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Homeowners insurance costs vary from property to property. Factors like your homeowners insurance provider, your level of coverage, and your home’s physical location can influence the cost.
For example, a homeowners insurance policy for $300,000 of dwelling coverage in Florida could be significantly different from the same type of policy that insures a home in Ohio.
Here’s the average cost of homeowners insurances, why your rate could increase over time, and the steps you can take to purchase homeowners insurance:
- How much does homeowners insurance cost?
- Factors that affect your homeowners insurance cost
- How to reduce the cost of homeowners insurance
- Can your homeowners insurance rate change over time?
- How to purchase homeowners insurance
How much does homeowners insurance cost?
Homeowners insurance is a safety net that you hope you’ll never use, but wouldn’t want to be caught without. Unfortunately, there’s no one-size-fits-all policy for every homeowner. More than a dozen factors influence the cost of homeowners insurance, many of which are unique to your home.
The average U.S. homeowner pays $106.50 per month, or $1,278 per year, for their homeowners insurance policy, according to the National Association of Insurance Commissioners. Of course, this may vary from the actual amount you’ll pay for your policy — that’s why it’s important to learn as much as you can about what factors can increase or decrease your rate.
Learn More: How Much Homeowners Insurance Do I Need?
Average homeowners insurance cost by state
Your home’s location is a major factor in your homeowners insurance cost. Homes near the coast are typically more expensive to insure than homes that are more inland. And if you live somewhere with a higher chance of a natural disaster occuring, such as a hurricane, you’ll pay more for homeowners insurance. Meanwhile, your home’s proximity to a highly rated fire department can save you money on your insurance premium.
Here’s the average cost of homeowners insurance by state, according to the National Association of Insurance Commissioners:
Factors that affect your homeowners insurance cost
In addition to your home’s location, other factors will affect your premium. Let’s take a look at a few aspects insurance providers consider when determining your home insurance premium:
|Factors That Influence Premiums||Why These Factors Impact Rates|
|Construction materials||Frame houses, for example, typically require higher insurance rates than brick homes.|
|Age of the home||Newer homes may be eligible for lower rates while older homes may need more coverage.|
|Scope and amount of coverage||The more coverage you require, such as extra liability coverage, the more your plan will cost.|
|Deductible amount||A higher deductible will lower your premium, while a lower deductible will raise your premium.|
|Home's replacement cost||Premiums generally increase for homes with higher replacement costs.|
|Neighborhood||Aside from your state, homes in areas where severe weather or high crime are common may warrant higher rates.|
|Claims history||One or more claims could cause your premium to increase.|
|Credit history||Though a provider won’t deny you a policy based on your credit score, they may offer lower premiums to homeowners with good credit.|
|Distance from fire department||Homes within a short distance of fire stations may be eligible for lower premiums.|
|Applicable discounts||Your homeowners insurance carrier may extend discounts that lower your rate if you qualify.|
Check Out: Types of Homeowners Insurance (Policy Forms)
How to reduce the cost of homeowners insurance
The good news is that you can lower your homeowners insurance premium so you can save some money. Here are a few ways you can reduce your homeowners insurance cost with little time, effort, or investment:
- Choose a higher deductible. By choosing a higher deductible, you’ll be able to lower your monthly premium.
- Take advantage of discounts. Along with any discounts your provider offers when you purchase the policy, be sure to periodically ask if you qualify for any new discounts. You may be able to earn discounts by not submitting claims or by having a good payment history.
- Make home improvements. Making certain improvements to your home, such as replacing your roof, may lower your annual rate.
- Install security systems. Installing a security system can deter criminal activity and potentially reduce the cost of your policy.
- Install fire suppression systems. Similar to security systems, fire suppression systems mitigate risk, thus making you a candidate for a reduced rate.
- Keep your home in good condition. New homes and homes in good condition are often cheaper to insure. Keeping your home in good condition for as long as possible could keep your rate from rising over time.
- Avoid filing claims, if possible. Companies may increase your rates when you file a claim. But they may give you a premium reduction if you don’t file claims over a significant period of time.
- Shop around. You can reduce your premium by comparing rates with other homeowners insurance companies.
Can your homeowners insurance rate change over time?
Your homeowners insurance policy will likely stay the same for however long you have it, unless you make changes to it. Your home insurance rate, however, may shift. There are many reasons your homeowners insurance rate could change, including:
- Your insurance score changes. Increases and decreases in your insurance score, which is a score calculated using your credit score and history, could result in your insurance provider raising or lowering your rate.
- Your home’s getting older. As your home ages, it becomes more at risk for damages, especially when appliances or fixtures begin to degrade in quality.
- You or your neighbors have filed claims. Frequent claims can raise your premium, even if your neighbors file them. If the carrier believes that your area is more at risk, it may raise your rates.
- Inflation hits. When overall costs rise, insurance providers typically raise their rates, so you may see your homeowners insurance premium increase from year to year.
How to purchase homeowners insurance
Purchasing a homeowners insurance policy isn’t too different from purchasing any other insurance policy. Follow these steps to buy homeowners insurance:
- Research insurance providers. You can ask your real estate agent, get recommendations from your friends and family, or search online for policies.
- Consider if you need additional types of insurance. For example, you may be required to buy flood insurance. You’ll need to take out separate policies for extra coverage like this.
- Request quotes from multiple insurance carriers. Compare rates for similar coverage amounts and deductibles.
- Consult your loan officer. It can be a good idea to run your homeowners insurance quotes by your loan officer to determine if they meet the homeowners insurance coverage requirements set by your lender.
- Choose the provider that best fits your coverage needs. Select the insurance carrier that offers the best rate and coverage for your situation. You may choose to send this information to your loan officer for a final review. In the event that the coverage isn’t adequate, your loan officer will inform you that you need to choose a different policy.