Written by Irena Martincevic
Published on February 25th, 2026
| Topic | Key Insight |
|---|---|
| Average Premium | $2,420 per year, varies by state. |
| Exclusions | Standard policies do not cover floods or earthquakes. |
| Valuation | Insure for replacement cost, not market value. |
| Savings | Bundling can save 10–25%. |
| Research | Check A.M. Best financial strength ratings. |
Ozzy's takeaways
- The average homeowners insurance premium in the U.S. is $2,420 per year, but costs vary widely by state and home value.
- Standard policies do not cover floods or earthquakes, separate coverage is required for both.
- Insure your home for its replacement cost, not market value. They're often very different numbers.
- Bundling home and auto insurance can save 10–25% on both premiums.
- Always check a company's A.M. Best financial strength rating before buying a policy.
Homeowners insurance helps protect your home, belongings, and finances if something goes wrong, from a fire or storm to a theft or liability claim. Most homeowners need it to qualify for a mortgage, but even if it weren't required, it's one of the most important financial safeguards you can have.
The cost and coverage of homeowners insurance can vary widely depending on where you live, the type of home you own, and how much protection you choose. The national average is $2,420 per year, but your state, home, and choices can push that number much higher or lower.
This guide breaks down how homeowners insurance works, what it covers, what it costs, and how to choose the right policy for your situation.
What is homeowners insurance?
Homeowners insurance is a type of property insurance that covers damage to your home and personal belongings, as well as liability if someone is injured on your property.
A standard policy typically works like this:
You pay a premium (monthly or annually).
If a covered event happens, you file a claim.
You pay a deductible, and your insurer covers the rest up to your policy limits.
For example: if a storm causes $15,000 in roof damage and your deductible is $1,000, you pay $1,000 and your insurer covers the remaining $14,000.
Most policies are structured to cover both physical damage to your property and financial risk from lawsuits or temporary living expenses if your home becomes uninhabitable.
What does homeowners insurance cover?
A standard homeowners policy covers six categories of risk: your home’s structure, detached structures on your property, personal belongings, personal liability, temporary living expenses, and minor medical costs for injured guests.
What does a standard policy include?
A standard homeowners insurance policy includes these six coverage types:
Dwelling coverage: Pays to repair or rebuild your home's structure (walls, roof, floors, built-in appliances, and attached structures) if damaged by a covered event like fire, storms, hail, or vandalism.
Other structures coverage: Covers detached structures on your property: garages, sheds, fences, gazebos, and guest houses.
Personal property coverage: Protects your belongings inside your home and away from home: furniture, electronics, clothing, and appliances.
Liability coverage: Covers legal defense, court judgments, and settlements if someone is injured on your property or you accidentally damage someone else's property.
Loss of use coverage: Pays for hotel stays, meals, and other extra costs if your home becomes unlivable after a covered loss.
Medical payments coverage: Pays minor medical expenses if a guest is accidentally injured on your property, regardless of fault.
What doesn’t homeowners insurance cover?
Standard homeowners policies exclude flooding, earthquakes, sewer backup, wear and tear, pest damage, and business-related liability, each of which requires a separate policy or endorsement to cover.
Flood damage — requires a separate flood insurance policy
Earthquake damage — requires a separate earthquake policy or endorsement
Normal wear and tear — gradual deterioration isn't a covered loss
Maintenance-related issues — deferred repairs and ongoing neglect aren't covered
Pest damage — termites, rodents, and other infestations are excluded
Sewer backup — one of the most common coverage surprises; typically requires a separate endorsement
Business liability at home — standard policies provide very limited coverage for home-based business activity
What are home insurance endorsements?
Home insurance endorsements are optional add-ons that customize your standard policy to cover specific risks it doesn’t address by default. Common endorsements include:
Guaranteed or extended replacement cost: covers rebuild costs that exceed your policy limit, increasingly important as construction costs have risen sharply since 2021.
Scheduled personal property: full-value coverage for high-value items like jewelry, art, or collectibles that exceed standard sub-limits.
Sewer or water backup coverage: one of the most cost-effective add-ons relative to how frequently it's needed.
Flood insurance: purchased as a separate policy through the NFIP or private insurers.
Earthquake coverage: available as a separate policy or endorsement depending on your state.
Ordinance or law coverage: pays for the additional cost of rebuilding an older home to current building codes.
These options increase your premium but can significantly reduce out-of-pocket risk.
Which endorsements do you need?
Not sure which add-ons apply to your situation? Answer 3 quick questions.
How much homeowners insurance do you need?
The right amount of homeowners' insurance depends on more than your home’s market value. Insurers typically focus on replacement cost, how much it would cost to rebuild your home today.
When choosing coverage amounts, consider:
The cost to rebuild your home
The value of your personal belongings
How much liability protection you need
Underinsuring your home can leave you paying thousands out of pocket after a claim, while overinsuring can mean unnecessarily high premiums.
2026 home coverage tool
What affects homeowners insurance cost?
Homeowners insurance premiums are calculated using a risk-based pricing model. Insurers evaluate how likely you are to file a claim and how expensive that claim would be. Some of the factors that drive your premium are within your control, but others aren't.
Location: Crime rates, weather risks, and rebuilding costs vary by area.
Home characteristics: Age, size, materials, and condition of the home.
Claims history: Past insurance claims can raise rates.
Credit-based insurance score: Used in many states.
Deductible amount: Higher deductibles usually mean lower premiums.
Because insurers weigh these factors differently, prices can vary significantly between companies.
Average cost of homeowners insurance
The national average homeowners insurance premium in 2026 is $2,420 per year (~$200/month), based on a standard policy with $300,000 in dwelling coverage. But where you live can make that number look completely different.
Two homeowners in different states, or even different ZIP codes, can pay very different premiums for similar coverage.
Having the right details on hand makes the quoting process faster and ensures you get accurate pricing. Here's what most insurers will ask for:
- Property address — including ZIP code, which affects local risk and pricing.
- Year built and construction details — home age, square footage, exterior material, and number of stories.
- Roof type and age — insurers weigh this heavily. Learn what affects your premium →
- Prior insurance claims — typically the last 3–5 years of claims history.
- Desired coverage limits and deductible — how much you want to insure your home for, and what you're willing to pay out-of-pocket. How much coverage do you need? →
- Safety features — smoke detectors, security systems, and storm-resistant upgrades may qualify you for discounts.
How do you choose a homeowners insurance company?
The right homeowners insurance company combines fair pricing, financial strength to pay claims after a major disaster, strong customer service, and the coverage options your home actually needs. When comparing insurers, consider:
Weather and natural disaster coverage
Standard homeowners insurance covers some natural disasters like fire, wind, hail, and lightning, but excludes others, most importantly, flooding and earthquakes, which each require separate coverage.
How can you save money on homeowners insurance?
You can lower your homeowners insurance costs without cutting your protection. The most effective moves are bundling policies, raising your deductible, upgrading your roof, and shopping around before renewal. Other steps worth taking:
Insurance Savings
5 ways to lower your home insurance premium
Check each strategy you're willing to try — see your potential annual savings add up.
Bundle home and auto insurance
Most major insurers offer a 5–15% multi-policy discount
Raise your deductible to $2,500
Moving from $500 can lower your annual premium noticeably
Replace or upgrade your roof
Impact-resistant materials can earn discounts in hail-prone states
Install a security or smoke alarm system
Most insurers offer 2–8% discounts for monitored systems
Shop around before your renewal date
Getting 3+ quotes takes about an hour and often saves hundreds
Small changes can add up to meaningful savings over time.
Homeowners Insurance FAQ
Is homeowners insurance required?
Homeowners insurance isn't legally required by any state, but mortgage lenders almost universally require it as a condition of the loan. Once you own your home outright, you can technically go without it, but the risk of absorbing a major loss out of pocket makes coverage strongly advisable for most homeowners.
Does homeowners insurance cover roof damage?
Roof damage is usually covered if it’s caused by a covered event, such as a storm, hail, a windstorm, or a fallen tree. Damage from normal aging, wear and tear, or lack of maintenance is not covered.
Does homeowners insurance cover water damage?
It depends on the source. Sudden, internal water damage like a burst pipe, an appliance malfunction, or an ice dam, is generally covered. Flooding from outside your home is not covered and requires separate flood insurance. Sewer backup is also typically excluded from standard policies, but can be added as an endorsement.
Can I switch homeowners insurance companies anytime?
Yes. You can switch at any time, though timing it around your renewal date is usually simplest. If you cancel mid-policy, you'll typically receive a prorated refund for any unused premium.
Does homeowners insurance cover valuables?
Standard policies include personal property coverage, but it comes with sub-limits for high-value categories. Jewelry is often capped at $1,500 total. Art, collectibles, and high-end electronics may have similar restrictions. If you own items exceeding these limits, you'll need scheduled personal property coverage, a specific endorsement that covers items at their full appraised value.
Next steps
If you’re ready to compare options, gathering quotes can help you understand what coverage costs for your home and situation.
About the Author
Irena MartincevicIndustry Analyst
