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?).
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.
Ranked By Yearly Premiums
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
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.
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 (even remote places like Alaska). 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.
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
Under $50,000 - $633
$50,000–$74,999 - $745
$75,000–$99,999 - $814
$100,000–$124,999 - $870
$125,000–$149,999 - $918
$150,000–$174,999 - $960
$175,000–$199,999 - $997
$200,000–$299,999 - $1,092
$300,000–$399,999 - $1,252
$400,000–$499,999 - $1,467
$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.
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:
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:
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:
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.
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