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Average home insurance rates

By Posted : October 20, 2017

Average home insurance rates can vary a lot, depending on where you live, your deductible amount and the amount of coverage you need. That’s why it’s important to have as much detailed information as possible when planning the home insurance basics for your budget.

How much does home insurance cost?

Below you will find average home insurance rates by ZIP code for 75 different coverage levels. Enter in your ZIP code, then select dwelling coverage, deductible and liability amounts and you’ll get the average homeowners insurance cost for your neighborhood and desired policy limits. Further below we explain how to choose the best limits to ensure sufficient coverage. You can get a customized rate so you know what to expect to pay and can see how much you can save by comparing home insurance companies.


There are many variables to consider when buying homeowner insurance, but you typically start by deciding the coverage amount for the following:

  • dwelling
  • deductible
  • liability

The limits of your coverage for the following are typically a set percentage of your dwelling coverage limit as shown below:

  • other structures – 10 percent
  • personal property – 50 percent (you choose between replacement value or actual cash value)
  • loss of use – 20 percent

How much dwelling coverage do I need?

When buying homeowners insurance, you should get enough dwelling coverage to match the full replacement cost of your home. The cost to repair damage to your home or rebuild it completely at equal quality — at current prices – is the replacement cost. Figuring out how to calculate home replacement cost can be a challenging task, but can be done by making a thorough inventory of building materials used for your home, using online calculators, or, you can hire an appraiser to do it for you.

How much liability coverage do I need?

Liability insurance provides a financial safety net for the household. It pays out when you and your family members are legally responsible for others’ injuries or property damage. That’s to say, it covers the medical expenses of people who are hurt while in your home or on your property, as well as damage caused to neighbors’ property. Personal liability also covers legal fees if you are sued, as well as any resulting judgments from a lawsuit, up to your policy limits.

Most home insurance policies come with $100,000 in personal liability insurance but this is rarely enough coverage. The cost to defend a lawsuit or to pay for medical expenses for a serious injury can easily exceed that amount. Most experts recommend upping your limits to at least $300,000. 

What deductible amount should I choose?

The deductible your share of the repair cost when you file a claim. Your home insurance rate will be lower if you choose a high deductible. If you have a $500 deductible, you're going to pay more on your premiums than if you have a $2,000 deductible.

Going with a higher deductible will save you money. It will also reduce your home insurance claims. That’s why it’s important to know the trade-off you’re making – and be comfortable with it -- when choosing a home insurance deductible.

 

Average home insurance rates by ZIP code

The highest homeowners insurance rates in the nation belong to ZIP code 33050, home to Conch Key, Florida, according to Insurance.com's analysis of average rates for nearly every ZIP code in the country.

ZIP codes in Venice, Louisiana and Pascagoula, Mississippi rank second and third, respectively, behind Conch Key, for the following coverage:

  • $200,000 in dwelling coverage
  • $1,000 deductible
  • $100,000 liability coverage

 

Rankings for the priciest ZIP codes were determined by identifying the ZIP code with the highest average rate for home insurance in each state and then listing them in descending order. For the cheapest ZIP codes, rankings were determined by identifying the ZIP code with the least expensive average rate for home insurance and then listing them in ascending order. Insurance.com's analysis showed a national average rate of $1,228 for $200,000 dwelling coverage with a $1,000 deductible and $100,000 in liability.

The top 10 most expensive locations by ZIP code, on average, for home insurance are:

ZIP codeStateCityAverage annual premium
33050 Florida Conch Key $11,702
70091 Louisiana Venice $11,151
39595 Mississippi Pascagoula $7,922
36561 Alabama Gulf Shores $7,850
77550 Texas Galveston $7,105
29577 South Carolina Myrtle Beach $3,858
73121 Oklahoma Forest Park $3,243
02554 Massachusetts Nantucket $2,970
72475 Arkansas Waldenburg $2,571
67868 Kansas Garden City $2,546

The top 10 least expensive locations for home insurance are:

ZIP codeStateCityAverage annual premium
96814 Hawaii Honolulu $332
07920 New Jersey Basking Ridge $485
83729 Idaho Boise $498
05404 Vermont Winsooki/Burlington $525
97003 Oregon Beaverton $532
98279 Washington Olga $539
94040 California Mountain View $544
19736 Delaware Yorklyn $558
84010 Utah Bountiful $560
17584 Pennsylvania Willow Street $578

How home insurance rates are set, and why they vary by location

Home insurance companies assess many factors when setting rates. Rates can fluctuate significantly from state to state, or even neighborhood to neighborhood, depending on how insurers assess the various things they look at to calculate your rate. The biggest factors influencing the cost of homeowners insurance are:

  • Your home’s location, which reflects its exposure to hazards, such as storm damage, wild fires, burglaries and so on
  • Your home’s value
  • The cost to rebuild your home if it were completely destroyed
  • Local construction costs, which account for building materials availability and price, building regulations, among other factors.
  • Your home’s age
  • Risk exposure on your property, for instance, from a swimming pool, trampoline, guest house or aggressive dog breed
  • Your neighborhood’s fire protection rating, or, how close your home is to a fire station
  • Your personal and neighborhood claims history, as well as the previous homeowner’s claim history
  • Your insurance score, which is based, in part, on your credit score (only two states don’t allow this – Maryland and Hawaii)

For more information on how homeowner premiums are determined, review some of the main factors affecting your home insurance rate.

Reasons why rates are so low in some areas

While Hawaii ZIP 96813 has the lowest average rate in the nation, dozens of other Hawaii ZIP codes are also among the cheapest in the country. So, why does Hawaii have such low home insurance rates? It may be that standard home policies in Hawaii do not absorb high claims costs for hurricane damage.

“One major factor in Hawaii is the fact that most standard homeowner insurance policies do not cover hurricane damage. Hurricane Iniki, which hit in 1992 did so much damage that the majority of insurers excluded hurricane damage from their coverage. Homeowners in Hawaii now have to purchase a separate hurricane damage policy,” says Michael Barry, spokesman for the Insurance Information Institute.

Barry also points to Hawaii’s underwriting laws, which prohibit the use of credit ratings. “The fact that Hawaii does not consider credit ratings could also be a factor,” he says, “but probably has a bigger impact on car insurance rates than homeowner premiums.”

Boise, Idaho rates are low compared to the rest of the country, in part, because of the following factors, says Jim Baxter, owner of Baxter - Newell Insurance Service in Garden City, Idaho:

  • Few major weather related losses.
  • A low crime rate.
  • Relatively few major liability lawsuits filed.
  • Many well organized neighborhood watch groups.

 

Barry agrees, saying, in general, that “Neighborhood watches are a factor that would be consider by insurers and can have an impact on rates. These groups help prevent vandalism and theft leading to fewer claims, and lower rates.”

He says that typically rural areas and cities with low population density will have lower home insurance rates. That’s because the cost to rebuild tends to be more affordable and insurers consider that when setting rates.

“Factors that tend to lower rates are often the reverse of factors that increase rates,” says Barry. “Low chance of natural disasters, smaller population, and lower building costs will all positively impact homeowner insurance rates.”

The ability of an area to successfully fight fires can impact rates as well. Well-placed fire stations with professional firefighters on staff improves a city’s rating and can reduce insurance costs over the long term, according to Barry.

Reasons why home insurance rates are so high in some areas

It’s likely no surprise that many of the most expensive ZIP codes for home insurance are in states that experience lots of severe weather. The most expensive ZIPs in Louisiana, Mississippi, Alabama, Texas, South Carolina and Massachusetts are all coastal areas prone to catastrophic storms that are costly to insurers, who then pass that cost to homeowners. Texas, Kansas, Oklahoma, Florida, Alabama and Mississippi have lots of tornadoes as well.

Naturally, the more claims paid out by insurers for damage due to wind, hail and flooding, the higher home insurance rates will be for everyone.

“Homeowner rates are based on actual and anticipated losses across the state so if a state is prone to natural disasters, it will push up the cost of insurance for everyone in the state,” says Barry. “It will have the biggest impact on areas where natural disasters tend to hit most often, coastal areas for example.”

For Florida in particular, there are also other issues. Aside from severe weather including tornadoes and hurricanes, Florida is seeing higher rates due to the frequency and severity of water claims associated with an Assignment of Benefit, according to the state insurance department.

Unfortunately, rates in Florida are also affected by a widespread scam that has resulted in insurers paying out inflated claims rather than going to court. Less than honest contractors ask homeowners to sign an Assignment of Benefits (AOB) form, which basically puts the contractor in charge of their claim as it assigns the benefits of their policy over to the contractor.

The shifty contractor then submits an inflated claim and demands payment. If your insurance company denies the claim because they feel it is inflated, a shifty trial lawyer (who has partnered with the contractor) sues the homeowners insurance company for payment, all of which can be done without the homeowner’s approval.

In most cases, insurers pay the inflated claims as it is cheaper than going to court. The cost of all of these inflated claims has led to increases in premiums for everyone in Florida, all due to fraud. According to The Consumer Protection Coalition, Florida AOB lawsuits have increased 90,000 percent since 2000.

 

How does your rate compare to the national average?

Here are are the nationwide average annual costs for home insurance for common coverage levels:

Average rateDwelling coverageDeductibleLiability
$1,228 $200,000 $1,000 $100,000
$1,244 $200,000 $1,000 $300,000
$1,737 $300,000 $1,000 $300,000
$2,252 $400,000 $1,000 $300,000
$2,790 $500,000 $1,000 $300,000
$3,295 $600,000 $1,000 $300,000