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What Is A Homeowners Insurance Premium? – Forbes Advisor

What Is A Homeowners Insurance Premium? – Forbes Advisor

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.

What Is a Homeowners Insurance Premium?

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.

What Does Home Insurance Cover?

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.

How Much Does Homeowners Insurance Cost?

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.

Average homeowners insurance premiums by state

StateAverage annual premium

Alabama

$2,236
Alaska$1,247

Arizona

$1,495

Arkansas

$2,595

California

$1,171

Colorado

$2,761

Connecticut

$1,614

Delaware

$1,026
District of Columbia$1,118

Florida

$2,173

Georgia

$1,632
Hawaii$558
Idaho$1,073

Illinois

$1,812

Indiana

$1,517
Iowa$1,729
Kansas$3,035

Kentucky

$2,376

Louisiana

$2,988

Maine

$1,035

Maryland

$1,241

Massachusetts

$1,474

Michigan

$1,602

Minnesota

$2,000

Mississippi

$2,899
Missouri$2,504
Montana$1,990
Nebraska$3,309
Nevada$1,083

New Hampshire

$961

New Jersey

$978

New Mexico

$1,724

New York

$1,226

North Carolina

$2,452
North Dakota$2,086

Ohio

$1,177

Oklahoma

$4,122

Oregon

$834

Pennsylvania

$1,079

Rhode Island

$1,326

South Carolina

$1,599
South Dakota$2,571

Tennessee

$1,747

Texas

$2,827
Utah$817

Vermont

$944
Virginia$1,292

Washington

$1,221
West Virginia$1,426

Wisconsin

$1,078
Wyoming$1,423

How Are Homeowners Insurance Premiums Determined?

Here are factors insurance companies typically use to determine a home insurance premium.

Your home’s characteristics

Your home’s location

Where you live is another important factor in premiums, including:

Coverage selections

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?

Deductible amount

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.

Other factors in home insurance premiums

Here are some other common cost factors used for setting home insurance premiums:

How Do I Pay My Homeowners Insurance Premium?

You can typically pay for home insurance premiums in two ways:

How Do I Buy Homeowners Insurance?

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:

What Is A Homeowners Insurance Premium? – Forbes Advisor

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

Cheap Home Insurance by Company

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.

CompanyAverage annual premium
Progressive$1,236
Lemonade$1,461
Auto-Owners$1,518
USAA$1,667
Erie$1,668
Nationwide$1,724
American Family$1,731
State Farm$1,836
Allstate$1,910
Farmers$2,019
Chubb$2,055
Country Financial$2,410
Travelers$2,871

Find the Best Homeowners Insurance Companies Of 2022

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Homeowners Insurance Premium FAQ

Do I need home insurance?

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

Who has the cheapest home insurance premiums?

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.