Average home insurance rates can vary a lot, depending on where you live, your deductible amount and Home made out of dollar billsthe amount of coverage you need. That’s why it’s important to have as much detailed information as possible when planning the home insurance basics for your budget.
How much does home insurance cost?
Below you will find average home insurance rates by ZIP code for 75 different coverage levels. Enter in your ZIP code, then select dwelling coverage, deductible and liability amounts and you’ll get the average homeowners insurance cost for your neighborhood and desired policy limits. Further below we explain how to choose the best limits to ensure sufficient coverage. You can get a customized rate so you know what to expect to pay and can see how much you can save by comparing home insurance companies.
There are many variables to consider when buying homeowner insurance, but you typically start by deciding the coverage amount for the following:
The limits of your coverage for the following are typically a set percentage of your dwelling coverage limit as shown below:
other structures – 10 percent
personal property – 50 percent (you choose between replacement value or actual cash value)
loss of use – 20 percent
How much dwelling coverage do I need?
When buying homeowners insurance, you should get enough dwelling coverage to match the full replacement cost of your home. The cost to repair damage to your home or rebuild it completely at equal quality — at current prices – is the replacement cost. Figuring out how to calculate home replacement cost can be a challenging task, but can be done by making a thorough inventory of building materials used for your home, using online calculators, or, you can hire an appraiser to do it for you.
How much liability coverage do I need?
Liability insurance provides a financial safety net for the household. It pays out when you and your family members are legally responsible for others’ injuries or property damage. That’s to say, it covers the medical expenses of people who are hurt while in your home or on your property, as well as damage caused to neighbors’ property. Personal liability also covers legal fees if you are sued, as well as any resulting judgments from a lawsuit, up to your policy limits.
Most home insurance policies come with $100,000 in personal liability insurance but this is rarely enough coverage. The cost to defend a lawsuit or to pay for medical expenses for a serious injury can easily exceed that amount. Most experts recommend upping your limits to at least $300,000.
What is medical payments for others and how much do I need?
Medical payments coverage pays for injuries to guests in your home, regardless of who is at fault. Medical payments differs from liability insurance in significant ways, primarily in that it is for minor incidents and comes in very low limits of $1,000 or $5,000. The latter amount of $5,000 is recommended.
What deductible amount should I choose?
The deductible your share of the repair cost when you file a claim. Your home insurance rate will be lower if you choose a high deductible. If you have a $500 deductible, you’re going to pay more on your premiums than if you have a $2,000 deductible.
Going with a higher deductible will save you money. It will also reduce your home insurance claims. That’s why it’s important to know the trade-off you’re making – and be comfortable with it — when choosing a home insurance deductible.
Average home insurance rates by ZIP code
The highest homeowners insurance rates in the nation belong to ZIP code 33050, home to Conch Key, Florida, according to Insurance.com’s analysis of average rates for nearly every ZIP code in the country.
ZIP codes in Venice, Louisiana and Pascagoula, Mississippi rank second and third, respectively, behind Conch Key, for the following coverage:
$200,000 in dwelling coverage
$100,000 liability coverage
Rankings for the priciest ZIP codes were determined by identifying the ZIP code with the highest average rate for home insurance in each state and then listing them in descending order. For the cheapest ZIP codes, rankings were determined by identifying the ZIP code with the least expensive average rate for home insurance and then listing them in ascending order. Insurance.com’s analysis showed a national average rate of $1,228 for $200,000 dwelling coverage with a $1,000 deductible and $100,000 in liability.
How home insurance rates are set, and why they vary by location
Home insurance companies assess many factors when setting rates. Rates can fluctuate significantly from state to state, or even neighborhood to neighborhood, depending on how insurers assess the various things they look at to calculate your rate. The biggest factors influencing the cost of homeowners insurance are:
Your home’s location, which reflects its exposure to hazards, such as storm damage, wild fires, burglaries and so on
Your home’s value
The cost to rebuild your home if it were completely destroyed
Local construction costs, which account for building materials availability and price, building regulations, among other factors.
Your home’s age
Risk exposure on your property, for instance, from a swimming pool, trampoline, guest house or aggressive dog breed
Your neighborhood’s fire protection rating, or, how close your home is to a fire station
Your personal and neighborhood claims history, as well as the previous homeowner’s claim history
Your insurance score, which is based, in part, on your credit score (only two states don’t allow this – Maryland and Hawaii)
For more information on how homeowner premiums are determined, review some of the main factors affecting your home insurance rate.
Reasons why rates are so low in some areas
While Hawaii ZIP 96813 has the lowest average rate in the nation, dozens of other Hawaii ZIP codes are also among the cheapest in the country. So, why does Hawaii have such low home insurance rates? It may be that standard home policies in Hawaii do not absorb high claims costs for hurricane damage.
“One major factor in Hawaii is the fact that most standard homeowner insurance policies do not cover hurricane damage. Hurricane Iniki, which hit in 1992 did so much damage that the majority of insurers excluded hurricane damage from their coverage. Homeowners in Hawaii now have to purchase a separate hurricane damage policy,” says Michael Barry, spokesman for the Insurance Information Institute.
Barry also points to Hawaii’s underwriting laws, which prohibit the use of credit ratings. “The fact that Hawaii does not consider credit ratings could also be a factor,” he says, “but probably has a bigger impact on car insurance rates than homeowner premiums.”
Boise, Idaho rates are low compared to the rest of the country, in part, because of the following factors, says Jim Baxter, owner of Baxter — Newell Insurance Service in Garden City, Idaho:
Few major weather related losses.
A low crime rate.
Relatively few major liability lawsuits filed.
Many well organized neighborhood watch groups.
Barry agrees, saying, in general, that “Neighborhood watches are a factor that would be consider by insurers and can have an impact on rates. These groups help prevent vandalism and theft leading to fewer claims, and lower rates.”
He says that typically rural areas and cities with low population density will have lower home insurance rates. That’s because the cost to rebuild tends to be more affordable and insurers consider that when setting rates.
“Factors that tend to lower rates are often the reverse of factors that increase rates,” says Barry. “Low chance of natural disasters, smaller population, and lower building costs will all positively impact homeowner insurance rates.”
The ability of an area to successfully fight fires can impact rates as well. Well-placed fire stations with professional firefighters on staff improves a city’s rating and can reduce insurance costs over the long term, according to Barry.
Reasons why home insurance rates are so high in some areas
It’s likely no surprise that many of the most expensive ZIP codes for home insurance are in states that experience lots of severe weather. The most expensive ZIPs in Louisiana, Mississippi, Alabama, Texas, South Carolina and Massachusetts are all coastal areas prone to catastrophic storms that are costly to insurers, who then pass that cost to homeowners. Texas, Kansas, Oklahoma, Florida, Alabama and Mississippi have lots of tornadoes as well.
Naturally, the more claims paid out by insurers for damage due to wind, hail and flooding, the higher home insurance rates will be for everyone.
“Homeowner rates are based on actual and anticipated losses across the state so if a state is prone to natural disasters, it will push up the cost of insurance for everyone in the state,” says Barry. “It will have the biggest impact on areas where natural disasters tend to hit most often, coastal areas for example.”
For Florida in particular, there are also other issues. Aside from severe weather including tornadoes and hurricanes, Florida is seeing higher rates due to the frequency and severity of water claims associated with an Assignment of Benefit, according to the state insurance department.
Unfortunately, rates in Florida are also affected by a widespread scam that has resulted in insurers paying out inflated claims rather than going to court. Less than honest contractors ask homeowners to sign an Assignment of Benefits (AOB) form, which basically puts the contractor in charge of their claim as it assigns the benefits of their policy over to the contractor.
The shifty contractor then submits an inflated claim and demands payment. If your insurance company denies the claim because they feel it is inflated, a shifty trial lawyer (who has partnered with the contractor) sues the homeowners insurance company for payment, all of which can be done without the homeowner’s approval.
In most cases, insurers pay the inflated claims as it is cheaper than going to court. The cost of all of these inflated claims has led to increases in premiums for everyone in Florida, all due to fraud. According to The Consumer Protection Coalition, Florida AOB lawsuits have increased 90,000 percent since 2000.
Choosing a home insurance company
With every type of insurance coverage, it’s true that the cheapest policy isn’t always the wisest choice. You want an insurance company that is financially healthy and that has a good reputation for service.
Insure.com’s annual Best Home Insurance Companies ranking also lists top insurers. Here are the top 10, based on a survey of 3,700 customers, asking them about customer service, claims processing, value for price and if they would recommend the company and would renew their policy:
Whether you own a home already or you’re house-hunting, it’s wise to know average home insurance rates for your state so you can anticipate what your expense is when shopping your policy and creating a family budget. Knowing what you can expect to pay also helps you save money when comparing rates because you can more easily flag rates that are above the average home insurance cost for your area.
Factors that shape home insurance rates – in detail
Home insurance companies analyze potential risk when devising home insurance rates.
Many factors affect home insurance rates. Here’s a look at what impacts home insurance rates:
Your home’s age — Older homes have older wiring and plumbing so they are a bigger risk of causing a fire or flooding a basement.
Your home’s building materials — Insurers consider a wood-framed home a greater risk than a home made of brick. Fire, wind and pests can cause more damage to a wooden home compared to a brick structure.
Your home insurance deductible — Insurance companies like higher deductibles because it means you’re less apt to file a claim and will pay more for repairs if you file a claim.
Your homeowners insurance discounts — Insurance companies offer dozens of discounts. Three of the largest discounts are bundling your home with other types of insurance, such as auto; loyalty, which is staying with an insurance company for at least a few years; and being claims free for a period of time. Note: Insurers usually have a cap on the percentage of discounts you can receive. The limit is often set at 25 percent.
Your home’s claims history — The claims history includes both your filed claims and ones that previous owners filed. If you file more than one claim in a 10-year period, you can expect your insurance rates to increase. They’ll increase even more if you file more home claims. That could even cause your insurance company to drop you because you’re considered too much of a risk.
Credit history — Nearly all states allow insurers to consider a person’s credit history when devising a home insurance premium. Insurance companies say that credit history is a good indication as to whether a person will file claims.
Once an insurer compiles that information, it is able to create a home insurance rate. An insurance company first looks at the home’s perceived risk, the home’s location and the homeowner. An insurer then reviews filed claims and adds surcharges to the rate. They lastly subtract applicable discounts. The result is your home insurance premium.
Location plays an important role in the cost of home insurance
Location is one of the biggest factors in your home insurance rates.
Insurers consider many factors when judging location:
Weather (areas that experience more natural disasters will likely have higher premiums)
Nearness to an area that could lead to claims, such as woods (fire risk) or dangerous roads or intersections (cars crashing into your living room)
Proximity to a fire department and fire hydrant
Claims history for the area
Home insurance companies base rates in part by location, which can go well beyond the state level, said Burl Daniel, CPCU, CIC, CRM, Property and Casualty Insurance Expert Witness, in Fort Worth, Texas.
Daniel said that generally speaking, insurers base rates and premiums on a home’s COPE:
Protection (fire department rating)
Exposure (residential vs. commercial neighborhood)
One part of a state might have higher rates because there is more crime. Or another part of the state may have lower rates because severe weather losses are less frequent.
For instance, someone who lives in New England near the ocean might not get as much snow as someone 25 miles inland. So, the person along the coast with less snowfall may pay less due to a lower risk of freeze losses. Or, on the other hand, if that person lives right along the coastline, he may pay more because of increased risk of ocean windstorm-related damage.
«It’s not one size fits all,» said Daniel.
Living near a full-time fire station with a nearby hydrant plays a role in your home insurance rates. The reason an insurer wants a home near a fire department and hydrant is that there is less chance of your home burning down if you live near a fire station. Having a hydrant nearby also means that firefighters can start battling a house fire faster than if the hydrant is down the street — or even miles away.
If you live in the part of the country with brutal, frigid winters, you will likely pay more for your insurance. Not only because rough winters can cause damage from snow and ice, but also frigid temperatures can cause frozen pipes and flooded basements.
Insurance Information Institute said that water damage and freezing caused nearly 34 percent of all losses in 2014.
Areas prone to wildfires can also have higher rates. Major wildfires aren’t just contained to areas that don’t get much rain like Southern California. Wildfires have destroyed thousands of acres in the Pacific Northwest and Tennessee in recent years. Those areas will likely see their home insurance rates increase.
Weather-related claims are often the most frequent, according to III. Here are the top five most frequent claims:
Wind and hail
Water damage and freezing
Vandalism and malicious mischief
Fire, lightning and debris removal
Water damage and freezing are the highest total dollar amount for claims. The most expensive homeowners insurance claims by incident are:
Fire, lightning and debris removal
Bodily injury and property damage
Wind and hail
Water damage and freezing
Vandalism and malicious mischief
III said about one in 15 insured homes has a claim each year and about one in 30 insured homes has a property damage claim related to wind or hail each year.
One way to keep your insurance rates down is to not file claims. That might sound counter-productive. You have insurance so why shouldn’t you take advantage of it, right? Wrong.
More claims mean higher insurance premiums and can cause your insurer to drop you.
Here’s one way to make sure that you don’t file too many claims — raise your deductible. The deductible is what you have to pay for repairs after filing a claim. The insurance company picks up the rest of the repair costs. An added benefit — raising your deductible will also decrease your home insurance premium.
If you decide to increase your deductible, make sure you set aside enough money to pay for the higher deductible in case you have to file a claim.
Risky areas to insure a home
Insurance companies review claims from an entire neighborhood when devising rates. Insurers gauge risk by looking at the number of burglaries, vandalism and weather-related claims in an area. Insurance companies usually use zip codes when gauging an area, but your neighborhood and even your street can influence your home insurance rates.
Daniel said insurers may deem a high-crime neighborhood or ones without a nearby full-time fire department and nearby fire hydrants as high risk.
When an insurer perceives higher risk of loss, it may only offer limited policies or policies with limited perils coverage and/or higher deductibles so there is less chance of claims due to increased risk of loss.
If it’s bad enough, an insurer can say the risks are too high and may not write a homeowners insurance policy, said Daniel.