The latest home insurance report from the National Association of Insurance Commissioners says that the average cost of home insurance is $1,192 per year.
Based on the most common type of policy, called a HO-3 policy, the average cost of homeowners insurance is highest in Texas and Florida. The average cost of home insurance is the least in Utah and Oregon.
The average cost of home insurance varies by state and by how much insurance is bought. When you get quotes for home insurance, you want a policy that covers the cost of building your home from scratch. That's an amount for the worst-case scenario, like a fire or tornado that completely destroys your home. You can use the map below to find out how much home insurance costs on average in your state.
To figure out how much it would cost to rebuild your home using your homeowner's insurance, multiply the square footage of your home by the cost per square foot of building in your area. Your agent for home insurance can help you figure out how much insurance you need.
According to the most recent survey by the National Association of Home Builders, it cost an average of $237,760 to build a single-family home in 2017.
Do you pay your home insurance every month or once a year?
Depending on your mortgage lender and home insurance company, you might be able to pay for your home insurance in a lump sum once a year, in monthly payments, or by having the money taken out of your escrow account.
If you pay for home insurance through an escrow account, your mortgage lender may pay your annual premiums on your behalf. The 2018 home insurance report from the National Association of Insurance Commissioners says that the average cost of home insurance per month is $99.33.
Does your mortgage payment cover your homeowners insurance?
Some mortgage companies add the cost of homeowners insurance to your monthly payment. This is done by putting money into an escrow account to pay for your home insurance. You'll put money in your escrow account, and your lender will use the money to pay things like your mortgage payment, property taxes, and home insurance.
Depending on your mortgage lender, you may need to set up an escrow account. If escrow is not required, you may be able to "waive" it and pay your home insurance directly to the company.
Remember that your homeowners insurance is different from private mortgage insurance (PMI). PMI is usually required for home buyers who can't make a 20% (or more) down payment. It protects the mortgage lender, not you, in case you stop paying your mortgage.
Why does my insurance for my house go up every year?
There are many things that could cause your home insurance rates to go up every year, like making a claim, getting a dog, or putting in a swimming pool.
But you can't do anything about some things. For example, the cost of labor and materials can go up if you need to rebuild or fix your home, which can cause your home insurance rates to go up. The Associated General Contractors of America says that between December 2017 and December 2018, the cost of goods and services used in construction went up by 3.8%.
Rates can also go up if disasters in your area have caused a lot of claims from other people.
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How are rates for home insurance set?
Home insurance companies figure out your rate based on information about you and the house. Among these are:
The price of rebuilding the house.
How old the house is (newer homes can be cheaper to insure).
How safe your town is from fire (called a Public Protection Classification from ISO).
Claims in your neighborhood or area (for example, frequent weather-related claims).
How much insurance you need and how much you want to pay out of pocket.
Your past claims for home insurance.
Your score (banned for use in home insurance rates by California, Massachusetts and Maryland).
How can I cut the cost of my home insurance?
There are a number of ways to lower the cost of home insurance, such as:
Compare quotes from a few companies to find a good deal on home insurance.
Raise your deductible, which is the amount that is taken out of a check for a claim.
If you bundle your home and car insurance, you can save money.
Ask your insurance agent if there are any other discounts, like discounts for having a security system.
If you can, try not to make any claims on your home insurance. Don't make claims for small problems because that could cause your rate to go up when it's time to renew.
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