Factors that impact your cost of homeowners insurance
According to average rate data from Quadrant Information Services, the average cost of home insurance is $2,181 per year as of January 2025. However, your exact rate will likely be different. Home insurance is a highly personalized product, and what you pay will depend on rating factors that are personal to you. Knowing what most home insurance companies look at when determining your rate can help you better understand your home insurance quotes, and may even help you to lower your premium.
Factors that affect the cost of home insurance
Some rating factors for home insurance are specific to you as a homeowner, while others have more to do with your home’s physical structure or the location. Your policy specifics will also factor into how much you pay for coverage. Overall, home insurance rates are a calculation of risk. If your insurance company sees you as more likely to file a claim or experience a loss due to a covered peril, you’ll likely pay more than average.
Location
Your state and even your ZIP code may influence the amount you pay in home insurance premiums. If your house is located in an area with a history of losses, such as vandalism, theft or weather-related events, you may see a higher rate. For instance, if you live in an area prone to tornadoes, you might pay more. For example, the average cost of home insurance in Oklahoma is $4,657 per year, while the average cost in Alaska (which had one recorded tornado in 2024) is $868 for the same amount of dwelling coverage. However, location could have a positive impact, too.
Location also impacts the replacement cost of your home, since construction costs, including labor and materials, may vary depending on the region.
Dwelling coverage
Dwelling coverage is the portion of your homeowners insurance policy that covers your home’s physical structure. Insurance companies and licensed agents have valuation tools that help calculate dwelling costs. An insurance agent — or online quoting tool — will likely ask you questions about your home to determine how much it might cost to rebuild. Be prepared to answer questions about the age of your home and major systems (HVAC, plumbing, electrical), the roof age and condition, the type of building materials used, the square footage and even the unique features of your home, such as dormers or architectural characteristics. These home valuation calculators are proprietary and each company has its own algorithms, so the rebuilding cost of your home will vary between providers.
*Average rate based on policies with $300,000 dwelling coverage.
Credit history
In all states except California, Maryland and Massachusetts, insurers can use a homeowner’s credit-based insurance score as a rating factor when assessing the level of risk they are taking on. A higher credit-based insurance score is associated with lower risk by insurers. Insurance industry actuarial data shows that homeowners with poor credit histories are more likely to file claims than homeowners who have good or excellent credit.
Claims history
Insurance companies often take previous claims filed within a certain time frame into consideration when calculating your rate. When a homeowner files a claim, their homeowners insurance company generally assumes they are more likely to file future claims — potentially even for the same reason. Having a history of filing insurance claims, even small ones, might indicate an even greater future claims risk for the insurance company.
Insurers may assess your personal claims history at current and prior properties. What that means is that even if you’re insuring a new home, your prior claims history from other homes will be visible to insurance companies for up to seven years on your Comprehensive Loss Underwriting Exchange (CLUE) report and will likely affect your premium on your new house. The CLUE database also includes claims filed that may have been denied by your insurer.
Marital status
Whether you’re a first-time home buyer or have owned a home for many years, your marital status may impact your homeowners insurance rates. Insurers typically charge lower rates to married couples because statistical data shows a lower probability of filing claims compared to unmarried homeowners. However, marriage is prohibited as a rating factor in Hawaii or Massachusetts.
Age of home
If you live in an older home, you will likely pay a higher home insurance premium. The older the house, the more likely it is that aging construction materials could lead to damage to key components, such as electrical, plumbing or roofing. Older homes may need to be brought up to code as part of the rebuilding process, so you may want to consider adding ordinance or law coverage as part of your homeowners insurance policy.
Deductible
A homeowners insurance deductible sets the amount you are financially responsible for after you file a claim. Agreeing to a higher deductible may decrease your premium, but it could also cost you more out of pocket. Some insurers offer diminishing deductibles on your home policy.
In Atlantic and Gulf Coast hurricane-prone states, homeowners may have a separate deductible for wind damage caused by named storms. Similarly, in tornado-prone states, homeowners may have a separate deductible for wind and hail damage.
Endorsements
Endorsements are additional coverages you can purchase to amend your home insurance policy, which provide broader coverage than what is typically included in a standard home policy. You can buy endorsements for valuable pieces of personal property, like jewelry, or to add more protection for your home. Water backup coverage, service line coverage and ordinance or law coverage are some other common ones. The more coverage you purchase from your insurance company, the greater level of financial protection you’ll have — though at a higher premium.
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Surprising factors that impact your home insurance rate
Though the factors above relating to a home’s construction and replacement cost, claims history and the insured’s credit-based insurance score are typically the most significant, there are other factors considered in setting rates that may surprise you.
- Type of home insurance policy: There are several different types of home insurance available, which differ in terms of benefits, perils covered, cost and kinds of homes that qualify for coverage. Some policies insure your home and property at actual cash value (ACV), while others use replacement cost value (RCV). Usually, the more coverage you have, the more you’ll pay in premiums.
- Distance from water: “Flood zones play a key role in whether or not you need flood insurance,” says Sean Harper, CEO and co-founder of Kin Insurance. “If you have a federally-backed mortgage, like an FHA loan and your home is in a high-risk flood zone, you’re required to have flood insurance.”
- Distance from a fire station: Wherever you live, the premiums you pay for home insurance are likely to be impacted by the proximity of your home to a fire department and fire hydrant. The closer you are to a fire station and hydrant, the greater the likelihood a fire can be quickly extinguished and severe damage or complete destruction of your home averted. The insurance industry generally uses the Fire Suppression Rating Schedule (FSRS) from the Insurance Services Office (ISO) to determine your home’s fire risk.
- Pet breeds: Having pets, especially certain dog breeds and exotic animals, may also impact your rates or even your eligibility with some companies. “Some companies will simply raise your rates to account for the increased ‘bite risk,’” says Harper. “Even if your dog isn’t a ‘restricted breed’, a bite history could also impact your rate or ability to get coverage.” However, if you are disabled and have a service animal or emotional support animal with specialty training, discuss this with your agent or provider to see if a lower cost or discount will apply.
- Attractive nuisances: If you have attractive nuisances or items on your property like a pool or trampoline that could be potentially dangerous and appealing — especially to children — you will likely see higher homeowners insurance costs or eligibility restrictions. Many home insurers will not insure your property if you have a trampoline or a diving board for your swimming pool. You may also have to install secure barriers, such as an automatic locking gate around your swimming pool or have a certain fencing height to decrease your liability risk.
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Home protective systems and devices: Having smoke detectors, a doorbell camera or a security system may help reduce the chance of filing a claim and in turn generate a discount to lower your premium.
This is just a snapshot of some of the additional factors that affect your home insurance rates. However, insurers consider multiple pieces of information that may affect homeowners insurance premiums, including ones that might not be mentioned.
As a homeowner, try to focus on the rating factors that you can control, not the ones you can’t. You may pay more for insurance if the prior owner put in several claims on the home or if you live more than five miles away from a fire station. However, talk to your agent about what kind of safety features you can install to help offset some of those costs.— Shannon Martin, Bankrate Insurance Analyst
How does owning or financing a home impact my premium?
If you have a mortgage on your home, you may not be the only one with a say on how much home insurance you need. Most mortgage lenders require homeowners to have a home insurance policy. Depending on your location, you may also be required to carry a flood insurance policy. Your lender has a significant insurable interest in your home, and requiring you to have home and flood insurance helps safeguard their financial investment.
If you own your home outright, it’s up to you how much home insurance you have — if you have any at all. As of mid-2023, 12 percent of homeowners admit to going without an insurance policy according to a consumer survey conducted by the Insurance Information Institute (Triple-I) and Munich Re. However, most insurance experts recommend against “going bare.” Your home is likely one of your largest financial investments, and without insurance, you could be left in a serious financial bind if your home is damaged.
If you don’t carry home insurance but have a mortgage, your lender can force-place insurance on your home and add the cost to your mortgage payment. Force-placed insurance is more expensive than getting your own home insurance, and typically doesn’t provide as much protection for the homeowners as a standard homeowners insurance policy.
Frequently asked questions
Methodology
Bankrate utilizes Quadrant Information Services to analyze January 2025 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on married male and female homeowners with a clean claim history, good credit and the following coverage limits:
- Coverage A, Dwelling: $150,000, $300,000, $350,000, $450,000, $750,000
- Coverage B, Other Structures: $15,000, $30,000, $35,000, $45,000, $75,000
- Coverage C, Personal Property: $75,000, $150,000, $175,000, $225,000, $375,000
- Coverage D, Loss of Use: $30,000, $60,000, $70,000, $90,000, $150,000
- Coverage E, Liability: $500,000
- Coverage F, Medical Payments: $1,000
The homeowners also have a $1,000 deductible, a $500 hail deductible and a 2 percent hurricane deductible (or the next closest deductible amounts that are available) where separate deductibles apply.
These are sample rates and should be used for comparative purposes only. Your quotes will differ.
Credit: Rates were calculated based on the following insurance credit tiers assigned to our homeowners: “poor, average, good (base) and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining home insurance rates: California, Maryland, Massachusetts.
Claims: Rates were calculated based on the following insurance claims assigned to our homeowners: “fire ($80,000 in losses), liability ($31,000 in losses), theft ($5,000 in losses) and wind ($12,000 in losses).”
Year built: Rates were calculated based on the following years built for homes and assigned to our homeowners: “1959, 1982, 1992, 2010, 2016 (base) and 2020.”
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