This Map Breaks Down The Average Cost Of Home Insurance In Every State

Fortune Recommends August 25, 2023

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This Map Breaks Down The Average Cost Of Home Insurance In Every State

There’s no doubt that owning a home comes with plenty of expenses. And one of the big ones is homeowners insurance. Home insurance is required by mortgage lenders, and provides financial protection for your property and belongings if they’re damaged by common perils. 

Nationally, the average homeowners insurance premium was $1,311 as of 2020, according to the most recent data from the National Association of Insurance Commissioners (NAIC). However, the average premium a homeowner pays for insurance can vary widely by state.

“Insurance premiums reflect the amount of risk insurers perceive that they have, combined with the insurer’s other costs, especially reinsurance,” says Terrence McLean, co-founder, and CEO at SageSure, an insurance company that specializes in coverage for coastal property owners in high-risk states. “Many states with high exposure to natural disasters, such as hurricanes in Louisiana and wildfires in California, have seen significant premium increases in recent years because the perception of the catastrophe risk has increased.”

 
Homeowners insurance rates by state

Wondering how much homeowners insurance costs around the country? This map breaks down the average annual premium by state, based on the NAIC data. Rates are based on H-03 policies, the most common package written.

 

Factors that impact homeowners insurance premiums

There are many factors that go into pricing home insurance policies. That said, there are a few categories that heavily impact the cost.

 

Where the property is located

As you can tell by the map, where a property is located can make a big difference in the cost of home insurance. In particular, weather conditions are a big location risk factor. “Certain areas will be more or less likely to be impacted by wind, hail, rainfall, wildfire, heavy snowfall, flood, earthquake, etc.,” says George Hosfield, senior director of home insurance at LexisNexis Risk Solutions. “Location-related risks are generally included in the territory rating factor that an insurer uses.”

Hosfield adds that the state an insurer writes in is also a major factor in not only the price but the coverage that a carrier must provide as part of the policy. That’s because, in the U.S., insurance is regulated at the state level. “Departments of insurance must balance the needs of the consumer with the availability of insurance and the financial health of the carrier,” he explains. Prices get pushed upward in states where more coverage is mandated. “States also control how much insurers are able to raise rates, and in some states, restrict certain underwriting criteria,” Hosfield says.

 
Type of structure and its features

Another key factor of home insurance pricing is the replacement cost of the home (what it would cost to rebuild the home from scratch). So a bigger, fancier home will cost more to replace, and therefore, would generally cost more to insure.

Houses may also have features that make the property more risky, which could influence the cost of insurance, according to Hosfield. “For example, a swimming pool may raise the risk of a liability claim,” he says.

Additionally, older homes may be more likely to have a claim due to aging components such as the roof, wiring, plumbing, and so on. “Very old homes may be difficult to repair back to original condition, which also increases the potential cost to insure,” he says.

 

Filed claim history

Hosfield notes that past claim filing activity can result in higher insurance premiums. Essentially, a past history of filing claims means the homeowner is more likely to file claims in the future. The exact number of claims that will bump up the cost depends on the particular state and insurer.

Most insurance companies get your claims history from the Comprehensive Loss Underwriting Exchange (CLUE), which means they can find out about past home insurance claims you’ve filed even if it was with a different insurer.

It's also important to note that an insurance company can't charge you more for certain types of claims. These include claims that the insurer ultimately didn't pay out on, or claims for damage that was caused by a natural disaster.

 

Homeowner's credit profile

Many insurers use credit information to price homeowners insurance policies (with the exception of certain states). "These scores, which have been used in the industry for over 30 years, use information from credit reports to predict future insurance claim behavior,” Hosfield explains. In general, the higher your credit score, the lower your premium. However, it's important to note that while insurance scores pull information from your credit reports, they aren’t the same scores as the ones used by lenders when evaluating applications to borrow money.

 

Contents within your home

The valuables that you own are also typically covered by homeowners insurance. “Policyholders with major expensive belongings—collections of art, furs, jewelry, guns, musical instruments—will result in higher prices to cover,” says Hosfield.

 

How to reduce your home insurance rates

Insurify predicts home insurance costs will rise 9% in 2023. The primary drivers of rising rates are expected to be:

  • Severe weather due to climate change
  • Fire damage due to the way new homes and furniture are constructed
  • Water damage due to homeowners increasingly putting washing machines upstairs
  • Supply-chain delays affecting lumber, roofing, piping, and more
  • High material and labor costs due to inflation

Having adequate insurance in place is crucial to protecting your home, just in case the worst happens. However, there are ways to reduce the cost of this coverage without sacrificing the quality of your protection:

  • Shop around: It's a good idea to compare prices from different insurance companies to ensure you're getting the best deal. Many websites allow you to compare quotes from multiple companies at once, which can save you a lot of time.
  • Bundle your policies: Many insurance companies offer discounts if you purchase multiple types of insurance through them, such as homeowners, auto, and life insurance.
  • Raise your deductible: The deductible is the amount you have to pay out of pocket before your insurance kicks in. Increasing this amount can reduce your monthly premium, but you should ensure you have enough saved to cover the deductible in case of an emergency.
  • Make your home disaster-resistant: If you live in an area prone to certain types of disasters, making improvements to your home to protect against them can help reduce your premiums. This might include reinforcing your roof, installing storm shutters, or modernizing your heating, plumbing, and electrical systems to reduce the risk of fire or water damage.
  • Maintain good credit: Your specialized insurance credit score could also impact your home insurance rate. Maintain a good credit score by paying your bills on time, not carrying high balances on your credit cards, and not applying for more credit than you need.
  • Review your policy annually: Over time, you may find that you're insuring items that have depreciated and no longer need as much coverage, which could allow you to decrease your premium.
  • Ask about discounts: Many insurers offer a variety of discounts, for everything from being a non-smoker to being a senior citizen. It's always worth asking what discounts might be available to you.
  • Stay with the same insurer: Some insurance companies offer a discount to long-term customers. However, you should still periodically compare this price with that of other insurers.

 

The takeaway 

As a homeowner, you need to have adequate home insurance. The premiums may be pricey, and there are certain factors that impact the cost that are out of your control, including location.

Even so, there are some ways to save money on home insurance. Shopping around, asking about discounts, bundling policies, and increasing your deductible are just a few simple ways to cut down the cost of a policy. And don’t forget to review your current policy and insurance carrier regularly—there may be opportunities to adjust your policy or change insurers in the future for even greater savings.


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