Homeowners insurance costs increased by nearly 11% between 2021 and 2022 according to private banking firm S&P Global, joining the list of necessary services hit by inflation. Many homeowners will see higher rates in 2023.
As the average cost of homeowners insurance continues to rise, take the time to review your coverage needs, collect quotes and compare home insurance companies to make sure you’re not missing out on a better deal elsewhere.
How much is homeowners insurance?
The average cost of home insurance in the U.S. ranges from $1,117 to $2,950 per year, based on our analysis of rates for policies with dwelling coverage limits of $200,000 to $750,000. How much you’ll pay for coverage depends on several different factors, such as how much coverage you need.
Here is a breakdown of the average annual home insurance cost by dwelling coverage amount, which should match the amount it would cost to rebuild your house. The higher your rebuilding costs, the more you will pay for homeowners insurance.
Average annual cost of homeowners insurance by dwelling coverage
Factors that determine homeowners insurance cost
Many factors affect how much you pay for homeowners insurance, some of which you can alter to help reduce costs. Common factors include:
- Rebuild or replacement cost value of your house. This factor refers to how much it would cost in labor and materials to completely rebuild or replace your house in the event of a total loss. Your dwelling coverage limit is based on your house’s replacement cost. If your house is older and built with harder-to-find materials, the replacement cost value may be higher than that of a new build.
- Coverage amounts. Standard homeowners insurance policies include six types of coverage: dwelling, personal property, other structures, loss of use, liability and medical payments. The amount of coverage you need for each can impact your rates.
- Deductible amount. Your deductible is subtracted from your claim payout when you file a homeowners insurance claim. A higher deductible results in lower home insurance rates but smaller claim payouts.
- Location. Location plays a significant role in homeowners insurance costs. If you live in a place prone to natural disasters, you will likely pay higher rates. Similarly, homeowners insurance in areas with higher levels of crime may also pay more.
- Claims history. Insurance companies use this metric in several different ways, including reviewing your history of claims, claims previously filed on the property and the number of claims filed in your location. A history of claims typically correlates with higher rates.
- Home condition and age. Older homes with outdated wiring, HVAC, plumbing or roofing systems often cost more to insure as there are more things that could go wrong. Newer homes with updated systems and sophisticated safety features pose less of a risk to insure, which usually results in lower home insurance costs.
- Additional coverage. If you add additional coverage to your homeowners policy, like water backup coverage or earthquake insurance, you’ll likely pay more for your policy.
- Safety features. If your house has smoke detectors, sprinkler systems, security alarms and other types of safety features, insurers will see it as less of a risk to cover and may offer you a discount.
Average cost of homeowners insurance by company
Homeowners insurance premiums vary by insurance company, making it important to get and compare quotes from multiple insurers. Doing so can help you find the best homeowners insurance for your property and budget. Progressive currently offers the least expensive homeowners insurance at $901 on average annually for all coverage amounts. Meanwhile, homeowners who take out policies with Shelter or Travelers pay the most for coverage.
Here’s how much homeowners insurance costs on average per year by company and dwelling coverage amount.
Average annual cost of homeowners insurance by company
Average cost of homeowners insurance by state
Home insurance rates vary based on where you live, even down to your ZIP code. Homeowners in Hawaii pay an average of just $364 per year for $350,000 in coverage, while those in tornado-prone Oklahoma pay an average of nearly $3,700 each year for the same amount of coverage.
Your home insurance cost will also depend on how much coverage you need. Homeowners in California requiring $500,000 in dwelling coverage will pay an average of $1,299 annually, but those in the state only needing $200,000 in dwelling coverage pay an average of $707.
Here’s how much homeowners insurance costs on average per year by state and dwelling coverage amount.
Average annual homeowners insurance rates by state
How to reduce homeowners insurance costs
You can take several steps to lower the amount you pay for insurance. Some popular ways to lower home insurance costs include:
- Shopping around. One of the most effective ways to find the cheapest homeowners insurance involves getting multiple quotes and comparing insurance companies to make sure you’re not missing out on a better deal elsewhere. Aim to receive quotes from at least three different insurance companies before making a final decision.
- Choosing a higher deductible. Raising the deductible on homeowners policies is a popular way to lower your home insurance costs. The higher your deductible is, the lower your rates will be. Insurers typically offer the choice of a $500, $1,000 or $2,000 deductible.
- Considering costs before buying. If you’re thinking about purchasing a new home, get an insurance quote beforehand so you know what to expect. In some cases, purchasing a newer home may offer lower insurance rates given that the property has updated systems and security features.
- Bundling other insurance policies. If you also have insurance on your vehicle, RV, motorcycle or other insurable items, consider insuring them all with the same company. Policyholders that take advantage of multi-policy or “bundling” discounts can save as much 23%, based on our analysis of the best auto and home bundles.
- Asking about discounts. Many insurers offer discounts if you install safety features at the house, including burglar alarms, deadbolt locks, sprinkler systems or security c
