The Average Cost of Home Insurance

Individuals that own their own home, apartment or condominium will require some form of insurance coverage. Standard homeowners insurance policy provides protection for the dwelling, personal property and liability. The cost of homeowners insurance depends on factors that include the replacement cost of the dwelling and the amount of coverage that is required by the insured.

Location

Prices for homeowners can vary because of various factors and one of the biggest is where a home is located. Some areas of the country cost more to insure than others. Insurance companies use a home's ZIP code to determine the claim trends for an area. Higher premiums are applied to geographic areas that have a higher concentration of claims than other areas. Weather in an area can also have an effect on the price of the premium.

Highest Cost

The average cost of homeowners insurance can vary by state with some states having a higher average cost than others. The most expensive states in which to purchase homeowners insurance are Texas, Florida and Louisiana. Homeowners insurance in Texas costs an average of about $1,400 a year. In Florida the cost is about $1,390 per year. Louisiana has average costs of about $1,250 per year.

Lowest Cost

States that do not have high claims activity for insurance companies tend to cost less for providing an insurance policy. The cheapest states to purchase a homeowners insurance policy include Iowa, Ohio and Oregon. Purchasing a homeowners insurance policy in Iowa will cost about $477 per year. Insurance in Ohio have an average price of about $530. Costs in Oregon will cost, on average, about $502 per year.

Premium Factors

Insurers use many factors to calculate the amount of premium to charge for homeowners insurance. These can include the type of construction that was used for the home and its age or when the home was built. Other factors that are used to calculate the premium include the amount of coverage that is needed and the amount of the deductible that will apply to the policy. The distance of a home from fire protection is also used as a factor in determining the premium.

Replacement Cost

Insurers use the replacement cost of the dwelling as a factor when determining the premium to charge for a policy. The replacement cost is the amount of money it would take to completely rebuild the home after there is a loss. Many homeowners get confused with this because the replacement cost is not the same as the appraised value of the home. As a result the replacement cost may be higher and a home may cost more to insure.

References

• What Affects the Cost of Homeowners Insurance?
• The Most Expensive States to Insure Your Home
• Average home insurance and renters insurance premiums by state