Home Insurance Calculator
A nationwide network of local independent insurance agents is ready to help you find the right home coverage at the best rate.
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Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
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When you purchase a home, the cost of the property itself isn't the only expense you need to factor into your budget. Other mandatory expenses include homeowners insurance, and protecting your property against many disasters, including fire damage and vandalism. While it might not be your biggest expense, average rates for home insurance in the US are $1,211 per year.
Getting a home insurance quote from an independent insurance agent can help you understand what your costs could look like. A calculator can also help you understand what factors determine home insurance rates. Here's a breakdown of homeowners insurance and how costs are calculated.
Homeowners Insurance Cost Calculator
How Insurance Companies Set Rates for Homeowners Insurance
How insurance companies make a profit is actually pretty simple. The insurance company takes in money from premiums, invests it, and pays out money in claims. If the money they pay out in claims is less than the money they take in from premiums and investments, they generate a profit.
Where you live has the biggest impact on homeowner's insurance premiums. Homeowners insurance premiums are based on the property's value along with other factors. Real estate values tend to be higher in heavily populated places. Resorts, retirement communities, and cities with rapid growth also have higher property values, and higher property values mean higher premiums. Construction costs, building codes, and interest rates also impact premiums.
Factors Used to Calculate the Cost of Homeowners Insurance
How is homeowners insurance calculated? There are several factors to keep in mind when considering the cost of homeowners insurance. The age and value of your home impact your rates, but several other factors do, as well.
Factors used by insurers when calculating home insurance costs:
- Location: Your location impacts your home insurance rates because of factors like property values, crime rate in the area, flood risk, etc.
- Property features: Many specifics about your home, including the materials used to build it, your property's age and value, the age and condition of your roof, the overall square footage, and more also factor into premium costs.
- Coverage amounts: The more coverage you need, the more your policy will cost.
- Deductible amount: In contrast, the higher the deductible amount you select, the lower the cost of your home insurance premiums.
- Credit score: The higher your credit score, the lower your cost of coverage is likely to be, because insurance companies will see you as less likely to file a claim.
- Claims history: With no prior claims history, your home insurance premiums can be lower, whereas if you've already filed multiple claims, your costs will be higher.
An independent insurance agent can further explain the many factors that go into determining the costs of home insurance.
Why You're Paying What You're Paying
When it comes to the factors that influence the cost of your home insurance, there are some things you can control, and others you can't, like the weather and real estate values. If you live in Miami, New York City, or Tampa in a single-family home, you're at a higher risk for storm damage. But if you live in San Jose, CA, where the current median home value is $1.1 million, you're paying a lot more for coverage than the folks in Binghamton, NY, where the current home value is $150,915. Also, if you have a history of submitting claims, you're likely to be paying more toward your premium.
The good news is that there are a lot of factors that you can control, especially when buying a house. A home built predominantly of wood will have higher premiums than a home with stone construction, due to the risk of fire damage. A location close to a fire station pays less than homes much further away. Even the pets you have can have an impact on your premium. Higher-risk dog breeds like pit bulls carry higher premiums or may be uninsurable altogether.
How to Estimate Your Home Insurance Coverage Cost and Needs
To calculate homeowners insurance coverage costs, you'll need an estimate of the home's replacement cost. You'll also need to know the value of the home's contents, or your personal property kept inside and around the home. Knowing these values will help you understand how much coverage is needed in every area of a home insurance policy.
Estimate How Much It Would Cost to Rebuild Your Home
One of the main purposes of home insurance is to protect the dwelling, or structure, of your home from many different incidents like vandalism, fire damage, falling objects, etc. That makes having enough dwelling coverage crucial. The coverage in the dwelling category of home insurance must be substantial enough to cover the entire value of rebuilding the home, should it get destroyed.
When calculating your dwelling coverage limits, you'll need to make sure you factor in the replacement cost of your property, or the cost to rebuild your entire home from the ground up. This doesn't mean the cost of your home's remaining mortgage value or its current market value. You can ask your independent insurance agent for more information on actual cash value vs. replacement costs.
Estimate the Value of Your Personal Belongings
Your home insurance policy will also need to have enough coverage for your personal belongings or contents, including electronics, clothing, kitchen appliances, artwork, jewelry, etc. Having an updated list of your personal possessions can help simplify the process of filing home insurance claims. Taking photos of your more important or expensive items is also helpful.
Estimate the Value of Your At-Risk Assets
It's critical for your home insurance policy to include enough coverage for the combined value of everything you own in case you get sued for causing injury or property damage to someone else. Make sure you have coverage that factors in special vehicles like boats, cars, business assets you own, investment real estate, saved money, and other personal belongings. Without enough coverage, you could stand to lose your assets after just one hefty lawsuit.
Determine How Much Home Insurance Coverage You Need
After you've figured out values for the above recommendations, you can then set your home insurance coverage limits. Standard home insurance policies include six important types of coverage, which protect not just the building, but also the home's inhabitants and contents. To calculate how much home insurance you need, you'll have to consider how much coverage is right for you in each area.
Standard homeowners insurance typically comes with the following:
- Dwelling coverage: Protects the structure, or dwelling, of the house against many disasters, including fire damage, lightning, wind and hail, vandalism, and more.
- Other structures coverage: Protects structures that are detached, like sheds, garages, etc., from the same perils as the dwelling is covered against. Coverage is typically just 10% of the dwelling category's limit.
- Contents coverage: Protects the items you store in and around your home, and sometimes even away from the home, like furniture, clothing, collections, etc. from many disasters including fire damage and theft.
- Liability coverage: Protects you against lawsuits filed by third parties for claims of bodily injury or personal property damage while on your property, as a result of you or your property, or even while away from the home.
- Medical payments coverage: Protects you against costs of someone else's injury at your home, no matter who caused it.
- Loss of use coverage: Protects you against additional expenses if you're forced to live somewhere else, like a hotel, while awaiting repairs on your home for a covered cause.
An independent insurance agent can further explain the critical core coverages provided by standard homeowners insurance nationwide and how much you need of each.
Types of Homeowners Insurance
When shopping for coverage for your home, first know that there are a few different types of policies to choose from. Some of the most common types of home insurance are:
- Special form policy: This policy is also referred to as an HO-3 policy, and it’s the most common form of homeowners insurance. HO-3 insurance covers your home against perils that aren't specifically listed as exclusions. HO-3 will cover your home for its replacement value, which may be different from the market value. Personal property like furniture is also covered, but only if the damage is caused by a covered peril.
- Comprehensive policy: This policy is referred to as an HO-5. It covers your home and personal property for its replacement cost.
- Condo insurance: Condo insurance is also called an HO-6 policy. Condo insurance covers damage from the "walls in," because the structure is usually covered by a policy purchased by the homeowners association.
- Historic home: Also called an HO-8. An HO-8 covers the same perils as an HO-3 except it is modified to suit the needs of older homes. Landmark and registered homes often carry this type of coverage.
Your independent insurance agent will know exactly which type of home insurance you need to protect your specific property.
Factors Used to Calculate the Cost of Home Insurance
The current average cost of home insurance nationwide is about $1,211 annually. But the cost of your policy will vary depending on a few factors, including your location.
Here are some factors that determine the cost of your home insurance, and how:
| Factor | Description | Impact on Home Insurance Costs |
|---|---|---|
| Location | Including all 50 states and DC | Some states pay more for coverage due to increased risk of crime or natural disasters, or due to higher property values. |
| Building age | The exact age of your home's construction, from less than 30 years old to more than 50 years old | Older homes pay more for home insurance than newer homes. |
| Home value | The value of your home, ranging from less than $50,000 to more than $500,000 | The more valuable your home, the more expensive its coverage will be. |
| Credit score | Your average credit score, ranging from poor/don't know to excellent | The better your credit score, the cheaper your home insurance premiums will be. |
| Claims history | The amount of claims you've previously filed through your home insurance | The fewer claims you've filed, the lower your premiums are likely to be, and vice-versa. |
Average Cost of Home Insurance by State
When calculating home insurance rates, location is one of the biggest impacting factors. The state you live in affects how much you pay for home insurance, since certain areas have higher threats of flooding, storm damage, or crime, and some areas just have higher property values in general. A few states tend to pay much more for home insurance than others, including:
- Texas
- Oklahoma
- Rhode Island
- Florida
- Kansas
Homeowners in Texas can pay an average of $1,893 for home insurance annually, while homeowners in Ohio only pay $862 each year for coverage. Be sure to check out your specific state's average rates for homeowners insurance before you start shopping for a policy, to avoid any potential shocks.
| State | Average Cost of Home Insurance |
|---|---|
| Alabama | $1,433 |
| Alaska | $959 |
| Arizona | $825 |
| Arkansas | $1,373 |
| California | $1,008 |
| Colorado | $1,495 |
| Connecticut | $1,479 |
| D.C. | $1,235 |
| Delaware | $833 |
| Florida | $1,951 |
| Georgia | $1,267 |
| Hawaii | $1,102 |
| Idaho | $730 |
| Illinois | $1,056 |
| Indiana | $1,000 |
| Iowa | $964 |
| Kansas | $1,584 |
| Kentucky | $1,109 |
| Louisiana | $1,968 |
| Maine | $882 |
| Maryland | $1,037 |
| Massachusetts | $1,488 |
| Michigan | $942 |
| Minnesota | $1,348 |
| Mississippi | $1,537 |
| Missouri | $1,285 |
| Montana | $1,174 |
| Nebraska | $1,481 |
| Nevada | $755 |
| New Hampshire | $972 |
| New Jersey | $1,192 |
| New Mexico | $1,017 |
| New York | $1,309 |
| North Carolina | $1,086 |
| North Dakota | $1,253 |
| Ohio | $862 |
| Oklahoma | $1,885 |
| Oregon | $677 |
| Pennsylvania | $931 |
| Rhode Island | $1,551 |
| South Carolina | $1,269 |
| South Dakota | $1,202 |
| Tennessee | $1,196 |
| Texas | $1,893 |
| Utah | $692 |
| Vermont | $918 |
| Virginia | $999 |
| Washington | $854 |
| West Virginia | $940 |
| Wisconsin | $779 |
| Wyoming | $1,159 |
How to Pay Less for Homeowners Insurance
Taking advantage of bundling discounts is an easy way to lower your premiums. Many companies will reduce the homeowners insurance premium if you also have other coverages with them like auto insurance and umbrella insurance. Adding a security system, deadbolt locks, and smoke and carbon monoxide detectors can also help. Raising your deductible can also reduce your premium, as can having a great credit score.
If you're thinking about a pool, a trampoline, or playground equipment for the kids, play it safe. Check with your insurance company to see if it will affect your premium or coverage. The type of homeowners insurance you have will also influence the premium that you pay.
FAQs about Calculating Home Insurance
The formula to calculate homeowners insurance includes a few easy steps, starting with estimating the home's value. Next, you'll calculate the value of your property insurance with the help of an independent insurance agent. You'll then be provided with several quotes for reliable coverage in your area. Afterward, your independent insurance agent might suggest adding extra coverages you need, like earthquake insurance or flood insurance, to complete your policy.
The square footage of your home can absolutely influence your homeowners insurance costs. Larger homes have more area to repair or replace in case of a major disaster, so the premiums must be higher to compensate.
Your home insurance rates may be high for a few reasons, such as if you chose lower deductible amounts when purchasing coverage. But home insurance costs may also be high because you own an older property, have "attractive nuisances" at your home like trampolines or pools, don't have safety features like burglar alarms installed, or have prior claims history.
The three basic coverage levels of homeowners insurance are actual cash value (ACV), replacement cost, and extended replacement cost (ERC). ACV factors in the depreciation of property when granting you reimbursement for a claim, whereas replacement cost grants your reimbursement by considering the price of giving you a new, similar item in the current market.
ERC will pay to rebuild your home or replace property regardless of inflation, basically making your property the same as it was before the disaster occurred. ERC protects homeowners against inflation rates and increases in the cost of materials needed to repair the home and will pay for repairs even if they exceed the home's value.
Typically yes. Even if you haven't filed a claim, your home insurance costs will still increase every year. For local tax authorities to be able to continue to improve road systems, schools, etc., your annual property tax and insurance costs continue to increase as well. With rising inflation rates, it becomes more expensive over time to repair your home.
Also, as your home ages, it gets more expensive for insurers to cover it due to the increased risk factor. If you've filed claims before, your premiums are certain to go up. But even if you have no prior claims history and your insurance company received claims from others in your area, your rates could still increase.
Why Choose an Independent Insurance Agent?
It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print so you know exactly what you’re getting.
Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best home insurance coverage, accessibility, and competitive pricing while working for you.
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