Calculating the insurance premium that you should expect to pay to protect your home is not always as straightforward as it might seem. Rates are determined by factoring in a long list of criteria, which includes the location of the home, the value of the property and the valuables stored in it, the likelihood of a hazardous event that could damage the home.
Home insurance policy shoppers consider these factors when weighing their coverage options, particularly with respect to the area where they live, given the degree to which a policy can vary by geography.
What factors influence the cost of homeowners insurance?
One of the factors that has the largest impact on a homeowner’s monthly premiums is the amount of coverage they choose to purchase in various aspects of their policy. When we noted that the value of the property affects the cost of insurance, we said so because a home of greater value will require a higher limit for dwelling coverage.
In the unfortunate event that a home is completely destroyed in a natural disaster, the homeowner will want to make sure that the dwelling coverage that they had was enough for the insurance company to be able to cover the cost of replacing the home. Likewise, if the homeowner had a lot of valuable possessions within the home, they would want to make sure that the personal possession insurance on their policy reflected that so that their provider can pay to replace the items.
As a brief side note about personal property insurance, which can also impact the cost of premiums, homeowners with this form of coverage must choose between actual cash value (ACV) and replacement cash value (RCV) insurance for their belongings.
While actual cash value coverage only reimburses a property owner for the value of their possessions at the time of the incident, replacement cost value coverage ensures that any stolen or damaged possession will be replaced at its like-new price. Because of this, replacement cost value coverage is more expensive, thus making the policyholder’s entire premium more expensive as well.
Returning to our point about geography, location has a major impact on how much you can expect to pay annually for homeowners insurance. As proof of this, consider average annual premiums on a per-state basis. Below are the five most affordable average annual premiums by state:
- Hawaii: $442
- Vermont: $733
- Utah: $784
- Oregon: $840
- Pennsylvania: $851
Each of these states affords its residents low premiums relative to the national average because its location is not associated with many risks that could put a home or the valuables inside of it in danger. States like Hawaii, Vermont and Pennsylvania, for example, rarely experience natural disasters, making them pretty much risk-free for insurance providers and thus cheap for homeowners. Pennsylvania, Vermont and Utah also have low home invasion rates, with Oregon and Hawaii barely above the national average.
On the flip side, states with the most expensive premiums relative to the national average include:
- Oklahoma: $4,053
- Nebraska: $3,547
- Kansas: $3,535
- Texas: $3,087
- Mississippi: $2,530
The same things that make homes in states like Hawaii and Vermont cheap to insure make homes in Oklahoma and Nebraska risky insurance prospects. Per 2018 figures, Texans submitted 4,559 claims for lightning damage, valuing $67.6 million in total, or $14,819 per claim. From 2008 to 2014, Nebraska, Kansas and Oklahoma were in the top five for hail claim frequency, with Texas registering the highest claims losses in the country dating back to the year 2000.
Finally, returning to the issue of theft, Mississippi ranked second in the nation for home invasions in 2018 with 697.8 per 100,000 inhabitants. That’s just under double the national average (376), which goes a long way in explaining why personal property insurance coverage there could drive up annual premiums.
Average homeowners insurance prices by state
If you’re interested in a more complete look at what home insurance might cost you in a given state, below is a comprehensive list put together by The Zebra, the nation’s leading insurance comparison site. Much of the fluctuations that you will see from one state to another are reflective of the factors discussed above, though other components play a smaller role as well.
| State | Average premium |
| Alaska | $1,103 |
| Alabama | $2,328 |
| Arkansas | $2,405 |
| Arizona | $1,283 |
| California | $1,031 |
| Colorado | $2,412 |
| Connecticut | $1,481 |
| Washington DC | $1,035 |
| Delaware | $880 |
| Florida | $2,133 |
| Georgia | $1,619 |
| Hawaii | $442 |
| Iowa | $1,583 |
| Idaho | $982 |
| Illinois | $1,443 |
| Indiana | $1,395 |
| Kansas | $3,535 |
| Kentucky | $2,053 |
| Louisiana | $2,193 |
| Massachusetts | $1,203 |
| Maryland | $1,211 |
| Maine | $961 |
| Michigan | $1,176 |
| Minnesota | $1,773 |
| Missouri | $2,377 |
| Mississippi | $2,530 |
| Montana | $2,042 |
| North Carolina | $1,794 |
| North Dakota | $2,128 |
| Nebraska | $3,547 |
| New Hampshire | $876 |
| New Jersey | $934 |
| New Mexico | $1,661 |
| Nevada | $975 |
| New York | $1,262 |
| Ohio | $1,265 |
| Oklahoma | $4,053 |
| Oregon | $840 |
| Pennsylvania | $851 |
| Rhode Island | $1,388 |
| South Carolina | $2,196 |
| South Dakota | $2,288 |
| Tennessee | $2,033 |
| Texas | $3,087 |
| Utah | $784 |
| Virginia | $1,100 |
| Vermont | $733 |
| Washington | $1,133 |
| Wisconsin | $1,084 |
| West Virginia | $1,366 |
| Wyoming | $1,171 |
How to find the best price for home insurance in your state
Your home insurance premiums are the product of factors that include the value of your property, the number of valuables your home holds, the risk that your home presents to others and where your home is located.
While all of these factors work together to add to the price tag of your annual premium, it’s important to also think about things that can help chip away at that number. While a California home might be exceptionally at-risk of damage resulting from wildfire, homeowners there that live near a firehouse, equip their homes with smoke detectors or fire alarms and rid the area near their home of as many fire hazards as possible are likely to pay less because of it. Likewise, moving into a newer housing development will help keep insurance premiums in check because newer houses tend to be sturdier and thus less at risk of suffering significant damage.
Apart from factors around you, your credit score and deductible are two components within your control that you can use to drive down your annual premiums. By getting your credit in good shape before approaching an insurance provider, you can ensure the best rates possible by presenting yourself as a low-risk policyholder. Further, by agreeing to pay a higher deductible, the out-of-pocket amount you agree to pay in the event of property damage theft, or a liability claim, you can keep your premiums down at a manageable rate.
Ultimately, you know your risk factors better than anyone else. Get in touch with an insurance expert in your area to weigh your options and, after having done sufficient research and getting several quotes, move forward with a policy that covers you where you need it most.