Estimate Your Homeowners Insurance Costs
Home insurance estimates are $1,516 per year for a typical home. Calculate your costs based on where you live and other factors.
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Calculate home insurance costs
Where you live is one of the main factors for calculating your homeowners insurance rates.
Average home insurance quotes range from $680 per year in Vermont to $2,900 per year in Colorado. That's more than a $2,000 difference based on the state where you live, and rates vary widely within a state, as well.
Homeowners insurance estimates by state
State | Annual rate |
|---|---|
| Alabama | $2,021 |
| Alaska | $1,307 |
| Arizona | $1,614 |
| Arkansas | $1,531 |
| California | $1,839 |
Averages are based on quotes from every ZIP code in the country using the median home value in each state.
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How to estimate your home insurance
1. Calculate your dwelling coverage
Your home insurance policy's dwelling coverage covers the structure of your house and anything that's permanently attached to it. This includes its roof, plumbing, furnace, and built-in appliances.
You should have enough dwelling coverage to rebuild your house if it were completely destroyed.
To estimate your home's replacement cost:
- Multiply your home's square footage by the average cost per square foot to build a home in your area.
- Add the cost for major parts of your home, such as a roof, siding, flooring and cabinets.
Your home's dwelling coverage amount is usually lower than its real estate value or sale price. That's because it only covers the cost to rebuild the structure, not the value of the land it sits on or what it's worth in the current housing market.
2. Choose the level of home insurance coverage
The level of homeowners coverage you have affects how much you pay for a policy and how much money you get after filing a claim.
Replacement cost coverage is a good choice for most people because it helps you replace items or repair damage without having extra expenses.
Type | Cost | Coverage |
|---|---|---|
| Actual cash value | $ | |
| Replacement cost | $ $ | |
| Extended replacement cost | $ $ $ | |
| Guaranteed replacement cost | $ $ $ $ |
Actual cash value coverage means the insurance company will pay you the current value of what's been damaged, after considering its age and condition. This usually means that insurance will pay less after something is damaged.
For example, insurance could pay you about $667 for a damaged refrigerator that you bought for $1,000 five years ago. You would have to pay any other costs to replace the refrigerator.
With replacement cost coverage, the insurance company will pay you the cost to replace what's been damaged. For example, the payout for a five-year-old refrigerator would be based on the cost to buy a new refrigerator of a similar make and model.
This gives you more protection than actual cash value coverage, which pays you less because it factors in wear and tear.
Extended replacement cost coverage provides an extra cushion with insurance payouts that can be more than the estimated replacement cost.
For example, say you had a policy with an extra 20% in coverage because of extended replacement cost. If the insurance company thinks that a repair job should cost $1,000, they would pay as much as $1,200 to make sure the repair is complete.
This helps cover your costs if the insurance company gives you a low damage estimate, if local labor costs are higher than expected, or if inflation drives up costs.
Guaranteed replacement cost coverage will pay to repair or rebuild your home, no matter how much it costs. This can give you the peace of mind knowing you won't end up having to use your own money.
This type of coverage is a great way to protect against changing costs, especially after a local disaster. Even if it costs twice as much as expected for plumbers, lumber, or appliances, your home insurance will pay the full bill.
3. Estimate coverage for your belongings
Home insurance also covers your belongings, such as clothing, furniture, electronics, collectibles, and jewelry. As a rule of thumb, most people will need their personal property insurance to be between 20% and 50% of their dwelling coverage.
For example, if the dwelling coverage for your home is $300,000, the coverage for your stuff is usually between $60,000 and $150,000.
You can also calculate your personal property coverage by making a home inventory of what you own and what it would cost to replace it. Or you can hire an appraiser for a more accurate estimate.
Expensive items such as jewelry, collectibles or sports equipment may have a separate limit of around $2,000. You can add on extra coverage that's specifically for expensive items such as an engagement ring or a baseball card collection. This is called a home insurance endorsement.
4. Decide how much liability coverage you want
Liability insurance helps cover your costs if someone sues you because of an injury or property damage. Most home insurance policies include at least $100,000 in liability coverage, which can be increased up to $1 million.
It usually only costs a few dollars per month to increase your liability limits, and it's a good idea to get as much as you can reasonably afford.
Your insurance company only covers lawsuits up to the limit on your policy. For example, if you have $250,000 in coverage and owe $500,000 after a lawsuit, you would have to pay what the insurance doesn't cover. This could mean you lose any savings or assets you currently have and potentially your future earnings.
5. Choose your deductible
The deductible on your home insurance plan is how much you have to pay for repairs yourself before the insurance company starts to pay.
- Getting a home insurance policy with a low deductible of $500 gives you the most protection from having to pay unexpected repair bills. But it will cost more.
- Increasing your deductible to $1,000 or $2,000 saves you money on your insurance policy, but you'll have to pay a larger portion of repair costs if you file a claim. When choosing a higher deductible policy, check that you have the emergency savings to cover the deductible if you file a claim.
6. Get home insurance quotes and compare companies
Home insurance calculators can help you get a rough estimate of what home insurance will cost.
But you'll get the most accurate rates by requesting home insurance quotes. That's because each home insurance company uses different formulas to set rates.
Home insurance quotes are free and don't affect your credit score. This means you can compare quotes from as many companies as you want to find the best rates for your home.
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Factors used to calculate home insurance costs
Home insurance is calculated using details about you, your home and where you live, as well as your coverage choices.
Details about your home
Expensive homes cost more to insure. For example, it costs an average of $731 more per year to get home insurance for a $500,000 home compared to a $350,000 home.
Your home's age, square footage, features and upgrades affect your rates. New or updated homes tend to be cheaper to insure because there's less risk of damage. For example, after replacing your roof, your insurance rates may go down by 21%. On the other hand, having a pool means you could pay at least $50 more per year.
Your personal details
Insurance rates usually go up after you file a claim, but the amount varies. Calculate a larger increase after a liability claim or if you've had multiple claims. An isolated claim for property damage won't increase your rates as much.
If you have an excellent credit score, you'll save about 26% on home insurance compared to homeowners with average scores. If your credit score is 523 or less, you could pay twice as much as the average shopper.
Where you live
If you live in an area with extreme weather, wildfires, or hurricanes, home insurance will cost more because you're more likely to file a claim after weather damage. How much your rates will go up will vary by insurance company.
If your neighborhood has lots of insurance claims or a high crime rate, insurance companies may charge you more for a policy because you're more likely to file a claim. On the other hand, you could pay about 8% less for homeowners insurance if you live within five miles of a fire station.
Your insurance choices
Insurance rates vary by hundreds or thousands of dollars per year between insurance companies. So comparing quotes from a few companies can help you find the cheapest company for your situation.
The coverage options you choose for your policy change your rates. For example, you'll pay more for higher liability coverage or add-ons such as water backup coverage. However, you can save on insurance with a bundling discount on your home and auto insurance.
Get quotes from the cheapest home insurance companies so you don't pay more than you should for the same amount of coverage.
Frequently asked questions
How much does home insurance usually cost?
The average cost of homeowners insurance in the U.S. is $1,516 per year, based on a typical level of coverage. That's $126 per month.
How much coverage does the average homeowner need?
The amount of dwelling coverage you need is based on the cost to rebuild your home. It's usually less than its real estate value because dwelling coverage doesn't consider the value of the land or what your home is worth in the real estate market. Other types of home insurance coverage are typically a percentage of your dwelling coverage. For example, coverage for your belongings is 20% to 50% of your dwelling coverage. Coverage for sheds and other structures is usually 10% of your dwelling coverage.
Can I reduce my home insurance if my mortgage is paid off?
You're not required to have homeowners insurance if you don't have a mortgage on your house. However, it's still a good idea to have insurance to pay for damage to your home or belongings.
Methodology
Average home insurance rates are based on thousands of quotes across every ZIP code in the U.S., from the largest homeowners insurance companies in each state.
ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only. Your own quotes may be different.
Additional data is from ValuePenguin's research on home insurance rates.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.