What Is the Cost Of Homeowners Insurance and Why?

logo by Editorial Staff | Updated on August 17th, 2022

2022 home insurance rate data throughout the United States of America shows that the average cost of homeowners insurance in the country is $1,899 per year or $158 per month. However, that figure varies greatly depending on the home’s location, type of construction, age, and other factors.

For a 40-year-old homeowner with $300,000 in home coverage, Policygenius examined house insurance prices from over 120 firms for approximately 35,000 ZIP codes throughout all 50 states and Washington, D.C. In March 2022, Quadrant Information Services released rates.

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Average home insurance costs by Home coverage amount

Home insurance coverage is one of the most crucial coverages in your house insurance policy. The home insurance provider will pay to rebuild or replace the home if you file a claim for structural damage.

MoneyGeek discovered from the data gathered for the study that the median house insurance policy has an average yearly premium of $1,979, or $165 per month, for $250,000 home coverage in 2022. (plus installment fees set by the insurance carrier).

You will pay roughly twice as much for your policy if you increase your residence coverage. Insurance with a $500,000 housing coverage average cost is $3,519 per year or $293 per month.

Average prices for home insurance by Home coverage

Home CoverageMonthly PremiumAnnual Premium

Various factors, including determine the annual cost of homeowners insurance

  • Location (state and ZIP code)
  • Home coverage amount
  • Amount of personal property
  • other buildings on the property (barn, shed, fence, pool, etc.)
  • History of claims (both individual and local to the home’s address)
  • Endorsements or Add-ons
  • Deductible amount

Based on a combination of the average housing coverage for each state, we calculated the average national cost of home coverage to be $2,103 per year or $175 per month. Since each state has a different average, your state’s rate could be significantly lower or higher than the national average.

The easiest approach to figure out how much you’ll have to pay is to compare customized insurance quotations from several companies based on the property’s location, household details, and requirements for home insurance coverage.

The top 5 states with the most costly homeowner’s insurance

Arkansas, Kansas, Nebraska, Oklahoma, and Texas have the highest premiums for homeowner’s insurance. These states’ average insurance premium is $3,706, which is over twice the national average.

The increased risk of tornadoes and winter storms, which raise the possibility of costly claims, is a recurring topic in these states. Insurance losses from winter storms in 2021 totaled more than $15 million. Plus, Tornado Alley encompasses all five of these states.

Additionally, Texas residents must deal with hurricanes in addition to tornadoes.

StateAverage annual costAverage monthly cost

If you reside in one of these states, you can reduce your premiums by fortifying your house to withstand severe weather. This may entail installing storm-resistant garage doors, roof shingles, or window shutters on your home, as well as pruning nearby trees to reduce the amount of possible debris.

The top 5 states with the cheapest homeowner’s insurance

Hawaii, Oregon, Utah, New Jersey, and New Hampshire are the states with the cheapest homeowner insurance rates. In these states, the average yearly premium is $855, almost 45% less than the national average.

StateAverage annual costAverage monthly cost
New Jersey$926$77
New Hampshire$974$81

Most important factors affecting home insurance cost

By reducing risk, insurance companies save money. The cost of insurance coverage increases with the riskiness of insuring a home. When determining price, some factors, such as the age of the house and its claim history, are more important than others. Here are some factors that insurers consider when calculating the price of a policy:

  • Coverage Type: Although replacement cost for the home and its contents is more expensive than real cash value, it is worthwhile to pay this extra to avoid having to pay for depreciated value in case of a claim.
  • Home Location: The location of the home is important. The more expensive the base rate for that location, the denser the population and the more often weather-related occurrences occur.
  • Home Coverage Amount: One of the major factors is the home coverage amount. The higher the value of your home, the more it will cost to rebuild or repair it, and the more you will have to pay for home insurance.
  • Personal Property Coverage: The standard home insurance policy instantaneously gives 70–75% of the home coverage as personal property coverage. This is included in the price but can be increased separately if necessary. Like home coverage for home insurance, personal property coverage is the most important component of renters insurance costs.
  • Deductible Amount: A higher deductible results in reduced premium costs but a higher out-of-pocket expense should a claim be filed. Check out deductible options to determine whether the lower premium amount justifies the higher deductible amount.
  • Age of Home: If your home is older, you are more likely to file a claim, and the reimbursement for repairs or replacement will be more expensive. You can reduce an older home’s insurance premiums by upgrading the roof, the heating and cooling systems, the electrical system, and the plumbing.
  • Credit Score: In most places, insurers are permitted to use your credit history when calculating the cost of your home insurance. Maryland,  Massachusetts, and California are the only states that don’t.
  • Frequency of Claims: Your home insurance will cost more the more claims you make. Claims often follow you from employer to employer and from residence to residence for three to five years. Keep your claims frequency as low as possible by being wise about making claims, avoiding cheap filing claims, and mitigating damage before a weather event is a forecast.
  • Other factors: Although they have less of an effect, other factors are also considered when calculating your rate. They include the type and age of the roof, a pool, potentially dangerous pets, security measures, and proximity to the nearest fire station.

How to save on homeowners insurance

You can reduce your home insurance premiums by using some of the following strategies: loyalty discounts, insurance bundles, and rare claims.

  • Enhance the security and safety features of your home. Most insurance companies offer discounts if you install the home security devices listed below:
  • Sprinkler system
  • Security alarms
  • Smoke detectors
  • Fire extinguishers
  • Wind protection
  • Deadbolts on doors
  • Improve your credit score. Your overall financial health will improve as a result of making an effort to pay off your credit card debt, make timely payments, and refrain from opening any new accounts, and you’ll also pay less for your home insurance.
  • Reconsider your add-ons and coverage limits. According to research by the National Association of Insurance Commissioners, just one in ten homeowners review or renew their home insurance policy every five years. However, we advise reviewing your coverage once a year.
  • Raise your deductible. A higher deductible might let you pay less expensive monthly premiums. Ensure that you have sufficient money to pay the higher out-of-pocket costs.
  • Bundle your auto and home insurance policies. Bundling your auto and home insurance policies can result in discounts of up to 35% from some insurance providers.
  • Consider critically before filing a minor claim. Avoid filing claims for minor occurrences that you might easily cover out of pocket because your claims history directly influences your premiums.
  • Ditch your kid’s treehouse or trampoline. Your likelihood of filing a claim is increased by these “attractive nuisances,” which drive up your rates.
  • Check out new policies every year. You can achieve this with the help of Policygenius’ team of insurance experts. They’ll look at your policy, assess your coverage limits and costs against the top insurers available, and assist you in figuring out whether you can get a better offer elsewhere. They’ll even assist you in getting new insurance and handle all the paperwork necessary to transfer insurers if you can. What a win-win situation.

What types of home insurance coverage levels are there?

Actual cash value

The least expensive and lowest level of protection is this one. When you have an actual cash value policy, your insurer will compensate you for the market value of your possessions and residence, minus depreciation. The cost of replacing what you’ve lost will often exceed the amount you are compensated for.

Cost of replacement

Because depreciation is not considered, this medium level of protection will have a higher premium than a policy that pays real cash value. This will cover the price of rebuilding your house or replacing your belongings without depreciation.

Guaranteed replacement cost

It costs more than the other two because it offers the highest protection. Construction costs will often be higher than typical in a covered disaster, such as a hurricane or tornado. Even if the cost exceeds the policy limits, this level of protection will rebuild and replace your belongings.

Several house insurance providers also provide increased limits for a higher price, enabling homeowners to get more coverage. If you need help with your homeowner’s insurance claim, contact your local home insurance claim lawyer.

Frequently asked questions

Do bundling your home insurance cost less money?

One of the best methods to save money is to bundle your house insurance with your motorcycle or auto insurance. Keeping all your policies with one company will earn you discounts, which might simplify paying bills and filing claims.

What will your home insurance cost?

The cost of your home insurance is based on several factors, including location, claims history, the need for coverage, and many more. You can use an estimator tool or ask insurance companies for personalized quotations to get an idea of what you can expect to pay.

Is home insurance mandatory?

Home insurance is not required by law, but if you have a mortgage, your lender can insist that you have coverage. Even if you are not legally required to have a policy, we advise getting home insurance to give you peace of mind and safeguard your home and its contents.


Editorial Staff

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