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How Much Does Homeowners Insurance Cost?

Updated: October 2019

How much is homeowners insurance going to cost me? When you buy a new home, this may be one of the first questions that pops into your mind. And it's an important question, especially if you're trying to budget your living expenses. The short answer to that question is: It depends. These are some of the factors that may help determine how much you'll end up paying for homeowners insurance:

  • The deductible you choose
  • The value of your home and belongings
  • Your insurance claim history
  • Other variables, such as the age and location of your home

Watch this video to learn more about the factors that may affect the cost of homeowners insurance.

Video Transcript

Wondering what determines the cost of homeowners insurance? Here are some factors that may affect your homeowners insurance premium.

First, consider your types of coverage. Certain coverages, such as dwelling, personal property and liability, are standard parts of a homeowners insurance policy.

You may decide it makes sense for you to add optional coverages, as well. For instance, if you purchase water backup coverage, you'll likely pay a bit more for that added protection.

Each coverage in your policy has its own limit. A limit is the amount of coverage you purchase and the maximum amount your policy will pay for a covered claim.

The limits you select may play a role in the cost of your homeowners insurance. Next, think about your deductible. This is the amount you typically have to pay out of pocket toward a covered claim before your insurance coverage kicks in.

If you select a lower deductible, you will typically pay less out of pocket toward a covered claim. However, the overall cost of your insurance premium may be higher. On the other hand, if you choose a higher deductible, your out-of-pocket costs will typically be higher — but your premium may be less.

Homeowners insurance prices can vary because no two policies are alike. Contact a local agent to get a homeowners insurance quote for the coverages that fit your needs.

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How The Deductible You Choose Affects The Cost Of Your Policy's Premium

One factor that determines how much you pay for homeowners insurance is the deductible, which is your share of a covered claim.

You can typically select the deductible for your property coverage in your homeowners policy. For example, you could choose a $1,000 deductible that would apply to your dwelling coverage, other structures coverage and your personal property coverage.

If you choose a higher deductible, the annual premium for your insurance policy will likely be lower. The downside? If you have to make a claim for repairs to your home, you'll be required to shell out more money before your insurance helps cover the cost of repairs. On the other hand, choosing a low deductible could increase your premium, but you will pay a smaller amount when you file a claim.

Your Policy's Premium And The Value Of Your Home And Property

Your homeowners insurance premiums are also tied to how much coverage you purchase. If you're buying an insurance policy to cover a home that's worth $250,000, you're going to pay more than someone whose home is worth half that amount.

Protecting Your Home

Your insurer can suggest appropriate dwelling coverage limits based on the type of home you're insuring and the materials it's made of. You may also be able to buy additional dwelling coverage, up to a certain amount. It's important to understand that your dwelling coverage limit is meant to help pay to completely rebuild your home if it's destroyed by a covered peril. So, you may not be able to purchase dwelling coverage with limits lower than what your home is worth. The Insurance Information Institute (III) also suggests that homeowners take inflation into account when choosing their coverage limits. For example, your home may be worth $300,000 today, but if you had to rebuild it after a covered loss in 5 years, it may cost $325,000 to rebuild. Be sure to ask your insurance agent about inflation guards when purchasing a policy.

Protecting Your Personal Property

The amount of personal property coverage you buy affects the premium for your homeowners insurance policy. Homeowners insurance usually includes personal property coverage, which helps pay to repair or replace your belongings if you experience a covered loss. Say your belongings are worth $50,000. You'll want to ensure that you buy enough personal property coverage to replace all of your personal items if they're damaged or destroyed. Otherwise, if a disaster strikes, you may not receive enough money to replace all of your stuff. However, keep in mind that the more coverage you buy, the more expensive your policy premium will be. Be sure to document and create an inventory of all your items to help ensure you purchase enough coverage.

Your Claim History And Homeowners Insurance Premiums

The rate you pay for homeowners coverage can be affected by your insurance claim history. Homeowners who have had fewer claims typically pay less for insurance than those who have filed more claims.

Home Age, Risk Factors And Other Things That Affect Cost

Many factors may affect the cost of your homeowners insurance policy. Here are some of the factors that may affect how much you pay for home insurance, according to the III:

  • The age of your home
  • Condition of the roof
  • Where you live
  • Your home's features (such as a swimming pool or fence)

When you're shopping for homeowners insurance, it helps to understand how the coverages, coverage limits and deductibles you choose affect the cost of a policy. It's a good idea to talk to a local insurance agent if you need help understanding a home insurance quote or your current home insurance coverage.

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This content is for informational purposes only and may not be applicable to all situations.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2019 Allstate Insurance Company, Northbrook, IL.
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