What is the average price of homeowners insurance?

The average price of homeowners insurance doesn’t really tell much about insurance rates nationally, because the annual premium varies so widely from state to state. The average is pretty much just a number, not a reality.

For example, homeowners in Utah might feel pretty smug about paying just $530 per annum on average for homeowner insurance when they hear that the average annual premium countrywide is $853, according to HomeInsurance.com. Paying hundreds of dollars less for insurance than does the average homeowner across the U.S. is a pretty good feeling.

But homeowners in Oklahoma probably blanch when told that the average national premium is $853 considering Sooner homeowners pay $1,730 on average for a year’s worth of insurance, more than three times what their peers in Utah pay and hundreds of dollars more than the average homeowner in the country. This is not a good feeling.

So why the great variance in the average price of homeowners insurance? Location, location, location is one factor. Utah doesn’t have tornados, Oklahoma does. (On the other hand, Oklahoma doesn’t have surges of sea water pushed by tropical storms, such as was recently experienced by New York and New Jersey; how this will impact insurance premiums in the states battered by Sandy remains to be seen.)

So the intensity and frequency of perils is a factor in average premiums. Mother Nature is a good gal, but when she acts up, someone has to pay for it. Insurers are more fearful of high winds—including hurricanes and tornados—than of wildfires and gigantic snowfalls, probably because the latter two can be largely mitigated by proper timber controls and structural integrity. Tornados are pretty much unstoppable.

Yet there are many other factors in determining the average price of homeowners insurance.  These include the average cost of homes in an area and the replacement cost of contents in the homes. Also influencing cost is the levels of deductible desired, the competitiveness of insurance companies, and the economic vitality of an area, which affects property values.

The average price of homeowners insurance is measurable, but it doesn’t mean much on a national scale. Where the average is important is locally. If a homeowner is paying far more than the average in a local area, it might be time to sit down with his agent and ask, why?

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