Average Cost of Homeowners Insurance in 2021
You’ve probably thought a lot about if you can afford that brown bungalow on the corner or that white Tudor across town, but have you thought about how much the insurance will cost? On average, homeowners insurance in the U.S. costs about $1,200 per year, according to the National Association of Insurance Commissioners (NAIC). It covers your home and other structures, your personal belongings and injuries on your property.
Let’s explore which states have the most expensive and least expensive premiums and why your premiums might be a little higher than you thought they’d be (spoiler: did you know that your home’s distance from a fire station can affect your premiums?).
Average homeowners insurance cost by state
Why is it that some states can be so far below the national average while others are so far above it? A lot of it has to do with how likely it is that your state will experience natural disasters like hurricanes, fires and tornadoes. In addition, average premiums in the U.S. continue to rise each year. (If you were buying home insurance back in 2008, for example, you probably would’ve paid about $830 vs. today’s national average of $1,200.)
If you live in a coastal state that typically sees multiple hurricanes each year, you should expect to pay more for insurance than if you lived in a state that rarely sees hurricanes or other significant disasters. Let’s look at the average cost of homeowners insurance by state.
Note: Based on 2017 NAIC data and a 3.97% annual growth rate, the average percent change in homeowners insurance premiums between 2008 and 2017
Most expensive states for homeowners insurance
The most expensive states for homeowners insurance are Louisiana, Florida, Texas, Oklahoma and Kansas. It’s no coincidence that the Congressional Budget Office classifies Florida, Texas and Louisiana as the top three states with the most expected damage from hurricanes. Meanwhile, Texas, Kansas, Florida and Oklahoma typically see the most tornadoes in a given year, according to The Weather Channel.
Not surprisingly, more disasters each year mean more risk to your home and a higher chance that you’ll file a claim. That means that if you live in a state where natural disasters are common, you should expect to pay higher premiums.
Cheapest states for homeowners insurance
On the other hand, the cheapest states for homeowners insurance include Oregon, Utah, Idaho, Nevada and Wisconsin. Of course, there’s no place in America that’s completely shielded from natural disasters. However, these states typically see fewer floods, tornadoes, hurricanes and, in some cases, lightning strikes than other states.
If you live in a state where natural disasters are less common, you and your insurance company take on less risk, and you should expect to pay relatively lower premiums.
Average homeowners insurance cost by coverage amount
Your premiums also depend a lot on the amount of dwelling coverage you have. That’s the coverage you have for your home and other structures on your property (like garages, sheds, fences and porches).
Many companies require you to have enough dwelling coverage to cover 100% of your property’s replacement cost. Here are the average premiums in the U.S. based on how much dwelling coverage you have, according to the NAIC.
|Dwelling Coverage Range||Average Annual Premiums|
|$500,000 and Above||$2,149|
Another thing to keep in mind is that your premiums will rise as you purchase more liability coverage. (That’s the coverage for bodily injuries and physical damage on your property.) Typical plans provide at least $100,000 in liability coverage, but you should purchase as much as you need.
How much of each component of homeowners insurance you should have
You should have enough homeowners insurance to rebuild your home and other structures on your property (dwelling coverage), replace your personal belongings (personal property coverage), cover injuries on your property (liability coverage) and maintain your quality of life while living somewhere else if your house becomes unlivable (additional living expense coverage).
In general, here are some good guidelines to follow when determining how much homeowners insurance you need:
- Dwelling coverage: 100% of your property’s replacement cost
- Separate structures coverage: 20–30% of your dwelling coverage
- Personal property coverage: 50–70% of your dwelling coverage
- Liability coverage: at least $100,000
- Additional living expense coverage: 20% of your dwelling coverage
Other factors that affect the cost of homeowners insurance
You’ve already seen that the state you live in, the amount of natural disaster risk you face and the amount of coverage you select all affect your home insurance premiums. Here are some other factors that affect the cost of homeowners insurance:
- Your home’s age: Older homes typically cost more to insure because they cost more to replace than newer ones. For example, old wooden floors, trims and moldings typically require more time and specialized knowledge to replace.
- Your roof’s age and quality: Your roof bears the brunt of the snow, rain, wind and whatever else hits your home. An old roof or one that’s not equipped to handle the weather spells trouble for your home and leads to higher premiums.
- Your home’s size: The bigger your home, the more expensive it is to replace, and the more you will pay in home insurance.
- Your insurance/credit score: Your insurance score is computed by your insurance company and represents the probability that you’ll file a claim. It’s based, in part, on your credit score. If you have a low credit score, you’ll likely have a relatively low insurance score and pay higher premiums.
- How close you live to a fire station: The closer you live to a fire station, the more quickly firefighters can respond to disasters, and the lower your premiums will be. (Keep in mind that if you live in an area serviced by volunteer or rural fire departments, you’ll likely pay higher premiums.)
- How close you live to a coast: Similarly, if you live close to the water, your home faces a higher risk of damage from natural disasters, and you should expect to pay higher premiums than if you live more inland.
- Your loss history report: When insurance companies pay out claims, they enter that information into various databases. That information stays tethered to homes. That means that if your home has a long claims history, you should expect to pay higher premiums.
- Your earthquake, flood or brush fire risks: Many people are surprised to learn that typical homeowners insurance policies don't cover earthquakes, floods or brush fires. If you live in a floodplain, an area prone to earthquakes or a brush-filled canyon, you will need to explore additional coverage options.
- Other risks on your property: Pools and trampolines are fun, but they can also lead to injuries on your property. You should expect to pay more in liability insurance.
How to save more on your home insurance
Installing smart home devices can reduce your premiums by up to 15%, and it’s a win-win. Insurance providers love water shut-off valves, smoke detectors, cameras and alarm systems because these devices can detect problems before they happen and lower the number of claims that you have to file. You benefit from these high-tech gadgets because they’re fun to use, keep your home safe and reduce your energy costs.
You can also qualify for home insurance discounts in a number of other ways:
- Signing up for coverage before your existing policy expires or before you close on your new home (about 10% in savings)
- Going several years without filing a claim (up to 20% in savings)
- Paying for your home without a mortgage (up to 10% in savings)
- Owning a fire extinguisher (up to 5% in savings)
- Living in a gated community (up to 20% in savings)
- Insuring a newly constructed home (up to 30% in savings)
Finally, you might also consider raising your deductible. That means that you’ll be responsible for paying more out of pocket if you file a claim, but it also means that your premiums typically decrease.
In the same way that all homes aren’t the same, all home insurance policies aren’t the same. That’s why it’s important to shop around at multiple companies to make sure you’re getting the best price. Also check out this home maintenance checklist to make sure you’re keeping your home in tip-top shape and reducing the risk of harm to your home and belongings.