How much is homeowners insurance?

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.

When buying a homeowner insurance policy, you decide the coverage amount for the following: Dwelling / Liability / Medical payments

The limits of your coverage for the following are typically a set percentage of your dwelling coverage limit as shown below:

·         Other structures – 10%

·         Personal property – 50%

·         Loss of use – 20%

You also choose a home insurance deductible amount, which applies to claims for damage to your home or belongings, but not if you’re sued or a medical claim is filed by someone injured in your home. Deductibles usually come in the amounts of $500, $1,000, $1,500, $2,000 and $2,500. The higher your deductible, the lower your rate.

You should buy enough dwelling coverage to match the full replacement cost of your home. It's a good idea to get at least $300,000 of liability coverage to ensure enough coverage. 

Learning how to calculate your home replacement cost or value is important, because the amount helps you determine how much dwelling coverage to buy. Figuring out an accurate replacement cost can be done by using online tools, calculating it yourself or an appraiser.

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. The nationwide average annual cost for home insurance for common coverage levels, based on a rate analysis by


·         $1,228: $200,000 dwelling with $1,000 deductible and $100,000 liability coverage

·         $1,244: $200,000 dwelling with $1,000 deductible and $300,000 liability coverage

·         $1,737: $300,000 dwelling with $1,000 deductible and $300,000 liability coverage

·         $2,252: $400,000 dwelling with $1,000 deductible and $300,000 liability coverage

·         $2,790: $500,000 dwelling with $1,000 deductible and $300,000 liability coverage

·         $3,295: $600,000 dwelling with $1,000 deductible and $300,000 liability coverage

Factors that shape home insurance rates

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. A higher deductible 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. #DIA

Posted 4:00 PM

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