How much does home insurance cost?

National average: $1,800-$2,500/year ($150-$210/month). Range: $800-$5,000+/year depending on: location (biggest factor), home value and rebuild cost, age and condition, claims history, credit score, and deductible. The most expensive states: Florida, Louisiana, Oklahoma, Texas (storm risk). The least expensive: Hawaii, Vermont, Utah, Oregon. Ways to reduce cost: bundle with auto (5-25% off), raise your deductible, improve security systems, get a new roof, and maintain a claims-free record.

What does home insurance cover?

Standard homeowners insurance covers: fire and smoke damage. Wind and hail (the most common claims). Lightning strikes. Theft and vandalism. Falling objects (trees on your house). Water damage from sudden events (burst pipe). Liability (someone injured on your property). NOT covered (common exclusions): floods (need separate NFIP or private flood policy). Earthquakes (need separate policy). Sewer backup (need rider). Normal wear and tear. Pest damage (termites). Mold (usually limited). If you live in a flood zone: get flood insurance separately. If you live in earthquake country: get earthquake coverage separately.

How much home insurance do I need?

Dwelling coverage: enough to rebuild your home from scratch (replacement cost, not market value). Contact your insurer for a replacement cost estimate or use an online calculator. Personal property: enough to replace your belongings. Do a home inventory (walk through each room and list items and values). Liability: minimum $300,000 recommended. Consider an umbrella policy ($1M) for additional protection (costs $150-$300/year). Review and update annually: after renovations, major purchases, or market changes.

What is the difference between actual cash value and replacement cost?

Actual cash value (ACV): pays the depreciated value of items. Example: your 5-year-old TV was worth $1,000 new. ACV might pay $400 (depreciated value). You are out of pocket $600 to replace it. Replacement cost: pays to replace the item at current prices. Example: that same TV costs $800 to replace today. Replacement cost pays $800. You are out of pocket nothing (minus deductible). Recommendation: always choose replacement cost coverage for both dwelling and personal property. The premium difference is small (10-20% more) but the coverage difference is enormous.

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Home Improvement

Home Insurance Guide: Coverage, Cost & Tips

Lumberama Editorial Team, Home Insurance & Financial Planning Specialists Oct 11, 2026 11 min read

Coverage Types

Dwelling coverage (Coverage A): Covers the structure of your home (walls, roof, foundation). Should equal the cost to rebuild your home (not market value). Typical: $200,000-$500,000+.

Other structures (Coverage B): Covers detached structures (garage, shed, fence, pool). Typically 10% of dwelling coverage.

Personal property (Coverage C): Covers belongings (furniture, clothing, electronics). Typically 50-70% of dwelling coverage. Standard policies cover items at actual cash value (depreciated). Replacement cost coverage pays to replace items at current prices (recommended).

Loss of use (Coverage D): Covers living expenses if you cannot live in your home after a covered loss. Hotel, meals, temporary housing. Typically 20-30% of dwelling coverage.

Liability (Coverage E): Covers legal expenses if someone is injured on your property. Standard: $100,000-$300,000. Recommended: $300,000-$500,000. Umbrella policy for additional coverage.

Medical payments (Coverage F): Covers minor injuries to guests (no lawsuit needed). Typically $1,000-$5,000.

What Is and Is Not Covered

Typically covered: Fire and smoke damage. Wind and hail. Lightning. Theft and vandalism. Falling objects (trees). Ice, snow, and sleet damage. Volcanic eruption. Sudden water damage (burst pipe).

Typically NOT covered: Floods (requires separate flood insurance). Earthquakes (requires separate policy or rider). Sewer backup (requires rider). Mold (limited or excluded). Maintenance issues and wear and tear. Pest damage (termites, rodents). Sinkholes (may require rider). Home business equipment (may need rider).

Costs

Average annual premium: National average: $1,800-$2,500/year. Range: $800-$5,000+ depending on location and home value.

Factors affecting cost: Location (coastal, tornado alley, wildfire zones = higher). Home value and rebuild cost. Age and condition. Claims history. Credit score. Deductible amount. Coverage limits. Proximity to fire station. Roof age and type.

Ways to save: Bundle with auto insurance (5-25% discount). Increase deductible (from $500 to $2,500 can save 10-25%). Improve home security (alarm, cameras: 5-15% discount). New roof (5-20% discount). Impact-resistant windows and doors. Loyalty discounts. Claim-free discounts. Retiree/age 55+ discounts.