Everything you need to know about insurance basics, like coverage types, limits, cost and more.
How to Calculate Home Insurance Costs
While you may know that you need homeowners insurance to stay protected from the unexpected, you may not know how to calculate exactly how much home insurance you need.
Homeowners Quick Cost Estimate
What Is the Average Cost of Home Insurance?
On average, Americans can expect home insurance yearly costs to be around $1,200 — though that amount can vary widely depending on where you live. That difference in annual home insurance premiums is due to a number of key factors like population density in a state, areas prone to natural disasters and the average age of homes in a given zip code.
The answer is: It depends. Many factors go into figuring out what your home insurance will cost, here are just a few things that we take into consideration:
- Your location.
- The value of your home. This is the cost for you to rebuild it.
- The value of your belongings. Not sure how much you have? Create a home inventory.
- Your coverages & coverage limits.
- Your deductibles.
- Details of your home (age, style, construction, and custom features to name a few)
Consider Your Zip Code
Simply providing your zip code can offer a lot of information about the potential cost of your home insurance. Your location helps insurance companies gather information about things like the average value of homes in your area, local building costs, as well as how many claims are placed in that zip code — each of which helps them better determine the cost of your home insurance.
Determine How Much It Would Cost to Rebuild Your Home
Having homeowners insurance helps cover costs from damage due to things like fire, lightning, hail, windstorms — among other events. And if you live in an area at high risk of flooding or earthquakes, you’ll want to make sure you have insurance for those, too.
To estimate how much homeowners insurance you need, consider the cost to rebuild your home. A number of factors will impact the cost to rebuild: Things like the style of your home (e.g. ranch, colonial), type of materials used to build the structure (e.g. brick, stone, frame), type of roof, and other special features of the home (e.g. fireplaces, exterior trim) can all impact the cost to rebuild your home. Those and other factors may differ from the original price you paid, the fair market price or the home’s assessed value. Connect with your insurance agent — they’ll help you calculate how much coverage you’ll need to rebuild your home.
Estimate Your Total Property Replacement Value
How much would it cost to help replace your belongings? All of the things inside your home are what make it uniquely yours. And when you start to add up your possessions, from your pots and pans to your closet full of clothes, it probably amounts to quite a bit.
Making a detailed home inventory of your belongings will not only help you estimate how much property insurance coverage you need for your personal possessions, but it’s a great record of all the things you own.
Keep in mind, there are limits to the personal property coverage offered with your base policy — make sure you ask about those limits and add costly items to your property insurance estimate so you’re sufficiently covered. Knowing your limits will help you understand if you need to itemize certain valuables and ask for increased special limits.
Decide How Much Liability Insurance You Need
The liability portion of your homeowners insurance doesn’t protect your stuff — instead it protects you against lawsuits brought upon you for things like bodily injury or property damage that you, a family member or even a pet cause. This coverage may cover court costs and damages awarded, up to your policy limits. If you’re looking for even more protection for your home, you can check out our umbrella liability insurance coverage limits to help safeguard your hard-earned dreams. Your agent can help you understand if you need more coverage based on the value of your property, savings and other investments.
Your liability insurance also includes medical payments coverage to pay expenses for those who are accidentally injured in your home during a covered loss.
Average Home Insurance Rates by Zip Code
There’s a lot to keep in mind when you’re comparing homeowners insurance rates by zip code, and your home’s overall value is just part of that equation. We’ve leveraged Quadrant Information Services’ data from insurance.com to get you average homeowners insurance rates by zip code — both high and low — across the US in the tables below: Here’s a list of the 10 most costly places to live, relative to the average cost for home owners insurance:
|
Average annual cost
|
City
|
State
|
ZIP Code
|
|---|---|---|---|
|
$6,295
|
Islamorada Village of Islands
|
Florida
|
33050
|
|
$5,911
|
Louise
|
Texas
|
77455
|
|
$5,752
|
Mobile
|
Alabama
|
36619
|
|
$4,966
|
Cashion
|
Oklahoma
|
73016
|
|
$4,666
|
Quinter
|
Kansas
|
67752
|
|
$4,654
|
Emerald Isle
|
North Carolina
|
28594
|
|
$4,612
|
Kenner
|
Louisiana
|
70065
|
|
$4,612
|
Awendaw
|
South Carolina
|
29429
|
|
$4,361
|
Holyoke
|
Colorado
|
80734
|
|
$4,071
|
Loco Hills
|
New Mexico
|
88255
|
Here’s a list of the 10 least expensive places to live, relative to the average cost for home owners insurance:
|
Average annual cost
|
City
|
State
|
ZIP Code
|
|---|---|---|---|
|
$490
|
Honolulu
|
Hawaii
|
96859
|
|
$881
|
Oceano
|
California
|
93445
|
|
$1,107
|
Winooski/Burlington
|
Vermont
|
05404
|
|
$1,144
|
Potomac
|
Maryland
|
20854
|
|
$1,148
|
Anahuac
|
Texas
|
77514
|
|
$1,190
|
Pike Creek
|
Delaware
|
19808
|
|
$1,265
|
Syracuse
|
Utah
|
84075
|
|
$1,308
|
Golden Meadow
|
Louisiana
|
70357
|
|
$1,313
|
Silver City
|
Nevada
|
89428
|
|
$1,319
|
East Rochester
|
New York
|
14445
|
Frequently Asked Questions About Home Insurance Costs
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The cost of homeowners insurance varies greatly by state and a number of other factors. Take a look at this great resource to help you determine the cost of home insurance based on your location.
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The price of a homeowners policy is based on many factors, but the amount your home is insured for is an important one. When you have replacement cost coverage, the limit of insurance on your home reflects the cost to rebuild your home if it were to be totally destroyed. This cost can be significantly different than the market value of your home.
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There are a variety of ways to pay your insurance premium. If you have a mortgage, your lender may require that you escrow your insurance premium each month, and they pay your annual premium once a year out of those escrowed funds. If you don’t have a mortgage, or your lender doesn’t require you to escrow your premium, most companies have a variety of payment plans that allow you to pay in monthly, quarterly or semi-annual installments, or to pay in full once a year. Sometimes you can get a discount for paying in full for the whole year or by setting up automatic monthly withdrawals from your bank.
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Homeowners insurance premiums reflect the cost the insurance company pays out each year in claims. As building costs increase, so do insurance premiums. While homeowners premiums don’t always go up each year, in general they will follow the same pattern as most other costs-of-living do, gradually rising over time.
Get the Most Accurate Price for You — Start a Quote!
Ways to Save on Home Insurance
There are many ways to save on homeowners insurance, from having smart technology and alarms to renovating your home — you can save! Find out if you already qualify for a home insurance discount and learn how to lower your insurance premium today.
Bundling your insurance has many advantages. Not only is it convenient, it can save you up to 23% when you bundle your auto and home insurance policies together. See how you can bundle and save with American Family!
Smart home technology is the perfect way to keep your family safe. Learn more about how smart homes and insurance go hand-in-hand and how American Family rewards smart behavior with our Smart Home Discount.
Additional Homeowners Insurance Resources
From smart home technology to bundling your insurance products, check out the many ways you can save with our homeowners insurance discounts.
*Customers who bundle auto and home insurance policies may save up to 23% on both policies together (as of October 2021). Discounts may vary by state, property, policy form and company underwriting the auto and/or home policy. Discounts may not apply to all coverages on an auto or property policy.