What is a homeowners insurance premium?
A homeowners insurance premium is the amount you pay to your insurance company to keep your policy active and your house protected against theft, fire, windstorms, and other catastrophes. The cost of your home insurance premium is determined by a slew of factors, including your home’s location, size, age, claims history, and other elements (more on that below).
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How often do you pay home insurance?
You can typically pay your premiums monthly, quarterly, or annually. While the monthly option gives you the most financial flexibility, insurance companies typically give you a discount if you pay annually.
If you’re financing your home with a mortgage, your lender will likely require you to pay for a year’s worth of homeowners insurance up front — either before or at closing. And if you put down less than 20%, your mortgage lender may also require you to pay for homeowners insurance as part of your monthly mortgage payment via an escrow account.
When your mortgage is escrowed, a portion of your monthly payment goes toward paying off your home loan, and the other goes into an escrow account to pay for your home insurance and property taxes.
What if I’m late on my home insurance premium payment?
If you’re late on your premium payment, you’ll generally have 10 to 30 days to pay down the balance — including any late fees. If you don’t, your policy will lapse, meaning your house will be unprotected against fire, theft, or any other unexpected disasters. Insurance companies generally charge higher premiums if you have a policy lapse or coverage gap on your record.
How much does the average homeowners insurance premium cost?
The average homeowners insurance premium costs $1,754 a year or about $146 a month — but the price of coverage will vary depending on your home’s location, size, age, and the amount of coverage in your policy.
Homeowners insurance premiums are going up nationwide — from May 2022 to May 2023, 94% of homeowners saw a premium increase from the year before, according to the 2023 Policygenius Home Insurance Pricing Report.
In Florida, Idaho, and Colorado, homeowners saw their rates increase 30% or more —making inflation guard coverage even more important to add to your home insurance policy.
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Average cost of homeowners insurance premiums by state
A major factor in how much your homeowners insurance premiums cost is where your home is located. If you live in an area that experiences frequent wildfires, hurricanes, or tornadoes — like Colorado, Texas, or Florida — you’ll see higher premiums than states with milder weather.
Here’s the average monthly and annual cost of homeowners insurance premiums in each state:
State | Average annual cost | Average monthly cost |
|---|---|---|
Alabama | $2,063 | $172 |
Alaska | $1,446 | $120 |
Arizona | $1,897 | $158 |
Arkansas | $3,391 | $283 |
California | $1,565 | $130 |
Colorado | $2,496 | $208 |
Connecticut | $1,571 | $131 |
Delaware | $980 | $82 |
District of Columbia | $1,154 | $96 |
Florida | $2,643 | $220 |
Georgia | $1,988 | $166 |
Hawaii | $486 | $40 |
Idaho | $1,363 | $114 |
Illinois | $2,053 | $171 |
Indiana | $2,045 | $170 |
Iowa | $1,830 | $153 |
Kansas | $3,159 | $263 |
Kentucky | $2,705 | $225 |
Louisiana | $2,719 | $227 |
Maine | $1,103 | $92 |
Maryland | $1,733 | $144 |
Massachusetts | $1,382 | $115 |
Michigan | $1,712 | $143 |
Minnesota | $1,966 | $164 |
Mississippi | $2,919 | $243 |
Missouri | $2,876 | $240 |
Montana | $2,778 | $231 |
Nebraska | $4,567 | $381 |
Nevada | $1,239 | $103 |
New Hampshire | $974 | $81 |
New Jersey | $926 | $77 |
New Mexico | $1,792 | $149 |
New York | $1,186 | $99 |
North Carolina | $1,678 | $140 |
North Dakota | $1,908 | $159 |
Ohio | $1,586 | $132 |
Oklahoma | $4,331 | $361 |
Oregon | $943 | $79 |
Pennsylvania | $1,303 | $109 |
Rhode Island | $1,470 | $122 |
South Carolina | $1,793 | $149 |
South Dakota | $2,426 | $202 |
Tennessee | $2,526 | $211 |
Texas | $3,080 | $257 |
Utah | $949 | $79 |
Vermont | $1,046 | $87 |
Virginia | $1,516 | $126 |
Washington | $1,280 | $107 |
West Virginia | $1,499 | $125 |
Wisconsin | $1,211 | $101 |
Wyoming | $1,599 | $133 |
Methodology: Why you can trust our rates
The Policygenius editorial team focused on comparing rates from some of the largest home insurance companies in the industry, since they hold the majority of the market share.
Rates were provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C., for a 40-year-old homeowner with no claim history, good credit, a $1,000 deductible, and the following coverage limits:
Dwelling: $300,000
Other structures: $30,000
Personal property: $150,000
Loss of use: $60,000
Liability: $300,000
Medical: $1,000
All rates based on the above coverage limits except where otherwise noted.
Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of costs. Your actual quotes may differ.
What companies have the cheapest homeowners insurance premiums?
Here are five popular home insurance companies that have average premiums below the national average:
Company | Average annual cost | Average monthly cost | |
|---|---|---|---|
Erie | $1,284 | $107 | |
Auto-Owners Insurance | $1,404 | $117 | |
USAA | $1,476 | $123 | |
Travelers | $1,572 | $131 | |
Allstate | $1,644 | $137 |
Learn more >> Cheapest home insurance companies of 2023
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What factors determine the cost of your homeowners insurance premiums?
Homeowners insurance premiums are based on multiple factors related to you and your home. Insurance companies will consider your home’s location and characteristics; policy details like coverage and deductible amounts; and policyholder-specific factors such as your credit score, claims history, and any dangerous pets in your home.
Understanding how insurance companies determine rates will help you better understand your bill and identify different cost-saving opportunities.
Here are the biggest factors impacting your homeowners insurance rates:
Location
One of the biggest home insurance cost factors is the location of your home. If your home is in an area prone to wildfires, tornadoes, or hurricanes, you’ll generally have to pay higher premiums compared to someone living in an area with milder weather.
Home characteristics
Your home’s size, architectural style, and the year it was built are all calculated into your home insurance premium. Homes that are larger, older, or constructed with less durable materials usually cost more to insure.
Here's a look at how much annual home insurance rates vary for popular insurers based on the age of your home:
Company | New home | 10-year-old home | 20-year-old home | 50-year-old home |
|---|---|---|---|---|
AAA | $1,118 | $1,651 | $1,790 | $2,076 |
Allstate | $947 | $1,580 | $1,726 | $1,717 |
Erie | $709 | $1,179 | $1,492 | $1,589 |
State Farm | $1,143 | $1,727 | $1,931 | $1,939 |
USAA | $836 | $1,251 | $1,501 | $1,566 |
Coverage amounts
Your homeowners insurance premium is primarily driven by your policy’s dwelling coverage limit — or how much it would cost to rebuild your home from the ground up after a disaster.
Generally speaking, the higher your dwelling coverage limit, the higher your rates. Adding optional coverages to your policy like extended replacement cost or extra coverage for valuable items like jewelry or instruments can also impact your policy premium.
Here's a look at how much annual home insurance rates vary for popular insurers based on the dwelling coverage limit in your policy:
Dwelling coverage limit | Average annual cost | Average monthly cost |
|---|---|---|
$100,000 | $946 | $79 |
$200,000 | $1,442 | $120 |
$300,000 | $1,754 | $146 |
$400,000 | $2,481 | $207 |
$500,000 | $3,066 | $256 |
Deductible
Your policy deductible is the amount you’re responsible for paying out on a claim before your insurance kicks in to cover the remainder of the loss. Raising your home insurance deductible is probably the easiest and most immediate way to lower your insurance premium. Just be mindful that a higher deductible means more out-of-pocket expenses if something bad happens to your home or belongings.
Here’s how the cost of home insurance compares with a few popular insurers for a policy with a $500 vs. $1,000 vs. $2,000 deductible:
Company | $500 deductible | $1,000 deductible | $2,000 deductible |
|---|---|---|---|
AAA | $2,028 | $1,818 | $1,621 |
Allstate | $1,776 | $1,596 | $1,104 |
Erie | $1,446 | $1,346 | $1,259 |
State Farm | $2,327 | $2,039 | $1,551 |
USAA | $1,090 | $1,432 | $332 |
Insurance score
Your insurance company will also consider your insurance score, or your credit-based insurance score, when determining your premiums. Your insurance score is a calculation of some (but not all) of the factors in your credit history as a way to measure how likely you are to file a claim. The higher your credit score, the lower your homeowners insurance premium.
Here's a look at how much annual home insurance premiums vary for popular insurers based on whether you have good credit vs. poor credit:
Company | Good credit | Poor credit |
|---|---|---|
AAA | $1,818 | $4,143 |
Allstate | $1,177 | $2,705 |
Erie | $1,346 | $3,575 |
State Farm | $2,039 | $3,966 |
USAA | $1,432 | $2,264 |
Claims history
If you’ve never filed a home insurance claim or you’ve only filed one within a three- to five-year span, your premiums likely won’t be impacted. But if you’ve filed multiple claims — particularly ones related to theft, water damage, or foundation issues — your insurance company will likely increase your premiums.
Here's a look at how much annual home insurance rates vary for popular insurance companies based on the number of claims filed over a five-year period:
Company | No claims | 1 claim | 3 claims | 5 claims |
|---|---|---|---|---|
AAA | $1,930 | $2,147 | $4,798 | $10,962 |
Allstate | $1,717 | $1,930 | $2,904 | $4,446 |
Erie | $1,465 | $1,534 | $2,440 | $3,919 |
State Farm | $1,935 | $2,132 | $2,132 | $2,132 |
USAA | $1,547 | $1,634 | $2,174 | $2,842 |
Dangerous dog breeds
Insurance companies view certain dog breeds, like pit bulls or Rottweilers, as a higher risk for dog bites and expensive liability claims. If you have one of these breeds or any other that insurers consider “dangerous,” you may be quoted a higher rate.
For example, American Family charges $1,491 per year on average for homeowners insurance. But if you own a high-risk dog, you can expect that to go up to $1,568 per year.
Learn more >> 11 factors that affect your home insurance premiums
What’s the difference between a homeowners insurance quote and a homeowners insurance premium?
A homeowners insurance quote is an estimate you receive from an insurance company for how much your policy will cost based on details about yourself, your home, and the coverages you’re looking for. If you like the quote, your homeowners insurance premium is the actual amount you agree to pay for home insurance coverage.
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Why did my homeowners insurance premium increase?
There are a few reasons why your homeowners insurance premium might have increased, including:
You filed a home insurance claim
You increased your coverage limits
Your credit score went down
Natural disasters like hurricanes, tornadoes, or wildfires are becoming more common in your area
Your insurance company filed for an average rate increase in your state
Labor and construction costs in your area went up
Learn more >> 5 reasons why your homeowners insurance premium increased
How can I lower my homeowners insurance premium?
If your home insurance premium is more than you can afford, there are several things you can do to save on coverage and keep your rates down, including:
Ask about homeowners insurance discounts. Ask your insurance agent if there are any discounts you’re eligible for. Many insurance companies offer discounts for not filing claims, owning a newer home, or making your house safer and more secure with security systems or smart home technology.
Bundle your home and auto insurance. Bundling your home and auto insurance can save you up to 35% on your premiums.
Raise your policy deductible. Opting for a higher deductible is one of the easiest and most immediate ways to lower your home insurance premiums. A higher deductible also means more out-of-pocket expenses when you file a claim, so tread carefully here.
Re-shop your homeowners insurance every year. It’s recommended that you re-shop your home insurance annually to make sure you’re not missing out on a better deal elsewhere. The agents at Policygenius can help you compare rates from multiple insurers to make sure you’re getting the best coverage at the best price.
Learn more >> 5 home improvements to lower your home insurance premiums
Can I pause my home insurance premiums?
In most cases, your insurance company won’t simply let you pause your premiums and continue insuring your home. But in extenuating circ*mstances, some insurers may offer flexible plans for policyholders facing financial hardship on a case-by-case basis.
Be sure to talk to your insurance company if you’re having a hard time paying your premiums. If they accommodate you with a payment plan and you’re still having difficulty affording coverage, consider raising your policy deductible and other rate-saving measures.
But whatever you do, don’t simply let your policy lapse — a lapse leaves your home without necessary protection, and having a policy cancellation on your record can make it difficult to get coverage going forward.
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Frequently asked questions
Is homeowners insurance paid monthly or yearly?
You typically have the choice to pay your homeowners insurance monthly, quarterly, or yearly. While monthly payments give you more flexibility, you’ll typically receive a discount if you pay your home insurance for the year up front. Your mortgage lender might also have requirements for whether you pay your insurance monthly or yearly.
Are there any other home insurance costs?
Unlike health insurance, which involves premiums, deductibles, copays, and other out-of-pocket expenses, the homeowners insurance costs are a little more cut and dry: You pay premiums to keep your coverage active, and you pay a policy deductible before you’re reimbursed for a claim.
What if I'm struggling to pay my home insurance premium?
If you’re struggling to pay your premium and have exhausted all discounts options, try re-shopping your policy to find a cheaper deal elsewhere. The agents at Policygenius can help you compare multiple quotes at once — all for free with no impact to your credit score.
