Overview of Homeowners Insurance Costs
National and State Average Costs
- The national average cost of homeowners insurance is about $2,304 per year for a policy with a $300,000 dwelling limit. This means about $192 per month.
- State averages vary a lot. For example:
- Hawaii is the cheapest at $515 per year.
- Oklahoma is one of the most expensive at $5,049 per year.
Factors Influencing State Variations
- Geographic location impacts rates because of natural disaster risks:
- States like Nebraska and Florida have higher premiums due to risks like hurricanes, tornadoes, and wildfires.
- Other factors include:
- The age and type of building.
- Proximity to fire protection services.
- Local crime rates.
Cheapest and Most Expensive States
- Cheapest states for homeowners insurance:
- Hawaii
- Delaware
- Vermont
- New Hampshire
- Maine
- Most expensive states include:
- Nebraska
- Florida
- Oklahoma
- Louisiana
- Kansas
For more details on why homeowners insurance can be more expensive in certain states, you can visit this helpful resource.
Insurance Company Rates and Policies
Comparison of Insurance Companies
- USAA: Offers the cheapest policies at $1,875 per year for $300,000 in dwelling coverage. USAA policies are available only to active-duty military, veterans, and their families.
- State Farm: The average annual rate is $1,935 for $300,000 in dwelling coverage.
- Farmers: This company is the most expensive, with an average annual rate of $2,415 for the same coverage.
Policy Limits and Coverage Types
The amount of dwelling coverage you need affects the policy cost. Higher coverage amounts mean higher premiums. Here are some examples:
- $200,000 in Dwelling Coverage: Costs around $1,420 per year.
- $500,000 in Dwelling Coverage: Costs about $2,935 per year.
Other things that influence insurance costs include:
- Liability coverage
- Flood insurance
- Earthquake coverage
Additional Coverage Options
Homeowners have choices for extra coverage to better protect their homes and belongings.
- Replacement Cost vs. Actual Cash Value: Replacement cost coverage is usually more expensive but offers better protection. It pays to rebuild or repair your home with similar materials and quality, without deducting for depreciation.
- Inflation Guard Clause: This automatically adjusts your dwelling limit to match rising construction costs, ensuring you have enough coverage.
- Extended Replacement Cost Coverage: This can pay an extra 5 to 25 percent above the policy limits to cover unexpected increases in rebuilding costs.
For more information on choosing the right homeowners insurance policy, visit this helpful guide.
Factors Affecting Insurance Costs and Premium Discounts
Location and Building Characteristics
- Location of the Home: Where you live affects your insurance cost. If you live near fire stations or in areas less prone to natural disasters, your insurance might be cheaper.
- Building Type: The age and materials of your home matter too. Brick homes usually cost less to insure than wood frame homes because they are less likely to catch fire.
Deductibles and Policy Limits
- Higher Deductibles: Choosing a higher deductible can lower your monthly premium. But, this means you’ll have to pay more out of your pocket if you make a claim.
- Policy Limits: The more coverage you have, like higher limits on dwelling and liability coverage, the more your policy will cost.
Premium Discounts and Reductions
- Safety Devices: Installing dead bolts, smoke alarms, and security systems can help you get discounts on your insurance premium.
- Multi-Policy Discounts: If you buy both homeowners and car insurance from the same company, you might get a discount.
For more tips on how to save on homeowners insurance, check out this helpful guide.