The Average American Is Now Paying Over $2,800 for Home Insurance

The Average Cost of Home Insurance Is Now Nearly $3K a Year

The average annual cost to insure a home in the United States is $2,802. That number has been consistently rising over the past decade. However, there is significant variation across different regions and ZIP codes. Insurance premiums are rising 8.7% faster than the average inflation rate.^[3]

We predict a continued increase in 2025. Here are a few of the reasons why:

The Home Insurance Domino Effect

David Seider, Chief Commercial Officer at The Zebra, shares more about what 2025 is likely to hold for homeowners, especially in response to the trickle-down effects of government regulation.

“The posture of state governments in Louisiana and Illinois may portend a more combative legislative stance as constituents lash out against higher home insurance prices. But that struggle could leave consumers — and many large American industries — in the lurch." ^[5] [6]

Residents in the Most Expensive State for Home Insurance Pay Nearly $8,000 on Average

In addition to individual factors like your claims history and features of your home, where your house is located is one of the biggest factors in how much you pay. 

As mentioned above, insurance is regulated by each state, so part of this huge divide is due to the state’s approach to insurance regulation. Another big factor: weather. Some states are more prone to large-scale weather disasters (like hurricanes) or frequent occurrences of smaller perils (like hailstorms). 

• The states with the highest annual premiums are Nebraska and Oklahoma. Nebraska had average annual premiums almost three times the national average, in part due to hail and volatile weather patterns. Both states have average annual home insurance premiums around $2,000 more than the next most expensive state. 
• The states with the lowest premiums are Hawaii and Vermont. Hawaii, in particular, has premiums one-fourth of the national average. That said, that doesn’t include the cost of hurricane or typhoon insurance, which many island homeowners must also carry.^[7]
• 21 states now pay an average of more than $2,000 a year in home insurance premiums.

A Poor Credit Score Can Mean 221% More for Home Insurance

So far, we’ve focused on where your home is located as the biggest factor in how much you will pay for home insurance. After all, what threats and perils it’s most likely to be subjected to are some of the biggest indicators of how likely you are to file a claim.

But there’s another factor when it comes to home insurance you might not realize is playing such a huge role in your premium – your credit score. In most states, insurance companies can use this information to determine whether or not to offer you a policy and also to help in determining what your rate will be. This is because insurance companies have noticed a correlation between credit score and the likelihood of people filing insurance claims. 

That said, not every state allows this practice. In California, Massachusetts, and Maryland, credit scores cannot be considered in determining rates. Interestingly, Hawaii also outlaws this practice for car insurance, but does allow credit score to be considered for pricing home insurance.

Key findings

• Nationally, the average for someone with Excellent credit is $2,260, and the average for someone with Poor credit is $7,260 – a difference of 221%
• By changing your credit score just one tier, you can save an average of 32% on your home insurance premiums. The biggest jump is going from Poor credit to Fair credit, which can reduce your premiums by half.
• Where you live again hugely matters. The difference between Excellent and Poor credit can be less than $100 (in Hawaii) to as much as $17,000 a year (in Oklahoma) 
• Recent news impacting credit scores: FICO announced its credit scoring will start to incorporate BNPL (buy now pay later) data, which could also impact credit scores. A recent consumer survey by The Zebra found that nearly 40% of Americans have used BNPL loans to make purchases.

Here are national averages by credit rating in states where credit is a factor:

How Much Does a Higher Deductible Really Save You?

Choosing how high you want your deductible to be is a personal choice. Deductibles are a standard part of property insurance, and are essentially your responsibility in the event of a claim before your insurance company covers the rest. 

Unlike with auto insurance, where deductibles are a fixed amount, in home insurance, there are actually two kinds: fixed dollar and percentage.  

• Fixed dollar standard deductible: This is the fixed dollar amount you pay before your insurance company covers the rest of your claim. The most common amounts range from $500 to $2,000, but higher and lower amounts can be found as well.
• Percentage deductible: This type of deductible is calculated as a percentage of your dwelling coverage amount, i.e., your home’s insured value. It usually ranges from 1% to 10%.

In looking at the fixed dollar amounts, raising your deductible can save you a little money on your premiums. Here are the U.S. national averages for how much you will pay at different fixed deductibles.

When selecting your homeowners insurance deductible, the most important question to consider is: What can you afford now versus over time? Striking the right balance between your deductible (a short-term, out-of-pocket cost) and your premium (an ongoing, long-term expense) is key to making a financially sound decision.

Before shopping for a policy, ask yourself the following:

• A lower premium might seem appealing, but could you realistically cover a higher-than-average deductible if you need to file a claim?
• Would you prefer paying slightly more each month in premiums to reduce your financial burden in the event of a covered loss?
• Are there specific risks—like hurricanes or other natural disasters—that your home's location is especially vulnerable to? If so, you may be required to carry additional deductibles for those perils, which could increase your overall cost.

How to Save on Home Insurance

If you live in a state with incredibly high (and rising!) home insurance rates or have bad credit or any number of factors that can negatively impact your insurance options, it can feel daunting.

Short of selling your house and trying to find a place immune to climate change, how can you possibly save on home insurance?

Here are some ways:

The Zebra’s Dynamic Insurance Rating Tool Data Methodology

The Zebra’s Dynamic Insurance Rating Tool for home and auto insurance rates utilizes the latest ZIP code-level rate filings from across the U.S., sourced from Quadrant Information Services and S&P Global. These filings, typically updated annually or biennially by insurers, are verified through Quadrant’s QA process and then integrated into The Zebra’s estimator.

The displayed rates are based on a dynamic home and auto profile designed to reflect the content of the page. This profile is tailored to match specific factors such as age, location, and coverage level, which are adjusted based on the page content to show how these variables can impact premiums.

For a comprehensive understanding, see our detailed methodology.