Homeowners Insurance Costs: What to Expect in 2025
If you’re among the millions who have a mortgage, you likely pay for homeowners insurance. And if you’ve been in your home a few years, you’re probably aware of the recent increases in insurance costs. Bankrate’s analysis of average rate data from Quadrant Information Services reveals a steady climb in homeowners insurance premiums across the country.
According to our research, the national average cost of homeowners insurance is $2,242 per year for $300,000 in dwelling coverage. This translates to approximately $187 per month. However, it’s crucial to remember that this is just an average. Your actual insurance costs may vary substantially based on a range of factors unique to your situation.
There are nine licensed insurance agents on staff at Bankrate who have a combined 78 years in the insurance industry to help you understand how home insurance is priced and ways to potentially lower your premium.
Factors Influencing Home Insurance Costs
Several factors can significantly impact the cost of your homeowners insurance. Understanding these can help you estimate how much you may need to pay and identify possible savings opportunities.
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Location: Where you live is a primary factor. Some states have a higher risk of natural disasters, which increases the likelihood insurance companies will pay claims related to weather damage. Your city can affect rates as well. High crime rates or the cost of materials and labor in your area will affect your premium. The national average can be a helpful baseline, but comparing costs by state and city provides more relevant insights.
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Dwelling Coverage: This is also known as Coverage A. This coverage protects the physical structure of your home. The more coverage you have, the more you’ll likely pay.
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Credit Tier: In most states, insurance companies review your credit history. Those with lower credit scores are more likely to file claims, so premiums are often higher for those with poor credit.
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Claims History: If you’ve filed claims in the past, expect this to make your insurance more expensive. The type of claim also matters. For example, wind damage claims can impact your rates.
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Deductible Amount: The deductible is the amount you pay out-of-pocket before your insurance kicks in. A higher deductible usually means a lower premium.
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Home Age and Characteristics: Older homes might be more expensive to rebuild after a loss. Roof age and condition are significant: a newer roof can lower your premium.
State-Specific Insurance Costs
Home insurance rates vary widely by state. It’s essential to understand how costs compare in your area.
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Least Expensive States: Average premiums are lowest in states generally less prone to natural disasters or with lower costs of living. Based on data, the five least expensive states for homeowners insurance are Vermont, Alaska, Delaware, West Virginia, and Oregon.
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Most Expensive States: States with a higher risk of natural disasters, like hurricanes or tornadoes, tend to have much higher average premiums. The five most expensive states are Nebraska, Florida, Oklahoma, Kansas, and Louisiana.
To see how costs vary in your state, you can view average home insurance costs by state.
How to Estimate the Cost of Home Insurance
To estimate your home insurance costs, you need to consider the following:
- Replacement Cost Value (RCV) of your home: This is the estimated cost to rebuild if the structure is destroyed
- Replacement Cost of Detached Structures: Include sheds, garages, and fences
- Personal Property Costs: Account for the value of all personal items, including clothing, furniture, and electronics.
Key Industry Trends
Home and auto insurance premiums have risen partly due to inflation and climate change. According to the National Centers for Environmental Information, 60 natural disasters costing over $1 billion in damage occurred each in the last three years. As building material costs and labor continue to rise, home insurance rates will continue to increase to cover claims expenses.
Finding a Competitive Rate
To find the best rate, compare quotes from different insurance companies.
