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How Much Is Home Insurance?

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How much is home insurance? How big is a dog? How long is a piece of string? These are all questions to which the answer is, “It depends.”

However, with home insurance there are published data that can provide some useful averages and highlight where some of the differences arise.

“How Much Is Home Insurance” Depends on …

Before we get to those numbers, let’s explore some of the factors that account for wide differences both across the nation and between neighboring homes. One of the biggest is the state in which you live. That’s partly because states regulate insurance differently, meaning you get different levels of minimum coverage, and partly because each is more or less vulnerable to hurricanes, earthquakes, sinkholes, wildfires, tornadoes, crime and other threats.

The home you choose can also make a big difference to your premiums (payments), something too few homebuyers recognize when they’re choosing their properties. All other things being equal, the more modern the home, the less the owner’s likely to pay to insure it, largely because high risks from fire or internal flooding are reduced when electrical wiring and plumbing are more recent. And older homes may have been built to less rigorous codes, making them less resistant to wind, hail and other damage. Owners of older properties can often drive down their premiums through improvement projects that reduce such risks.

You too affect your insurance rates. If you have a history of making multiple claims, have a poor credit score or tick other boxes that make insurers think you’re more likely to make a claim, you’re almost certain to be penalized.

The other big influence over the amount you’re going to pay is the insurance company you choose. There can be startling differences between the premiums charged by similarly credible insurers for the same coverage of the same home for the same person. That’s why it’s so important to get quotes from multiple insurance companies and then compare them carefully.

Differences by State

In January 2016, the National Association of Insurance Commissioners (NAIC) published its annual survey of insurance costs for consumers. This reveals one answer to the “How much is home insurance?” question: More than last year!

Average homeowners insurance premiums were up 6.0 percent in 2013, and that came after a 5.6 percent rise in 2012. Those are a fraction of the national inflation rates for those years.

Because it takes such a long time to compile and analyze the extensive data on which the survey is based, the following numbers relate to 2013. But this information is likely to be the most accurate comparison available, so let’s go with it.

The five states with the highest average homeowners insurance annual premiums that year were:

Florida $2,115

Texas $1,837*

Louisiana $1,822

Oklahoma $1,654

Mississippi $1,395

* That Texas figure may look higher than it actually is owing to local reporting factors and the Texas Windstorm Association’s impact.

The five with the lowest such premiums (starting with the cheapest) were:

Idaho $561

Oregon $568

Utah $609

Wisconsin $665

Washington $676

If you trawl the Internet for more recent (probably less comprehensive and thus less reliable) data, you may find slightly different numbers and rankings, but the overall picture – including the same states in the top- and bottom-five – remains remarkably similar. One such survey puts the nationwide average in 2016 at $952 per year.

How You Can Pay Less

Assuming you’re not up for a move to Idaho or another low-cost state, what else can you do to reduce your homeowners insurance premiums? Here are 10 ideas:

  1. Shop around and get multiple quotes – This is the Insurance Information Institute’s #1 tip.
  2. Insure the cost of rebuilding your home – not its market value, which includes the value of the land.
  3. Choose a higher deductible – That’s the amount you have to contribute to every claim, and the higher your deductible, the lower your premium’s going to be. Just make sure you can afford it if something bad happens.
  4. Bundle your home, auto and other policies – Buy multiple policies from the same insurer and most will give you a worthwhile discount, maybe up to 15 percent.
  5. Make your home less vulnerable – You could save if you install security devices and make your home more resistant to natural disasters.
  6. Get your credit score up – Insurers perceive people with poor credit as greater risks. Learn how to monitor and improve your score with LendingTree’s free help.
  7. Stay loyal – Some insurers reward your continuing loyalty with lower premiums. But others increasingly take you for granted, so you still have to get multiple quotes every time you renew or amend a policy.
  8. Get all the discounts you’re due – Talk through with your insurer’s call center agent all the many discounts it offers to make sure you’re getting every one for which you qualify.
  9. Review your coverage annually – Things change, and you don’t want to be paying for protections you no longer need. You also don’t want to leave new acquisitions unprotected.
  10. Avoid the public-sector rut – If you live in a high-risk area, you may get your insurance from the government. Check with your state’s department of insurance for the names of private insurers that might cover your risks. They might be cheaper.

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