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
Find Cheap Homeowners Insurance Quotes in Your Area
To calculate your home insurance costs:
- Start with the average rate to insure a home in your state.
- Next, use factors such as your home's value to adjust the rate higher or lower.
Other factors for calculating home insurance costs
Home insurance is calculated using details about you, your home and where you live. How much you pay is also affected by the coverages and insurance company you choose.
Details about your home
Expensive homes cost more to insure. For example, it costs 66% more to insure a $500,000 home versus an average-priced home.
Your home's age, square footage, features and renovations affect your rates. New or updated homes tend to be cheaper to insure because they usually have fewer hazards. For example, after replacing your roof, your insurance rates may go down by 21%. On the other hand, having a pool means you'll pay about $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 personal property damage typically has less of an impact.
Having a higher credit score means you'll likely pay less for home insurance. Those with excellent credit scores save about 26% on home insurance compared to homeowners with average scores. Those with scores of 523 or below pay more than double what an average shopper pays.
Where you live
Living in an area with extreme weather or natural hazards means home insurance rates are higher because you're more likely to file a claim due to weather damage. The impact on your rates varies widely based on the type of risk.
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 an average of $1,943 per year between the cheapest and most expensive company in each state. Companies use different formulas to set rates. 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.
Increasing your deductible saves you money on your insurance policy, but you'll have to pay a larger portion of repair costs if you file a claim. Compared to a policy with a $1,000 deductible, you'll save about 13% by increasing your deductible to $2,500. Conversely, you'll pay about 7% more for a policy with a $500 deductible.
Get quotes from the cheapest home insurance companies so you don't pay more than you should for the same amount of coverage.
How to estimate home insurance coverage
Estimate home insurance dwelling coverage
Dwelling coverage is the main part of your home insurance policy. It covers your house and parts of its structure, such as the roof, plumbing and built-in appliances. You should carry enough dwelling coverage to rebuild your house if it were completely destroyed.
Your home's dwelling coverage amount is usually lower than its real estate value or sale price.
To estimate your dwelling coverage:
- 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 replacement cost only covers the cost to rebuild the structure, not the value of the land it sits on.
Home insurance companies use both public property data and info you supply to determine your home's replacement cost. Plus, companies often inspect homes with new insurance policies to confirm that the policy matches the amount of coverage that's needed.
Coverage for other structures, including sheds, fences and detached garages, is usually set at 10% of your dwelling coverage limit.
Compare the cost for different types of coverage
The type 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.
With replacement cost coverage, the payout after a claim is based on the cost to buy a new item that's similar to the one that was 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.
In a situation where your home is destroyed, replacement cost coverage is based on the cost to rebuild a similar home. This gives you more protection than actual cash value coverage, which factors in wear and tear and pays out less.
Actual cash value payouts are calculated based on the market value of what was damaged, minus depreciation due to age.
For example, if your refrigerator cost $1,000 when you bought it five years ago, the actual cash value is based on what the five-year old fridge is worth today. After filing a claim, the insurance company would calculate how much it's worth after depreciation and would pay you about $667 for the damaged refrigerator. Any other costs to replace the refrigerator would be your responsibility.
Coverage for extended replacement cost provides an extra cushion, with insurance payouts that can be up to 20% more than replacement cost.
You can't use this coverage to upgrade your home or appliances after a claim. However, it can protect you in situations when a local disaster or other situation drives up construction or material costs.
Estimate personal property coverage
Personal property insurance covers your belongings, such as clothing and furniture.
Estimate your personal property coverage by considering the value of the belongings you own, which in most cases is between 20% and 50% of your dwelling coverage.
For example, if the dwelling coverage for your home is $250,000, the coverage for your belongings is typically between $50,000 and $125,000.
What's not covered
The most accurate method for calculating your personal property coverage is to make a home inventory of your personal possessions and their replacement values. During this process, you can photograph your most important possessions so you have proof of ownership if you file a claim because it's stolen or damaged.
Estimate liability coverage
Liability insurance covers the cost 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 are sued for $500,000, you would have to pay what the insurance doesn't cover. This could mean you lose assets such as a savings account or valuable belongings.
- Money saved in your bank accounts
- Future wages
- Personal belongings
- Vehicles and boats
- Business assets you personally own
- Investment real estate
- Home equity
- Social Security benefits
- Employer-sponsored 401(k)
Without enough liability insurance, most of your belongings are at risk if you're sued. However, some assets, such as retirement funds, may be exempt from lawsuits. Each state has different rules regarding how protected retirement funds are from legal actions, so you should review local laws to determine what is at risk.
For extra liability protection beyond your home insurance policy, an umbrella policy provides affordable coverage in $1 million increments. It costs about $50 to $75 per year for each $1 million in liability coverage.
Get a personalized home insurance quote
Free online insurance quotes are the best home insurance calculator because they consider all of the different factors that could affect your rates and come from direct sources.
Find Cheap Homeowners Insurance Quotes in Your Area
When getting a quote, the insurance company can often use data about your property to estimate the details about your home and the type of coverage you need. You'll enter info about yourself and provide other details about the home.
You can also choose add-ons or other policies such as coverage for:
- Flood insurance
- Earthquake insurance
- Water or sewer backup
- Equipment breakdown
- High-end valuables
- Home business
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. 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.
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.
Coverages are based on the median home age and value in each state, which is an approximation of the cost to rebuild a home.
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.