5 Things That Impact the Average Cost of Home Insurance

If all things are equal in the level of coverage and policy limits like the insured dwelling value, there are still several factors that affect how much you pay on your home insurance. These are five additional factors that determine the premium of house insurance aside from coverage limits on the declaration page of your insurance policy:

Location: What the claims experience and risks or perils are in your neighborhood.

Personal insurance score or credit scoring: This can make a huge difference in price.

Discounts you personally qualify for: Find ways to Lower Your Home Insurance Costs

Coverage options you choose: For example, All risk vs. Named perils, or if you have Actual Cash Value or Replacement Cost coverage.

Deductible: How much of the insurance risk you take on yourself, vs. the insurance company? You can use your insurance deductible to save money on your insurance in many cases, which would lower your cost compared to the national average.

Average Cost of Home Insurance By State

Understanding what the average cost of home insurance in your area is important because the rates vary based on a number of factors. Here are the average costs of home insurance by state compared to the average cost of renter insurance, based on data from the Insurance Information Institute Fact Sheet. The map below shows a breakdown of home insurance and renters insurance by state. Hover over each state to see its figures.

The Top 5 Most Expensive States for Home Insurance

1. Louisiana

2.Texas

3. Florida

4. Oklahoma

5. Kansas

The 5 Least Expensive States for Home Insurance

1. Oregon

2. Utah

3. Idaho

4. Nevada

5. Wisconsin

The Kind of Coverage Average Home Insurance Cost Is Based On

It is important to note that this coverage is based on an All Risk on building, but named perils on contents policy form. This means that it is not the best coverage available, only a standard coverage as seen in an HO-3 policy. An all risk on building and contents policy is a better form of insurance and will cost more.

The Real Value Your Home Will Impact Cost of Insurance

If you are in a neighborhood with homes that have higher than average reconstruction cost value or dwelling value, then the national or state averages may be way off what you are paying. For example, if the average cost is $1918, but this is for a $200,000 home, then you can not reasonably expect to be paying close to an average price on home insurance if your home reconstruction value is $500,000 or over $1,000,000. If you aren't sure of the value of your home for insurance purposes, insurance companies will sometimes provide a home inspection, especially if you are with a high-value home insurance company that specializes in higher than average value homes.

Examples of Why Home Insurance Pricing Could Be Lower or Higher in Some Areas

Lower levels of crime in the area

Less severe weather patterns, such as flooding, hurricanes, snowstorms, windstorms, etc.

Lower incidents of lawsuits for liability risks

Newer construction or well-maintained homes

Updated infrastructure (water service pipes, sewer lines, etc) avoiding water claims.

Depending on the average age of homes in your area, and the condition of the infrastructure of your county, costs of home insurance may be higher than average if for example the city sewer lines are older, and are causing more water damage claims.

Another example is if all the homes in your area are older than average, then the claims may be higher driving the cost of your insurance up. A home built in 2015 will have less chances of leaky roofs or other problems than one built in the 1960's that hasn't had renovations. Usually certain areas are built around the same time, so the zip code you are in will have data associated with it at the insurance company level, and even though you may have a solid home, if the general loss experience (claims paid) in the area is heavier for certain claims, the rates for insurance in that area may be higher.