Average Cost of Home Insurance: How Much Will Homeowners Coverage Cost You in 2021?
The average cost of homeowners insurance is $1,979 per year, but that number changes greatly based on the home’s location, age, construction type and other factors.
MoneyGeek created a comprehensive study providing average rates on home insurance coverage to take the guesswork and sticker shock out of the equation. Determine the type of coverage you need and how to find the best price for home insurance so you can shop with confidence.
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Average Cost of Home Insurance by Dwelling Coverage Amount
Dwelling coverage is one of the most important coverages you can have in your home insurance policy. If you have a claim with structural damage, the home insurance company will pay to rebuild or replace the home. Through the data collected for the study, MoneyGeek found that the typical home insurance policy for $250,000 dwelling coverage in 2021 has an average annual premium of $1,979, or $165 per month (plus installment fees set by the insurance carrier).
If you double your dwelling coverage your policy will cost almost twice as much. The average cost for a policy with $500,000 in dwelling coverage is $3,519 per year, or $293 per month.
How Much Home Insurance Costs by Dwelling Coverage
How Much Will Home Insurance Cost You?
Home insurance cost varies widely throughout the country and even throughout each state. Our calculator can help you find average rates that best approximate the cost of insurance where you live.
Many different factors determine the annual cost of home insurance, including:
- Location (state and ZIP code)
- Dwelling coverage amount
- Personal property amount
- Other structures on the property (shed, barn, pool, fence, etc.)
- Claims history (both personal and at the home’s address)
- Add-ons or endorsements
- Deductible amount
MoneyGeek’s study determined the average national cost of dwelling coverage to be $2,103 annually or $175 per month, based on a combination of each state's average dwelling coverage. Each state has a different average amount, so your state could be well below or above the national rate.
Comparing personalized insurance quotes from different companies based on the home’s location, household information and home insurance coverage needs is the best way to know how much you’ll need to pay.
Average Cost of Home Insurance by State
The location of your home is a big factor in determining the cost of home insurance. The average cost of home insurance varies by state and city. In MoneyGeek's study, Delaware has the cheapest dwelling coverage premium with an average annual cost of $717, or $59.75 per month, for a baseline coverage amount of $250,000. Meanwhile, Tennessee has the highest price point at $3,466 annually, or $288.84 per month.
Average Home Insurance Rates by State
Average Cost of Home Insurance by Company
The company you choose will also be a significant factor affecting the cost of homeowners insurance. MoneyGeek found that the cheapest major home insurance company, Allstate, charges an average of $146 per month, while the most expensive, Farmers, charges an average of $171 per month.
When looking for the best homeowners insurance you should consider more than just cost, but if you’re focused on affordability you could save hundreds of dollars per year by shopping around.
Average Cost of Home Insurance by Company - $250K Dwelling Coverage
Average Cost of Home Insurance by Deductible Amount
A home insurance deductible is the amount you will pay toward a covered claim. For example, if you have a home deductible of $1,000 and a covered claim of $10,000, you're responsible for $1,000 and the insurer will pay the remaining $9,000.
When choosing a home insurance deductible, the higher the deductible, the less you will pay in annual premiums. A higher deductible means the insurance company pays less per claim, and it discourages insureds from filing lower-value claims. These factors add up to premium savings for the homeowner.
However, be sure you can afford to pay the deductible amount at any time in case you have to file a claim. It’s nice to save on premiums with a $2,500 deductible, but not if you aren’t able to pay the first $2,500 if your home is damaged.
Review the table below to see examples of how your premiums will increase as your deductible decreases.
Average Annual Home Insurance Cost by Deductible
What Factors Have the Most Impact on Your Home Insurance Cost?
Insurance companies save money by mitigating risk. The riskier it is to insure a home, the more the insurance policy costs. Some factors — like the home’s age and claims history — matter more than others when determining pricing. Here are some of the criteria insurers use to determine the price of a policy:
- Coverage Type: Replacement cost on the dwelling and contents is more expensive than actual cash value, but it’s worth it to not have to pay for depreciated value if you have a claim.
- Home Location: The home’s location matters. The more dense the population and the higher the frequency of weather-related events, the more expensive the base rate will be for that area.
- Dwelling Coverage Amount: One of the biggest factors is the dwelling coverage amount. The more value your home has, the more expensive it will be to repair or rebuild, and the more you will pay in home insurance cost.
- Personal Property Coverage: The basic home insurance policy automatically provides 70–75% of the dwelling coverage as personal property coverage. This is built into the cost but can be increased independently if needed. Personal property coverage is the most significant factor in renters insurance costs, much like dwelling coverage is for home insurance.
- Deductible Amount: The higher the deductible, the lower the premium cost, but the more you have to pay out of pocket if you file a claim. Check deductible options to see if the premium savings is worth the higher deductible amount.
- Age of Home: The older the home is, the more likely it is you’ll file a claim, and the more expensive the payout will be for repairs or replacement. Updating the roof, heating and cooling sources, electrical and plumbing could lower the home insurance costs on an older dwelling.
- Credit Score: Most states allow insurers to use your credit history when determining your home insurance premium. The only states that don’t are California, Maryland and Massachusetts.
- Frequency of Claims: The more claims you file, the higher the cost for home insurance. Claims typically stay “chargeable” for 3–5 years and follow you from company to company and house to house. Be smart about filing claims, avoid filing inexpensive claims and mitigate damage before a weather event is forecast to keep your claims frequency as low as possible.
- Other factors: These factors are less impactful but are still used to determine your rate: roof type and age, pool, aggressive pets, security systems and proximity to the nearest fire department.
FAQs About the Cost of Home Insurance
Many factors impact the cost of home insurance. Most are specific to the home, while some are based on your personal information and claims history. Here are answers to the most common questions asked about the cost of home insurance.