
Indiana | $1,080 |
Iowa | $1,262 |
Kansas | $2,552 |
Kentucky | $1,606 |
Louisiana | $1,904 |
Maine | $801 |
Maryland | $924 |
Massachusetts | $1,071 |
Michigan | $947 |
Minnesota | $1,395 |
Mississippi | $1,443 |
Missouri | $1,706 |
Montana | $1,499 |
Nebraska | $2,361 |
Nevada | $680 |
New Hampshire | $590 |
New Jersey | $671 |
New Mexico | $1,279 |
New York | $786 |
North Carolina | $1,124 |
North Dakota | $1,578 |
Ohio | $756 |
Oklahoma | $3,342 |
Oregon | $661 |
Pennsylvania | $661 |
Rhode Island | $918 |
South Carolina | $1,284 |
South Dakota | $1,678 |
Tennessee | $1,389 |
Texas | $2,105 |
Utah | $718 |
Vermont | $553 |
Virginia | $823 |
Washington | $809 |
West Virginia | $867 |
Wisconsin | $884 |
Wyoming | $949 |
According to average rates from Quadrant Information Services, Oklahoma, Kansas and Nebraska have the highest premium rates for homeowners insurance costs. Oklahoma remains the most expensive, due to the stormy and volatile nature of the weather of the Sooner State. The same is true for Kansas and Nebraska. All three of these states have some of the highest rates of tornadoes across the entire country, making it more likely to incur damage to a home from volatile weather.
On the other end of the spectrum, you have Hawaii, Delaware and Vermont with the lowest costs for homeowners insurance. Not only are all three of these states smaller in land mass, but all three are less likely to experience severe weather conditions like hurricanes, hailstorms and tornadoes.
Insurance providers ultimately make their decisions about risk and the likelihood of a peril falling upon you and your family, which is one reason why rates vary from one carrier to the next. For example, one carrier might determine a person who lives in an old house is more likely to have structural issues after a hard winter versus another carrier. Providers need to maintain a certain profit margin in order to provide service and protection to its customers, and this impacts rates too.
Company | Average annual premium ($200,000 dwelling coverage) |
---|---|
Allstate | $1,211 |
American Family | $1,239 |
Amica | $1,637 |
Auto-Owners | $1,270 |
Chubb | $1,142 |
Erie | $884 |
Farmers | $1,254 |
GEICO | N/A |
Liberty Mutual | N/A |
MetLife | $1,044 |
Nationwide | $1,126 |
Progressive | $955 |
State Farm | $1,211 |
The Hartford | $1,426 |
Travelers | $1,053 |
USAA | $1,210 |
As you’re gathering quotes and information on your home insurance rates, there are several factors influencing the home insurance estimate. Not only does the insurance carrier you select make a difference, but so do several other variables.
Location is a major factor when determining the amount you pay for homeowners insurance. Not only does it vary by state, but the location on a smaller scale has an impact too. For example, if you live in a ZIP code with a higher crime rate or you’re located near a fire department, your rate is impacted to a higher or lesser degree based on proximity.
Naturally, the amount of coverage you choose for your policy affects your rate. For instance, if you choose a $200,000 dwelling coverage, you’re going to pay less than a homeowner who needs $300,000 in dwelling coverage to rebuild their home. Other categories of coverage, such as liability amounts also make a difference. If you have the minimum liability coverage of $100,000 then you’ll pay less versus choosing a $300,000 limit.
Your credit score is another important factor in determining your home insurance rate. A higher credit score mixed with a low debt-to-income ratio means you’re likely to pay less each month.
To ensure your credit doesn’t unnecessarily hurt your insurance premium, request a free copy of your credit reports. Check for errors with all three credit bureaus and diligently monitor your score. If you see a mistake, which could ultimately affect your homeowners insurance rate, follow the Federal Trade Commission’s advice on disputing an error.
The age of your home is considered a risk factor for insurance companies because it suggests how likely your home is going to need work sooner versus later. The younger your home, the lower you will pay for homeowners insurance since it’s less likely you’ll need work in the near future.
There are steps you can take to get the most competitive rate for your homeowners insurance.
Shopping around with multiple carriers is one of the best ways to get the most competitive rates for your policy, especially considering how much rates can vary from one carrier to the next. As you’re doing so, make sure you’re comparing exact coverage options so you’re getting a true head-to-head cost comparison.
Your deductible is the amount you’re responsible for paying out of pocket if you need to make a claim. The lower your deductible, the higher your insurance rate will be. If you increase your deductible, you are taking on more risk and can often get a more competitive rate. If you do choose to raise your deductible, make sure you have savings set aside to cover the amount in case you find yourself making a claim.
Knowing how much homeowners insurance coverage you need is helpful as you’re comparing carriers and policies. First, to determine the appropriate dwelling coverage, figure out how much it would cost to rebuild your home based on today’s construction costs and your square footage. Remember, you’re not including the cost of your land, only your structure. Some banks require you to have the coverage amount equal to your mortgage. Depending on the carrier, you may find an online tool useful for this estimation.
Secondly, your personal property is equally important. Conduct a home inventory to adequately assess how much your belongings are worth, and what it would cost to replace them. You will have to choose between an Actual Cash Value (ACV) policy, which replaces the cost based on what your belongings are worth today, or Replacement Cost Coverage, which is what you paid for your item.
Last, your liability coverage is vital. Policy limits begin at $100,000, but if you own other properties or have additional assets worth more, it’s recommended you carry at least $300,000 in coverage. You could even add an excess liability policy if you feel you need more.
There are many ways to save on homeowners insurance. Some are easy while others are more tedious. It’s often tempting to many homeowners to simply choose a less expensive policy, but this is often not the best course. As a homeowner, you need to protect your investment, and this means getting the best coverage you can afford.
To get the best coverage, see if you can save with these strategies.
Many homeowners insurance companies also offer auto-insurance. By choosing the same company for both, you can often save money on your premiums.
Making a few safety enhancements to your home can make your property look less risky to insure. Here are some things you can add to possibly get a discount:
Not every insurance provider uses credit scores as a risk indicator, but many do in most states. Improve your credit score by paying your bills on time, reducing your overall debt and keeping your cards open. You should also look into your credit report for any errors.
Many insurance providers have a variety of ways for their policyholders to get discounts. For example, you may get a discount for not smoking or signing up for automatic payments. Ask your provider what discounts you could be eligible for.
Asking how much is homeowners insurance is only the beginning of finding the right policy to fit within your budget. Rates are based on a variety of factors, including:
Even with the numerous influences on insurance rates, you can lower your rates by looking for policy discounts, comparison shopping between carriers and securing your home with smoke detectors and other safety measures.
Coverage utilizes Quadrant Information Services to analyze 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:
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 may be different.
Rates are determined based on 2020 Quadrant Information Services data.