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The Cost of Homeowner’s Insurance in 2021

Homeowners Insurance

Many citizens have wanted to know the average cost of homeowner’s insurance in the United States. The average cost of homeowners insurance in the U.S. is $144 per month but can vary from as low as just $39 to as high as $304 per month. For a thorough look into the ins and outs of homeowners insurance and what affects the cost, read below. 

Homeowners Insurance Cost Averages By State 

Home insurance costs can range from as low as $3,645 a year in Oklahoma to the highest of all states at an average price point of $466 which happens to be Hawaii. Nationwide we have seen that most people are paying about $1,726 annually on premiums alone.

Your homeowner insurance rates may be more costly depending on where you live. For instance, Florida is one of the most hurricane-prone states in America, which means many people there are at a higher risk for hurricanes. Floridians will have higher premiums than a state with less of a risk for hurricanes such as California.

Some of the most expensive states for homeowners insurance include: 

  • Texas: $3,431
  • Mississippi: $3,417
  • Nebraska: $3,241
  • Kentucky: $3,212

The least expensive states for this coverage after Oklahoma include: 

  • Hawaii: $466
  • Massachusetts: $832
  • New Hampshire: $839
  • Vermont: $874
  • Delaware: $882

Cost of Homeowners Insurance By Coverage on Average 

Homeowners insurance can be expensive depending on how much coverage you want. Upon researching and analyzing thousands of quotes for various homeowner coverages, the cost varied a lot based on what level of protection you wanted to get. The prices ranged from $150,000 – $400,000.

There are several factors that contribute to homeowners insurance rates, but higher dwelling coverage amounts have been linked with increased costs. Insurance companies must be prepared in case of a more significant loss caused by any unexpected event such as flooding or fire damage. Think of your dwelling coverage as the cost to rebuild your home. This amount is calculated based on materials, size, and local labor costs in order for you to be covered if there was a loss. 

How Homeowners Insurance Is Affected By Remodeling 

It’s important to keep your insurance rates in mind when thinking about remodeling. Since the rebuild cost is increased by a home remodel, you will likely have higher insurance rates. The average home insurance premium and remodel value have a linear relationship. For instance, increasing the cost of your home’s rebuild by $50,000 will come with an insurance rate hike that is twice as expensive as a remodel where you only increased your house costs by $25,000. This means for every $50,000 of added rebuild cost, and you’ll pay another $258 yearly. 

A good tip before starting a renovation project, especially if it involves roofing materials with low fire resistance or weak window panes, is the wise step of speaking with your insurance company beforehand so they are aware that there may be a possible increased risk associated afterward.

Cost of Homeowners Insurance By Deductible on Average 

A deductible is your out-of-pocket expenses after a loss before you receive compensation. For example, suppose the insurance company approves for $5,500 and has an initial deduction of $1,000 from your total amount owed. In that case, it will cover up to $4,500 in any circumstance that does not meet their criteria.

Research shows that a person who increases their deductible from $1,000 to $2,000 will save $186 yearly. It will require avoiding a claim for over seven years to save $186 from the $1,000 deductible. 

Being prepared to pay your deductible will set you up for a better future and savings. With a deductible of $2,000, you’ll be in your best interest, having that amount in cash should you experience property loss. 

Home Insurance Premium Averages By Company

Estimating Your Homeowners Insurance Rate 

Homeowners insurance needs tend to be unique to a person’s situation. Unfortunately, this makes the estimation process for the insurance rate that much more difficult. Getting a fair estimate of your home insurance rate involves assessing some crucial details. A homeowner needs to consider the amount of coverage they’ll need. Also, examine the six coverages that influence the rate always found in a standard policy:

  • Dwelling: Covers your home’s structure; the amount is the estimated cost of rebuilding your home. 
  • Other Structures: Covers any other structures or buildings on your property (such as garages or sheds), costs 10% of dwelling. 
  • Personal Property: Covers your belongings, costs 50% of dwelling. 
  • Loss of Use: If you can’t remain in your home, this covers additional expenses, costs 20% of dwelling. 
  • Personal Liability: Any medical or legal defense payments if you’re sued for property damage or bodily injury costs $100,000. 
  • Medical Payments to others: Coverage to any guest’s medical bills injured on your property costs $5,000. 

The first step in determining your homeowners coverage amount is estimating what level of dwelling coverage you need. You’ll need to get a baseline rate from estimating the amount of dwelling coverage you require. After figuring out our baseline rate based on estimated needs, the next thing we want to do is increase or decrease that figure depending on if you’re living in a high-risk area.

Tips for Saving On Your Homeowners Insurance 

Consider looking into one of the several ways to reduce the premium of your home insurance. 

Switch Your Company

If you’re shopping for new car insurance, then it’s important to know that insurers want your business. They’ll often offer discounts and lower rates if you sign up with them. This is a wise way to take advantage of their competition. Make sure, though, that you get the benefit of getting multiple quotes before making a decision. 

Consider Bundling policies

You will see some companies advertising a special deal such as a 25% savings by bundling your home and auto insurance. Not only can this method of payment offer you savings, but it also tends to be an easy way to manage all your bills since they’re together with one company. 

Increase Your Deductible 

Increasing your deductible to $2,000 from $500 could save you up to $323. Make sure that this change is the right choice for your current lifestyle and insurance needs before making any decisions. Having enough money already saved is wise to continue payments even if you confront issues like a loss or filing any claims. 

Do a Home Material Upgrade 

You can get an idea of the quality and safety of your home by taking a look at what materials it is built from. Insurance companies will factor in these details when setting premiums, so if you have fire prone or structurally weak windows, you may see higher insurance rates to reflect this risk level. 

If you choose to upgrade features such as your roof and windows or reinforcing your home’s structure, it can not only lower those monthly premiums but also make it less likely that you’ll need to file a claim. While the upgrades might be pricey at first, the lower premiums on your insurance will save you more in the long run. 

The Most Common Home Insurance Losses 

More than 98% of homeowners insurance claims are for property damage, with just under 2% being a liability. These percentages differ regarding the type of claim – wind, hail fire, and lightning have been found most commonly in recent years.

Factors of Home Insurance Rates 

Did you know that insurance companies have many variables or rate factors into account when setting their premiums? The three facets they consider include the characteristics of your home, your location, and your personal profile. Here are a few important ones to keep an eye on 

It’s important to keep in mind that your insurance rates are subject to change. If you move, make renovations, or if certain events occur, such as burglary within the neighborhood, this will affect how much you have to pay for coverage. It is best practice to inform your insurer of any changes to update their knowledge base and adjust accordingly.

Common Questions to Consider 

Q: What is the standard cost of homeowners insurance?

A: The average cost of homeowners insurance is $1,726 a year. 

Q: What are the determining factors of homeowners insurance costs? 

A: The cost per month can vary greatly depending on your home’s location and level of risk. A recent study found that other factors like dwelling coverage and how close you live to high-risk areas were also important in determining your premiums.

Q: How Much Homeowners Insurance Will I Require? 

A: When deciding how much homeowners insurance you need, it’s essential to consider your unique situation. For instance, if you live in an area prone to natural disasters such as hurricanes or earthquakes, then more dwelling coverage will be necessary for rebuilding. Personal property protection should also include valuables if valuable items are stored at home like jewelry and antiques.

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