Homeowners Insurance Guide: Coverage, Costs, and How to Save (2026)
By Wealthvieu · Updated
Homeowners insurance is required by mortgage lenders and protects your biggest asset. Here’s everything you need to know to get the right coverage at the right price.
Table of Contents
What Homeowners Insurance Covers
A standard HO-3 policy includes six types of coverage:
Coverage Type
What It Protects
Typical Limit
Dwelling (Coverage A)
Home’s structure
Full replacement cost
Other structures (B)
Garage, shed, fence
10% of dwelling
Personal property (C)
Furniture, electronics, clothes
50-75% of dwelling
Loss of use (D)
Temporary housing if displaced
20-30% of dwelling
Personal liability (E)
Lawsuits from injuries on property
$100K-$500K
Medical payments (F)
Minor injury costs for guests
$1,000-$5,000
Example: $350K Home
Coverage
Limit
What It Means
Dwelling
$350,000
Full rebuild cost
Other structures
$35,000
Garage, fence
Personal property
$175,000-$262,500
All your belongings
Loss of use
$70,000-$105,000
Hotel + expenses while displaced
Liability
$300,000
Someone injured on your property
Medical payments
$5,000
Guest’s medical bills
What’s NOT Covered
Peril
Covered?
Solution
Fire, lightning
✅ Yes
—
Wind, hail
✅ Yes
—
Theft, vandalism
✅ Yes
—
Falling objects
✅ Yes
—
Snow/ice damage
✅ Yes
—
Flooding
❌ No
NFIP or private flood insurance
Earthquakes
❌ No
Earthquake endorsement or separate policy
Sewer backup
❌ No
Sewer backup rider ($50-$100/year)
Mold (most cases)
❌ No
Mold endorsement
Normal wear & tear
❌ No
Regular maintenance
Pest damage (termites)
❌ No
Pest service contract
Dog bites (some breeds)
⚠️ Varies
Check breed exclusions
Average Cost by State
State
Avg Annual Premium
Monthly
Vermont
$890
$74
New Hampshire
$950
$79
Utah
$1,050
$88
Oregon
$1,100
$92
Idaho
$1,150
$96
Wisconsin
$1,200
$100
Washington
$1,250
$104
Pennsylvania
$1,350
$113
California
$1,500
$125
Virginia
$1,600
$133
Michigan
$1,700
$142
New York
$1,800
$150
Georgia
$2,000
$167
North Carolina
$2,100
$175
South Carolina
$2,300
$192
Texas
$2,800
$233
Mississippi
$2,900
$242
Oklahoma
$3,200
$267
Colorado
$3,400
$283
Nebraska
$3,600
$300
Louisiana
$4,200
$350
Florida
$4,800
$400
Factors That Determine Your Rate
Factor
Impact
Location (state, zip, proximity to coast/fire)
Highest impact
Home age and construction type
Older homes cost 20-40% more
Dwelling coverage amount
Higher coverage = higher premium
Deductible chosen
Higher deductible = 10-25% lower premium
Credit-based insurance score
Poor credit = 40-90% higher rates
Claims history
1+ claims = 10-40% increase
Roof age and material
New roof = 10-20% discount
Security/safety features
Alarm, smoke detectors = 5-15% discount
Choosing the Right Deductible
Deductible
Annual Premium (est.)
You Pay at Claim
Premium Savings vs. $500
$500
$2,500
$500
—
$1,000
$2,250
$1,000
$250/year
$1,500
$2,050
$1,500
$450/year
$2,500
$1,900
$2,500
$600/year
$5,000
$1,750
$5,000
$750/year
Best strategy: Choose the highest deductible you can comfortably pay out-of-pocket. For most homeowners, $1,000-$2,500 is the sweet spot.
How to Save on Homeowners Insurance
Strategy
Typical Savings
Bundle with auto insurance
10-25%
Increase deductible to $2,500
15-25%
Install security system
5-15%
New roof
10-20%
Improve credit score
10-40%
Claims-free discount (3-5 years)
5-10%
Shop around every 2-3 years
10-30%
Age 55+ or retiree discount
5-10%
Replacement Cost vs. Actual Cash Value
Type
What You Get
Example ($10K couch, 5 years old)
Replacement cost
Cost to replace with equivalent new item
$10,000
Actual cash value
Depreciated value
$4,000-$6,000
Always choose replacement cost coverage — the difference in premium is typically $50-$100/year but the payout difference can be tens of thousands.
Key Takeaways
Average homeowners insurance costs $2,200-$2,500/year nationally — but ranges from $890 (VT) to $4,800+ (FL)
Standard HO-3 policies cover fire, wind, theft, and liability but NOT floods or earthquakes
Choose replacement cost over actual cash value — pays to replace items at current prices
Bundling auto + home, raising deductibles, and shopping regularly can save 25-40% on premiums
Flood and earthquake coverage are separate policies — essential in at-risk areas
