Average Home Insurance Cost

When looking at state-to-state comparisons of the average home insurance rate, it masy seem like there is no good reason that the rates vary so much.

For every reason you can fathom about more expensive home insurance, there will be states with high or low rates that fit this explanation, and others who don’t seem to fit at all.

This is often because the answer to the variation is a tapestry of factors that insurers must consider regarding the risk and cost of replacing a damaged home.

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Here are some of the big reasons, and states that are impacted by these costs:

The Highest and Lowest Average States

The average cost for home insurance runs between 500 and 1500 dollars annually. This number will change based on how your home price compares to either the median or the average home price in your area, as replacement cost is an important factor in home insurance.

According to the National Association of Insurance Commissioners 2013 report, the top five most expensive states were:

  1. home insurance average ratesFlorida $1,933
  2. Louisiana $1,622
  3. Texas $1,578
  4. Mississippi $1,479
  5. Oklahoma $1,386

The five lowest costing states were:

  1. Washington $626
  2. Wisconsin $592
  3. Utah $563
  4. Oregon $559
  5. Idaho $518

Natural Disasters

Areas that are prone to natural disaster will have higher home insurance rate averages. This is because an insurance company will be much more likely throughout the ownership of a home to have to pay for damage.

This is a bigger deal if a state is likely to get a number of smaller natural disasters, as the largest disasters are partially or completely reimbursed by FEMA.

Here are some of the most common natural disasters that will raise the average cost of home insurance, and some of the states that are affected by this:

  • Fire: Wildfires have become more common over the past few decades, and the extent of them can be far-reaching. States with dry climates and large forested areas are most likely to be in fire-danger areas. These include California, Arizona, New Mexico, Colorado, and Wyoming.
  • Flooding: Areas with expansive coastline or large rivers are often affected. Mississippi River states like Iowa and Illinois, and coastal states like Florida and Washington are all likely candidates to have higher rates. Homes on a floodplain often require supplementary flood insurance, which can be costly but don’t figure into average home insurance rates.
  • Tornadoes: These wind phenomena can not only transport a home to the magical land of Oz, they can also increase home insurance rates if you live in an area where they are common. States in the center of the US, From Texas and Oklahoma to the central Midwest like Arkansas, Iowa, Kansas, Kentucky, Indiana, Illinois, Michigan, Wisconsin and Ohio are all likely tornado locales. If you have flat topography and are far from a coastline, these storms may be a risk to your home and a bump to your insurance rate.
  • Hurricanes: The entire East Coast from Maine to Florida runs the risk of these storms, as does Hawaii with typhoon damage. The closer you are to a coastline, the higher your rate may be.
  • Earthquakes: The entire West Coast can be affected by this, but California is the most strongly affected, and sees the biggest rate bump.
  • Snow: Snowfall is lovely, but a heavy snow or an ice storm can make trees fall on homes or power lines, cave older roofs in, burst water pipes, and wreak other expensive havoc. The Northern US is almost all subject to this damage, particularly areas that have both trees and snow together.

Cost of Living

Homes who live in regions with a higher cost of living will cost more to replace. This is true for both the expensive and the inexpensive homes. This is not simply a factor of the cost of the home, but the cost of everything it would take to repair it.

A repair to a home will maintain its value, but the cost of the repair will be much more in areas with high costs of materials, gasoline, and skilled labor.

This may be true whether the area has a wealthy component, like Connecticut, or if it requires expensive transportation, like in Hawaii, where most wood is shipped from the mainland.

Understanding is Key

Understanding the reasons why home insurance in a state is high can go a long way in finding ways to reduce your damage risk, and therefore your insurance premiums. Florida residents can’t do much about hurricanes, but they can put up a lightning rod and stay away from flood-prone regions as a start.

average cost for home insuranceThose people in the wildfire regions of the West can choose fire-resistant vegetation like succulents to serve as an extra fire barrier for their home.

They can also build their places out of fire-resistant stucco or concrete to cut down on the fire danger to the structure.

Those who live in flood-prone regions can look at floodplain surveys and choose the house well away from the river instead of the one directly on the bank.

By mitigating for the most likely disasters, you are more likely to be able to negotiate a lower premium.

After the Fact

If you already have a home and an insurance plan, you still may benefit from discounts when you lower your home’s risk of damage. You have the right to change plans, and if you do the work to make the place a less hazardous environment, then it is a good idea to go shopping once again for price comparisons for your upgraded facility.

Don’t forget that if you have done work on your home, you will not only have the factor of lower risk to calculate into the policy, but potentially the increased replacement value of the home as well.

In some cases, this may make it a wash, though it is still a good idea to update your insurance, as your upgrades won’t be replaceable if you don’t first upgrade your insurance as well.

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