Lowest Homeowners Insurance States

Homeowners in the U.S. are faced with spiking home insurance premiums that continue to inch upward. A December 2013 study conducted by the National Association of Insurance Commissioners (NAIC) says the average homeowners insurance premium rose by 7.6 %  in 2011 after a 3.3% increase in 2010. And in 2013, homeowners paid an average $1,022 for one year of home insurance coverage in the U.S., according to the Insurance Information Institute (III). 

Homeowners in Gulf states such as Florida, Texas, Mississippi and Louisiana paid the most for home insurance in 2013. But not everyone saw their budgets stretched by expensive premiums.

Many in the U.S. enjoy premiums that are much more tolerable. Who paid the least?

The states with the lowest home insurance premiums, according to the latest available data (2012) from the Insurance Information Institute (III), are:

1. Idaho – $538 

2. Oregon – $567

3. Utah – $580

4. Wisconsin – $631

5. Washington – $648

6. Nevada – $674

7. Delaware – $678

8. Arizona – $691

9. Ohio – $721

10. Maine – $ 741

What are these states doing to keep their home insurance costs low? It all comes down to geography and Mother Nature.

Natural disasters – floods, wildfire, thunderstorms and earthquakes – accounted for $12.8 billion in losses covered by home insurance companies in 2013. The states that experienced the largest number of natural disasters, or the most costly hurricanes, floods, etc., happen to be located in regions prone to these type of catastrophic disasters. So it’s no wonder residents living in regions with the fewest catastrophic losses enjoy lower premiums.

In fact, many of the states where home insurance rates are the lowest – for example, Nevada, Washington, Utah and Arizona – have some of the lowest National Hazard Risk Scores in the country, according to the III. That rating is comprised of nine natural disasters including flood, tornado, earthquake, wind and hurricane.

“Having such low scores is why their insurance rates are also lower. These states have a low risk in terms of hazardous natural events,” says Loretta Worters, vice president of the Insurance Information Institute. 

Taming your Costs

Regardless of weather and location, each insurer has its own metrics to set prices, says Noah Bank, a licensed insurance broker in Plainville, NY. “Pricing of rates can vary depending on an insurer’s appetite for certain building construction, roof type, condition or age of the home, heat type, if an oil tank is on premise or underground, the proximity to the coast, if there are any pets, swimming pool, trampoline, security systems and more.”

To ensure you pay the most economical rate possible, Bank suggests shopping around for coverage.

He recommends starting with an independent insurance agent or broker who works with multiple insurers. “Ask to see multiple quotes and compare quotes to see what works best for you.” You can also contact captive agents, those who work for one company and only sell that company's products.  

When shopping for coverage, make sure to consider different deductibles and weigh where it makes sense to self-insure. “All policies have different terms and exclusions which can affect the premium.” 

The Bottom Line

Whether you live in a region prone to weather disasters or not, Bank says you should never shy away from asking questions about how your annual premium was determined. “Don’t be afraid to ask questions so you can understand what you're paying for,” he stresses.

Be sure to incorporate any updates done to the home and discuss its safety and security features, including whether a resident is retired or home most of the time, which may reduce the risk of vandalism or theft.  “Any eligible savings is better in your pocket than in that of your insurance company,” he says. For more, see Find the Best Homeowners' Insurance.