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The average sales price of a new single-family home in the U.S. in 2020 was $391,900, according to the U.S. Census Bureau. For most homeowners, your home is your biggest investment. The best way to protect that investment from disasters like fires and tornadoes is with homeowners insurance.
A homeowners insurance premium is the amount of money you pay to keep your home insurance policy active. You can typically pay your home insurance bill monthly, quarterly or annually.
If you have a mortgage, your lender might require you to have home insurance and roll your home insurance premium into your mortgage payments.
A standard home insurance policy (called an HO-3) covers your house for any type of damage that’s not specifically excluded. Damage from fire, smoke, wind and more is covered. It also covers attached and unattached structures on your property.
A standard home insurance policy covers your personal belongings for specific “perils.” Tornadoes, explosions, fire, theft and vandalism are just some of the problems covered by home insurance.
You’ll also have coverage for other types of problems, such as:
Home insurance doesn’t cover every problem. For example, common exclusions found in an HO-3 include earthquakes, water damage from floods, sewer back-ups, sinkholes and wear and tear.
Nationwide, the average annual homeowners insurance premium with $300,000 in dwelling coverage is $1,729, according to a Forbes Advisor analysis of home insurance rates. Your costs will depend on several factors, including the cost to rebuild the home, the age of the home, your location and other factors, like your claims history and how much coverage you choose.
|State||Average annual premium|
|District of Columbia||$1,118|
Here are factors insurance companies typically use to determine a home insurance premium.
Where you live is another important factor in premiums, including:
The amount of coverage you choose will play a major role in determining your homeowners insurance premium. Generally, home insurance can be broken down into these main coverage types:
You can also choose additional coverage types to fill any coverage gaps that a standard home insurance policy doesn’t cover, such as:
Related: How much home insurance do you need?
You’ll choose an insurance deductible when you purchase a policy. The deductible is the amount taken out of your insurance check if you make certain claims, like a theft claim. Common deductible amounts are $500 and $1,000 but can be more.
Generally, the higher your deductible, the less you’ll pay in home insurance premium. That’s because your insurance company will pay out less money if you file a claim.
Here are some other common cost factors used for setting home insurance premiums:
You can typically pay for home insurance premiums in two ways:
The best way to buy home insurance is to compare quotes among multiple companies. That’s because prices can vary drastically for the same type of coverage from company to company.
You can get free home insurance quotes:
Don’t forget to ask about discounts. You can often find savings for home security features, loyalty discounts, having a new house, paying in full and by bundling your auto and home insurance.
Related: 10 ways to get cheap homeowners insurance
Here are the average annual premiums for large insurance companies. Keep in mind, your costs will vary depending on several factors, such as the cost to rebuild your home and where you live.
|Company||Average annual premium|
If you have a mortgage, your lender will most likely require you to have homeowners insurance.
But even if you’ve already paid off your home, home insurance is a good idea. Without it, you’ll be stuck paying out-of-pocket to repair or rebuild your home if a problem like a fire damages it.
Related: New homebuyers guide to home insurance
Nationally, we found that Progressive has the cheapest home insurance premiums at $1,236 per year for $300,000 in dwelling coverage. But your rates will vary depending on the cost to rebuild your home, where you live, how much coverage you choose and other factors.
The best way to find cheap home insurance where you live is to compare home insurance quotes from multiple insurers.