Why is homeowners insurance so expensive?

The software and data that each company uses is actually a heavily guarded secret. That said, there are a couple reasons you could be paying higher premiums. It could be based on where you live, the value of your home, or your deductible. (It’s always good to check what homeowners insurance you currently have by looking at your insurance declaration page .)

Why did my home insurance go up?

Supply chain shortages and rising labor costs over the last few years have made new construction more expensive. By extension, home insurance carriers have been forced to raise their premiums to stay in business. There are also plenty of other factors that can raise a premium, including the number of past claims you’ve made, the possibility that claims in your area have increased generally, or if you requested to lower your deductible.

Does my home insurance cost affect my mortgage payment?

It is possible to lose your mortgage if you don’t maintain homeowners insurance coverage. So keep up with your payments! But sometimes your coverage can get cancelled and it’s not your fault—like if your insurance carrier reevaluates and decides your area is too risky to insure. If that happens, get in touch with your mortgage lender immediately and let them know the situation. Try to get a new insurance policy in place as quickly as possible , because your lender may buy it for you if they decide you’re not acting fast enough—and that stuff is usually around five times as expensive as insurance you buy on your own.

Is home insurance cheaper if you pay yearly?

Typically, it is cheaper to pay your home insurance annually instead of monthly. By paying once a year, the carrier will get all their cash from you at once, and they like to get paid. For that reason, you’ll probably get a discount for choosing annual payments. Be sure to ask your insurer if they offer a discount for setting up an annual premium. No matter which premium frequency you choose, be sure to plan your budget accordingly. Forgetting about a big annual payment could really do a number on your emergency fund!

How can I save money on homeowners insurance?

There are several steps you can take to save on homeowners insurance. Many companies will give you a break if you bundle coverage with other insurance policies (auto is a popular choice here) or add locks and alarms to your home. Paying out of pocket for small repairs is also wise, since too many claims will send your premiums up. Consider going with a higher deductible as well and use your emergency fund to cover it if needed. And, of course, you should regularly check to see if another company can get you a better rate. RamseyTrusted insurance pros are a great way to explore that possibility.

What does homeowners insurance cover?

A typical homeowners insurance policy addresses five basic things: dwelling, other structures, personal property, personal liability, and additional living expenses—that means emergency housing costs in the event your home is destroyed and you have nowhere else to stay. Thankfully, homeowners insurance helps you cover those expenses.

How Much Is Homeowners Insurance?

15 Min Read | Nov 26, 2024

By Ramsey Solutions

Reviewed by Brandon Smith

By Ramsey Solutions

Reviewed by Brandon Smith

How Much Is Homeowners Insurance?

Your home is a really nice place—it’d be a shame if something happened to it, right? All it takes is one kitchen fire, burglar or severe hailstorm to do serious damage to your castle and your finances. Some protection from a homeowners insurance policy is essential! But as insurance costs rise, you’re probably wondering, How much is homeowners insurance? And can I even afford a policy?

The real question is, can you afford to go without one? We can tell you with authority the answer is no. Without homeowners insurance, you’re just one bad day away from a state of homeless bankruptcy. But when you have the right protection in place, you can rest assured that your comfy lifestyle—house, property and money—is sheltered.

Let’s look at how much homeowners insurance is, the specific averages in states and cities, the factors influencing your premiums, and some tips on lowering your costs.

What Is the Average Cost of Homeowners Insurance?

Key Takeaways

Your policy cost is based on factors like the value of your home, your insurance history, type of coverage, your credit score, where you live, and how much your belongings are worth.
Homeowners premiums are on the rise, but there are plenty of things you can do to lower your own cost and protect your home from disasters.
As real estate values keep going up, it’s important to review your home insurance coverage annually and confirm that the two numbers match.
Price isn’t everything! Working with an independent agent is a great way to be sure you can save money and buy enough coverage for your specific home and location.

What Is the Average Cost of Homeowners Insurance?

If you haven’t googled “how much is homeowners insurance” lately, this may come as a sticker shock. In 2024, the average annual premium for homeowners insurance in the U.S. is $1,582 (for $350,000 in dwelling coverage), according to data from Quadrant Information Services . (If you don’t know, dwelling coverage is the part of homeowners insurance that pays to repair or rebuild your home, and dwelling just means your house and anything attached to it.)

And looking over the state-by-state breakdown in the table below, you’ll see a wide range of average premiums—from $364 per year for that same amount of coverage in the Aloha State of Hawaii to a whopping $3,651 insurance bill in windswept Oklahoma!

If your state’s insurance rates seem high, don’t freak out! Remember that there’s more to what you’ll pay than location—and we’ll go over some things you can do to save on homeowners insurance below.

Here's A Tip

Tip: The two main things insurance companies consider when setting your property’s homeowners rates are the year it was built and the age of its roof. But here’s some good news—a few carriers have announced that they don't intend to file new rates in 2024.

Average Cost of Homeowners Insurance in Your State

One easy way to see the huge differences in homeowners premiums is to compare the average price of coverage by state. Depending where you live, you could be paying anywhere from $40 (oh yeah!) to $400 (oh no . . . ) each month!

Protect your home and your budget with the right coverage!

Check out our list to see the average costs by dwelling coverage amount in your own state.

State	Total Annual Average	$200,000Dwelling Coverage	$350,000Dwelling Coverage	$500,000Dwelling Coverage	$750,000Dwelling Coverage
Alabama	$2,293	$1,303	$1,855	$2,476	$3,537
Alaska	$1,326	$769	$1,101	$1,446	$1,990
Arizona	$1,472	$893	$1,197	$1,560	$2,240
Arkansas	$2,886	$1,692	$2,363	$3,105	$4,386
California	$1,222	$707	$995	$1,299	$1,890
Colorado	$2,463	$1,469	$2,056	$2,663	$3,666
Connecticut	$1,333	$781	$1,083	$1,438	$2,031
Delaware	$1,142	$570	$872	$1,253	$1,874
Florida	$2,389	$1,201	$1,889	$2,598	$3,870
Georgia	$2,200	$1,179	$1,768	$2,394	$3,459
Hawaii	$469	$264	$364	$498	$751
Idaho	$1,291	$734	$1,040	$1,402	$1,987
Illinois	$1,727	$1,066	$1,416	$1,837	$2,589
Indiana	$1,614	$962	$1,321	$1,727	$2,445
Iowa	$2,031	$1,106	$1,636	$2,201	$3,183
Kansas	$2,938	$1,641	$2,390	$3,176	$4,543
Kentucky	$2,607	$1,411	$2,059	$2,831	$4,125
Louisiana	$4,477	$2,271	$3,549	$4,832	$7,255
Maine	$1,224	$634	$962	$1,319	$1,979
Maryland	$1,700	$980	$1,356	$1,829	$2,635
Massachusetts	$1,417	$835	$1,138	$1,499	$2,194
Michigan	$1,747	$903	$1,382	$1,940	$2,764
Minnesota	$1,974	$1,106	$1,606	$2,162	$3,019
Mississippi	$3,636	$1,972	$2,917	$3,930	$5,726
Missouri	$2,766	$1,496	$2,221	$2,988	$4,360
Montana	$2,087	$1,312	$1,764	$2,242	$3,031
Nebraska	$4,165	$2,600	$3,556	$4,487	$6,019
Nevada	$937	$538	$745	$998	$1,466
New Hampshire	$1,055	$582	$848	$1,144	$1,647
New Jersey	$1,042	$576	$858	$1,137	$1,596
New Mexico	$1,724	$847	$1,368	$1,916	$2,766
New York	$1,341	$718	$1,060	$1,461	$2,127
North Carolina	$1,963	$928	$1,640	$2,199	$3,085
North Dakota	$1,988	$1,183	$1,656	$2,139	$2,973
Ohio	$1,215	$731	$995	$1,302	$1,833
Oklahoma	$4,510	$2,436	$3,651	$4,967	$6,986
Oregon	$992	$583	$784	$1,052	$1,550
Pennsylvania	$1,223	$699	$977	$1,325	$1,892
Rhode Island	$1,531	$899	$1,271	$1,649	$2,307
South Carolina	$1,756	$930	$1,394	$1,881	$2,819
South Dakota	$2,564	$1,434	$2,069	$2,818	$3,935
Tennessee	$1,972	$1,147	$1,563	$2,127	$3,052
Texas	$2,983	$1,632	$2,396	$3,196	$4,709
Utah	$868	$553	$691	$898	$1,329
Vermont	$1,032	$566	$845	$1,145	$1,571
Virginia	$1,306	$710	$1,021	$1,405	$2,089
Washington	$1,354	$773	$1,088	$1,446	$2,111
West Virginia	$1,583	$875	$1,280	$1,717	$2,461
Wisconsin	$1,246	$677	$1,013	$1,346	$1,947
Wyoming	$1,505	$748	$1,145	$1,623	$2,502

Data from Quadrant Information Services

Cheapest States for Homeowners Insurance

Wondering which states are the cheapest for homeowners insurance? (It’s funny to think about people deciding where to live based on the cost of insurance, but with prices spiking so high lately, we kind of understand why!)

Here's A Tip

Tip: Most insurers will give you a discount on homeowners insurance if you sign up for annual payments. Just be sure to budget for that big, once-a-year premium in a sinking fund.

Here are the top five most affordable states to insure your home by total annual average. (One reason for Hawaii’s low average cost is that insurers in that state usually exclude wind damage from standard policies, so the additional cost of a separate wind policy could bring your total Aloha State premium more in line with national averages.)

Hawaii, $469
Utah, $868
Nevada, $937
Oregon, $992
Vermont, $1,032

Most Expensive States for Homeowners Insurance

Exposure to extreme weather events like windstorms and tornadoes means homeowners in these five states are at far higher risk of damage—and their insurance costs reflect that.

Oklahoma, $4,510
Louisiana, $4,477
Nebraska, $4,165
Mississippi, $3,636
Texas, $2,983

Here's A Tip

Tip: As the cost of homeowners insurance keeps climbing, California is one of the hardest-hit states. Several major insurance companies have announced they are no longer writing any new policies there at all, and some have set annual limits on the number of policies in California.

Average Cost of Homeowners Insurance in Your City

Here’s a sample of the annual homeowners insurance premiums people pay on average in cities across America.

City	$250,000 Dwelling Coverage
Austin	$1,443
Chicago	$2,144
Dallas	$2,245
Houston	$2,046
Los Angeles	$1,432
Nashville	$2,032
Phoenix	$1,912
Pittsburgh	$1,974
Seattle	$1,144

Data from Quadrant Information Services

Average Cost of Homeowners Insurance by Company

You have a lot of companies to choose from as you shop homeowners coverage. Here are some of the average premiums.

Company	Average Annual Rate for $250,000 in Dwelling Coverage
Allstate	$1,600
American Family	$1,457
Amica	$1,429
Chubb	$2,021
Erie	$1,138
Farmers	$2,081
Nationwide	$1,375
State Farm	$1,461
USAA	$1,076

Data from Quadrant Information Services

The list is long, but don’t let the options overwhelm you! Instead of working with these companies directly (which could be expensive), we recommend working with an independent agent when you buy any kind of insurance.

Independent agents aren’t married to just one big company, so they’ll give you an honest perspective of your options along with a lot of industry knowledge. Plus, they’ll shop around for you—saving you time and helping you get the exact right coverage for your home’s needs.

Average Cost of Homeowners Insurance by Dwelling Coverage Amount

Here’s how the premiums break down according to dwelling coverage limits.

Dwelling Coverage Amount	Average Annual Rate
$150,000	$1,195
$250,000	$1,759
$350,000	$2,328
$450,000	$2,904
$750,000	$4,643

Data from Quadrant Information Services

Factors Impacting Homeowners Insurance Premiums

You’ve probably noticed the cost of everything rising the last few years—who could possibly miss it? Homeowners insurance is no exception. It’s one of the most expensive kinds of must-have insurance, and the cost to get a policy has been way up lately!

But hear this: Even if the price of homeowners insurance is high, it’s not random (and a lot of it is out of your control).

Don’t get discouraged! Understanding what drives the price of your premium can help you look for ways to save based on what you can control (and we’ll talk more about savings in a minute).

Like with any insurance, how much homeowners insurance costs you will depend on several factors like:

Your credit score
An estimate of the cost to rebuild your home
The type of coverage you want (some are more deluxe than others)
The frequency of insurance claims in your area
Your past history of homeowners claims
How much your belongings are worth

Let’s take a closer look at what affects your premiums.

Here's A Tip

Tip: As inflation hits hard on all the basics of normal life, homeowners insurance is no exception. After all, the materials needed to repair damaged homes has risen, and that is driving up costs for insurers.

Replacement Cost

The replacement cost is the amount of money your insurer expects to pay out if you ever needed to rebuild your house after a total loss—think tornadoes or house fires. Scary thought—and quite expensive! In fact, replacement cost is one of the biggest factors in determining the cost of your home insurance.

A house isn’t a one-size-fits-all purchase, and neither is the cost to replace it. Your insurer will look at everything that went into building your home: the fixtures, the cabinets, the countertops, and everything in between. They’ll also consider all the materials needed (along with the cost of labor) to put everything back in place. The nicer your place, the higher the replacement cost.

Location

“Location, location, location” is just as true of homeowners insurance as any other aspect of real estate. If you don’t believe us, scroll back up and look at those average premiums in Oklahoma and Louisiana!

We know it’s a bummer that stuff like extreme weather or high crime rates—things you have no control over—have so much impact on your homeowners insurance, but that’s the reality.

Age of Your Home

Did you just buy a brand-new house? That’s going to affect your premium in a good way, since insurers have more confidence that the plumbing and wiring will do their jobs with fewer and less frequent repairs. The opposite is true for older homes, where stuff is more likely to break and leak. So if you live in a home that’s seen better days, that’ll likely raise your rates.

Deductible and Level of Coverage

Your coverage levels and deductible amounts will affect your premium. For example, higher coverage levels and a lower deductible (which is how much you pay out of pocket before your insurance kicks in) will lead to higher premiums since a bigger payout means a bigger risk for the insurer.

Higher deductibles mean lower premiums, so it’s up to you to figure out if you’re willing to pay more out of pocket for future incidents in exchange for lower premiums today.

For example, if you have a fully funded emergency fund (congrats by the way), setting a higher deductible makes sense. After all, fixing your home usually qualifies as an emergency, and you’d have cash on hand to cover the cost of the deductible if you need to make a claim.

On the other hand, if you’re still working your way out of debt and don’t have a lot of money saved up, setting your deductible lower could be smart. That keeps your out-of-pocket costs low if you need to replace your roof or someone breaks into your home.

Construction Type

The name speaks for itself—we’re talking lumber, glass, brick, and whatever other materials you’d need to rebuild your house after a disaster. And in case you couldn’t guess, this is yet another factor that’s been affected by widespread inflation and supply chain issues.

Frequency of Claims

Do you file a lot of claims for little home repairs? Expect higher premiums. Do you have that DIY attitude when anything breaks? Say hello to cheaper homeowners insurance. That’s just how the math works.

Keep all that in mind when a repair comes up. Do you really need insurance to pay for the window your son broke with a misfired baseball? Probably not! Chances are there’s a YouTube video out there that’ll teach you how to replace it yourself after a quick trip to Home Depot.

Just be aware that every claim you file will only drive your premiums up when it’s time to renew.

Your Home’s Square Footage

Once again, math plays a big role in your premiums. Sure enough, it’s pricier to insure a mansion than a cottage, because the mansion has way more rooms and doors and floors (and johns).

Number of Residents

More people, more problems. (Kidding!) But seriously, a multigenerational family huddled up together under one roof will bring a higher risk of daily household chaos and accidents than a bachelor living alone in a small townhouse. So if you plan to have more kids—or let Uncle Bob take up residence in the guest room—don’t be surprised to see your premiums rise.

Other Factors

Phew, that is a lot of things to think about! As you’re shopping around, here are just a few more factors insurers will consider as they set your premiums:

Roof type
How far you live from fire and police stations (the closer, the cheaper)
If you own certain dog breeds (like pit bulls or rottweilers)
Your credit score
Owning a trampoline or swimming pool
The kinds of security and fire alarm systems you installed

How to Estimate the Cost of Homeowners Insurance

Whether you’re hopelessly devoted to your current home or in the market to buy, you need homeowners insurance. Having a good estimate of the cost of homeowners coverage will help you shop your policy wisely—and it could even help you think about things to look for in your next home, if that’s where you’re coming from.

There are three basic numbers you’ll need to estimate your homeowners cost (and you probably already have a pretty good sense of what those are if you read over the list of factors above).

Your house’s replacement cost
The replacement cost of detached structures (you know: fences, garages, outhouses)
The cost to replace your own valuables (furniture, clothes, jewelry, and anything else inside your home)

If you can get those three numbers, you’ll start to have a decent idea of how much homeowners insurance is going to cost you. But you’ll probably want an agent to help you put the numbers in context, and they’ll also be the smartest avenue for actually buying. And remember to review this stuff regularly so you’re fully covered.

Even if you already have homeowners insurance in place, you should reevaluate your coverage once a year to make sure you have enough coverage for your house.

How Are Homeowners Insurance Rates Changing?

Homeowners insurance rates are rising, and experts believe they’ll rise more—by as much as 30% this year.¹

The trends around home insurance cost are all moving in the wrong direction, at least from the perspective of the homeowners themselves. But companies aren’t just raising prices out of cruelty or greed. After all, costs in general are rising, and no company can stay in business without making a profit.

Here are a few of the trends that are sending premiums up.

Increased hurricanes, floods and wildfires
Inflation
Supply chain problems delaying repairs and making them more expensive to complete

To repeat: You have very little control over any of those trends. But here’s some good news: No matter how many wildfires or supply chain mix-ups strike the market, you can take proactive steps to bring the cost of your homeowners insurance down! Here are a few.

How to Lower the Cost of Homeowners Insurance

We already touched on a few of these when we went over cost factors, but here’s a fuller list of budget-friendly ways to save.

1. Beef up your safety.

You may be able to get a discount if you install deadbolt locks, burglar alarms and smoke detectors. It might not seem like much, but all those small steps to make your home safer could lead to some extra savings when it comes time to renew your policy.

2. Don’t make claims on just anything.

We’ve already mentioned this before—every insurance claim you make will probably lead to higher premiums later on. So if something breaks and you can repair it yourself, you should.

See that busted front-door hinge or sagging fence as chance to bond with your spouse or child over some shared home improvement. It’ll keep your premiums lower and make for some family memories. Win-win!

3. Raise your deductible.

Increasing your deductible is one of the fastest and easiest ways to lower your premium. Boom! But key reminder: Only do this if you have a full emergency fund in place. Saving on premiums isn’t worth seeing your whole house (and financial future) go up in smoke.

4. Bundle your insurance policies.

You’ve probably seen a thousand insurance commercials over the years talking about saving money by bundling insurance policies—and it’s true. Combining your homeowners insurance with another policy is a great way to save on premiums. Try it with your commercial, auto or umbrella policies!

5. Shop around with an independent agent.

When it comes to insurance, don’t pay more than you should or for coverage you don’t even need!

This is where our RamseyTrusted local pros really shine. They’re industry experts who understand not only the ins and outs of homeowners coverage, but even the local factors specific to insurance in your area! If anybody can help you save on home insurance, it’s these guys.

Next Steps

Figure out how much home insurance you need.
Find out whether or not you need any extra insurance, like flood insurance, hurricane insurance or earthquake insurance.
If you already have homeowners insurance, shop around and see if changing carriers can save you money.
Estimate how much you’ll need to pay.
Get in touch with a RamseyTrusted insurance pro who can do the heavy lifting for you—like gathering quotes—and help you figure out the right coverage for you.

Connect With a Trusted Pro

Methodology

RamseyTrusted uses Quadrant Information Services to analyze insurance rates for all 50 states.

Coverage A, Dwelling: $150,000, $300,000, $350,000, $450,000, $750,000

Coverage B, Other Structures: $15,000, $30,000, $35,000, $45,000, $75,000

Coverage C, Personal Property: $75,000, $150,000, $175,000, $225,000, $375,000

Coverage D, Loss of Use: $30,000, $60,000, $70,000, $90,000, $150,000

Coverage E, Liability: $500,000

Coverage F, Medical: $1,000

The rates in this article are examples and should only be used to get a general sense of how much insurance costs. Your quotes will be different. Make sure to reach out to your independent insurance agent to get the right rate for your needs.

Frequently Asked Questions

Why is homeowners insurance so expensive?: The software and data that each company uses is actually a heavily guarded secret. That said, there are a couple reasons you could be paying higher premiums. It could be based on where you live, the value of your home, or your deductible. (It’s always good to check what homeowners insurance you currently have by looking at your insurance declaration page.)
Why did my home insurance go up?: Supply chain shortages and rising labor costs over the last few years have made new construction more expensive. By extension, home insurance carriers have been forced to raise their premiums to stay in business. There are also plenty of other factors that can raise a premium, including the number of past claims you’ve made, the possibility that claims in your area have increased generally, or if you requested to lower your deductible.
Does my home insurance cost affect my mortgage payment?: It is possible to lose your mortgage if you don’t maintain homeowners insurance coverage. So keep up with your payments! But sometimes your coverage can get cancelled and it’s not your fault—like if your insurance carrier reevaluates and decides your area is too risky to insure.

If that happens, get in touch with your mortgage lender immediately and let them know the situation. Try to get a new insurance policy in place as quickly as possible, because your lender may buy it for you if they decide you’re not acting fast enough—and that stuff is usually around five times as expensive as insurance you buy on your own.
Is home insurance cheaper if you pay yearly?: Typically, it is cheaper to pay your home insurance annually instead of monthly. By paying once a year, the carrier will get all their cash from you at once, and they like to get paid. For that reason, you’ll probably get a discount for choosing annual payments.

Be sure to ask your insurer if they offer a discount for setting up an annual premium. No matter which premium frequency you choose, be sure to plan your budget accordingly. Forgetting about a big annual payment could really do a number on your emergency fund!
How can I save money on homeowners insurance?: There are several steps you can take to save on homeowners insurance. Many companies will give you a break if you bundle coverage with other insurance policies (auto is a popular choice here) or add locks and alarms to your home.

Paying out of pocket for small repairs is also wise, since too many claims will send your premiums up. Consider going with a higher deductible as well and use your emergency fund to cover it if needed. And, of course, you should regularly check to see if another company can get you a better rate. RamseyTrusted insurance pros are a great way to explore that possibility.
What does homeowners insurance cover?: A typical homeowners insurance policy addresses five basic things: dwelling, other structures, personal property, personal liability, and additional living expenses—that means emergency housing costs in the event your home is destroyed and you have nowhere else to stay. Thankfully, homeowners insurance helps you cover those expenses.

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Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.