Shopping for home insurance requires knowing what homeowners insurance covers and how much coverage you need, understanding your options, and researching so you can find the best coverage at the lowest price. The average U.S. homeowners insurance premium is $2,777 yearly for $300,000 in dwelling and liability coverage with a $1,000 deductible. But your rates will depend on several things, some unique to you.
The good news is you can do most or all of your home insurance shopping online. Here, we’ll walk through the process of buying homeowners insurance, from selecting coverage to comparing quotes to signing your policy.
Where to buy homeowners insurance
You can buy home insurance from a selection of dozens of home insurance companies, ranging from the big national names like State Farm and Allstate to smaller, local companies that may serve only your state or a few states.
Both big companies and smaller ones are worth considering when you’re shopping. You can start by reviewing home insurance companies to narrow your choices.
Some companies sell policies only through agents; some sell only online, but most offer both. Consider whether you want the personal service of an agent or the convenience of online shopping when you decide where to buy a home insurance policy.
How to buy homeowners insurance
Shopping for homeowners insurance is one of the most important things you can do as a homeowner. Buying home insurance requires just a few simple steps.
- Decide how you’d like to get quotes. Most major insurers offer a variety of quoting options. You can get quotes online directly from an insurance company, speak to an agent over the phone or in person, call the insurance company’s customer service line or get multiple quotes at once with an online quote comparison tool.
- Decide how much coverage you need. Before you start shopping, you need to know how much dwelling coverage you need, which is a calculation of your home’s replacement cost. A calculator makes this easy, but the insurance company will also provide you with their own estimate. You’ll also need to decide on personal liability coverage limits and a deductible.
- Have all of the details ready. Make sure you have the following handy when you request quotes:
- Your home’s square footage
- Your personal information, including your social security number.
- Estimated value of home contents or personal belongings.
- Details about the home, like construction materials, upgrades and security systems
- Breed of your dog(s), if any
- Your claims history
- Request and compare quotes. Ensure you’ve requested multiple quotes using the same coverage levels and deductible. Take your time comparing each quote.
- Finalize the policy. When you’ve chosen the policy you want, contact the insurance company to make payment arrangements and finalize your application for coverage.
How much homeowners insurance do you need?
You need enough insurance to rebuild your home and replace everything in it. The basis of your home insurance policy is the dwelling coverage; most other coverages are set as a percentage of this amount.
Mortgage lenders require replacement cost coverage based on the calculated amount to rebuild your home from the ground up. Ensure you have an accurate calculation for that amount, considering current construction costs.
"One of the biggest misconceptions about homeowners insurance we find in our office is that people think they should insure their house for market value, i.e., what they would get if they sold it. The amount of insurance that should be purchased is what it will take to rebuild a home after a total loss,” says Kent Unruh of Unruh Insurance Agency, Inc., in Denver, PA.
What are the best companies for homeowners insurance?
Based on a 2023 analysis of rates, third-party ratings and insurance customer survey results, these are the best home insurance companies in the U.S.:
- State Farm
- Auto-Owners
- Travelers
- Allstate
- Erie
- Progressive
- Nationwide
- American Family
- Farmers
Of course, the best insurance company for your needs depends on personal factors, so take the time to do your research before you buy.
How much does homeowners insurance cost?
The average U.S. homeowners premium is $2,777 per year for $300,000 in dwelling and liability coverage with a $1,000 deductible, according to an analysis of rates from major insurance companies for nearly every ZIP code in the country.
However, your claims history and where you live can lead to higher or lower premiums. In some states, home insurance premiums are rising due to the increased threat of natural disasters. Florida’s home insurance crisis has driven rates among the highest in the nation.
The chart below shows the average annual homeowners insurance cost for a policy with $300,000 in coverage for both dwelling and liability and a $1,000 deductible.
To dig a bit deeper into what your rates might look like, check out our home insurance calculator.
Factors that affect homeowners insurance rates
Your home's value and insurance claim history influence your homeowner's insurance rate, but many other factors affect home insurance rates, too. Here are some of those factors:
- Credit score
- Claims filed by the previous homeowner
- Number and type of pets
- Garage size
- Attractive nuisances (i.e., pools, trampolines)
- Home business
- Your location
There are also a lot of ways to save on homeowners insurance. For example, home insurance discounts can decrease your rates, so ask about them and factor them into your quote comparison.
Frequently asked questions about buying homeowners insurance
How should I handle buying homeowners insurance for the first time?
Buying home insurance for the first time is the same as any other time regarding what steps to follow. It may feel a bit more stressful since you’ve never done it before, and it’s also paired with your first time buying a home and, most likely, getting a mortgage. However, the steps are the same.
Remember that you must have your homeowner's insurance policy ready before your mortgage closes, so don’t put it off.
Can I buy homeowners insurance online?
Yes. Many major insurers offer options to both quote and purchase a policy online.
Who pays for the first year coverage of homeowners insurance?
The homeowner is always responsible for the cost of homeowners insurance. However, many homeowners pay for their home insurance as part of their mortgage payment, and the mortgage company pays the insurance company from an escrow account created when the loan is finalized.
What is the difference between actual cash value and replacement cost?
Actual cash value (ACV) takes the replacement cost at today's prices and deducts depreciation. For example, if your roof has a 20-year lifespan and you make a claim on year 18, an actual cash value policy will deduct 18 years' worth of depreciation, which means you will be left paying for the majority of the replacement.
Replacement cost is the cost to replace the home or belongings at today's prices. In the same roof example, a replacement cost policy would pay for a new roof, at today's prices, after you've paid your deductible.
Standard home insurance uses replacement cost. You may also want to consider an extended replacement cost or guaranteed replacement cost endorsement.
