How Much Does Home Insurance Cost, on Average?

© 2009, Brandon Cornett. All rights reserved.

Reader Question: “We are shopping for a homeowners policy, but we have no way to validate the quotes we are getting. How much does home insurance cost on average? What can we expect to pay?”

In the United States, the average home insurance policy has a premium of about $800 per year. This cost will vary based on two key factors — your location, and the value of your home. Florida (hurricane territory) is one of the most expensive states for homeowners insurance, with the average premium exceeding $1,400 per year. Delaware is one of the most affordable, with an average premium of about $550 per year. These numbers come from the Insurance Information Institute.

You can lower the cost of your home insurance premium by increasing the deductible amount. Many financial experts recommend this. The logic is that many homeowners never even make a claim against their insurance policy, so they never have to pay a deductible of any kind. But you know for sure you’ll have to pay the premium every month / year, so you might as well minimize them. For example, if you increase your deductible from $500 (an industry standard) to $1,000, you could save up to 25% on your premium each year.

Some companies will lower your home insurance premium if you have an alarm system on the house, deadbolt locks, smoke detectors, etc. Ask about discounts when you are shopping for a policy. Some companies give discounts to retirees, or people over a certain age.

Your credit score may factor into this process as well. These days, a lot of insurance companies use credit scores when establishing the cost of a policy. So having excellent credit could lower your premium costs as well.

Lastly, you should look into flood insurance. This does not come with most homeowners policies — it has to be added on as a “rider” or a separate policy. You can learn more about this by visiting FloodSmart.gov.

I hope that answers your question. Remember, shop around for the best policy. Ask about discounts. Consider a higher deductible to lower your premium. And find out exactly what your home insurance does and does not cover. Good luck.