How Much is Homeowners Insurance on a $400,000 House?

Over the course of my experience as a licensed insurance agent, I’ve discovered that people looking for homeowners insurance want more than one or two options. They want to see a handful of options, understand what each policy affords, and see the costs.

That’s where this guide comes into the picture. In this review, we’ll help you understand the ins and outs of homeowners insurance on a $400,000 house. The average cost of a homeowners insurance policy with $400,000 in dwelling coverage is $3,186 per year. Home insurance covers the replacement cost of your home, not the market value, which is why we are looking at dwelling coverage.

Factors Influencing Homeowners Insurance Costs

Several key elements affect the cost of insuring a $400,000 home:

• Location: Areas prone to natural disasters or with high crime rates typically have higher premiums.​ Your proximity to a local fire station and fire hydrants also plays a role in determining your premiums.
• Home Characteristics: The age, size, and construction materials of the home influence insurance costs.​
• Coverage Selections: Higher coverage limits and lower deductibles increase premiums.​
• Personal Factors: A homeowner’s credit score and claims history can impact rates.

Cost Of Homeowners Insurance – By State

One might pay around $261 every month for a $400,000 home in Hawaii and $304 for the same policy in Oklahoma. It really is about location when discussing real estate.

For a home with $400,000 in dwelling coverage, here’s a look at the premiums you’d pay in some other U.S. states:

Most Expensive States For Homeowners Insurance

In order to bring out the right point, let’s stick with the example of a $400K home. Oklahoma heads the list with homeowners insurance policies available for $304 a month. From there, here are the other most costly states in order:

Cheapest states

Let’s now look at the cheapest states for homeowners insurance. You’ll see the lowest-cost state for homeowners insurance for a $400,000 home is Hawaii at $32 per month. From there, the other cheapest states are as follows:

Cost Of Homeowners Insurance – By Policy Limit

When buying a residence, you must insure it for its full value. The reality is that a decision as to whether to do that or not will likely not be left up to you. Why? Many lenders insist on it. Insurers will quote based on the replacement cost value of your home, not these two amounts.

Cost Of Homeowners Insurance – By Insurance Carrier

No two homeowners insurance providers are the same. That’s why you must get quotes from several different insurance companies before choosing a policy. As described previously, where you live can play a significant role in the cost of your policy. Insurance companies rate such factors differently.

The three basic homeowner policies are:

• HO1: Basic Form – This type of policy is also regarded as a named peril policy. An HO1 policy typically only covers 10 perils that the homeowner may encounter. No coverage will be offered if your incident isn’t included on the list.
• HO2: Broad Form – If covers more than is covered under the basic form. HO2 policies typically cover 16 named perils including wind, fire, freezing, theft and vandalism. Some HO2 policies also cover personal property and personal liability.
• HO3: Special Form – This is the most common types of home insurance policy. It merges the coverages provided in HO1 and HO2 policies and adds medical payments, liability insurance, and additional living expenses. The HO3 also includes personal property coverage, and it’s an ‘open peril’ policy since it covers all perils save for any perils specifically excluded via your policy.

Each of these will carry a different cost, so when pricing your policy, ensure you receive the correct HO form policy quote.

Based on my analysis, Allstate provides the cheapest average annual cost for a homeowners insurance policy at an average rate of $2,319 for a $400k dwelling coverage policy.

Cost Of Homeowners Insurance – By Deductible

Depending on the deductible that you choose, your insurance costs will likely change. Take a look at some average costs for home insurance on a $400,000 home for different deductible amounts.

Homeowners Insurance Cost – By Credit Score

Credit scores have an impact on the cost of your home insurance premiums. Here’s a quick look at the average costs of home insurance on a $400,000 home for different credit ratings.

How Do You Calculate How Much Coverage You Need For a $400,000 House?

It is vital to understand your home. That’s the case whether you have resided there for one year or several years. A homeowners policy is a big decision – one that you can’t make lightly.

Remember that it’s something to have in place in the event you suffer loss, so you need to ensure you have the right coverage for your needs before signing on the dotted line. Consider the following:

1. Dwelling coverage – It is important that the replacement cost coverage for your home considers current inflation for construction materials and labor so you don’t face a shortfall when suffering a covered loss.
2. Other Structures – These include detached garages, sheds, gazebos, in-ground swimming pools and even doghouses.
3. Your personal belongings – Your furniture, clothes, electronics, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disasters. The coverage is generally 50 to 70% of the dwelling insurance you have on the structure of the house.
4. Loss of use/additional living expenses – This pays the additional costs of living away from home if you cannot live there due to damage from a an insured disaster. It covers hotel bills, restaurant meals and other costs, over and above your usual living expenses, incurred while your home is being repaired or rebuilt.
5. Liability protection – Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. Liability coverage also provides no-fault medical coverage, so if a friend or neighbor is injured in your home, they can simply submit medical bills to your insurance company.

What Does Your Home Insurance Need to Cover?

While it was brought up earlier, it’s time to dig a little deeper. What coverage does homeowners insurance provide in your $400,000 home? A HO3 policy has various coverage levels, but it also has a lot of standard exclusions. Among these are the following:

• Power failure
• Intentional damage
• Flood damage
• Neglect
• Mold damage
• Rodent infestation
• Pet damage
• Earthquake
• Foundation issues
• Defective construction

You can also add more coverage to make up for excluded items. Consider the following:

Flood Damage

Flood damage is a homeowner’s nightmare. Consider rainwater. A homeowners insurance policy will cover water damage caused by rainif it enters the home from the “top down” such as a hole in your roof caused by a windstorm.

You won’t be covered if the water rises damage stems from water rising from the ground up, however. You’ll require Flood Insurance for proper coverage. Flood insurance typically needs to purchased separately through the National Flood Insurance Program or a private flood insurers. Some home insurers offer it as an endorsement.

Earthquake Damage

Earthquake damage is another type of natural disaster that isn’t usually covered by a standard HO3 policy. But you can get earthquake insurance coverage as an add-on option from most home insurers. It’ll protect your residence and possessions from earth movement.

In California, the most earthquake-prone state, coverage is offered through the California Earthquake Authority..

Comprehensive homeowners insurance should address:

Dwelling Coverage

Protects the physical structure of your home against covered perils.​

Personal Property Coverage

Safeguards your belongings, such as furniture and electronics.​

Liability Protection

Covers legal expenses if someone is injured on your property.​

Additional Living Expenses (ALE)

Pays for temporary housing and related costs if your home becomes uninhabitable.

How To Save On Homeowners Insurance

There are ways to save on your homeowners insurance coverage. But your chances of doing so will go up if you work with an agent rather than do it yourself online. An agent can look for discounts and help you reduce what you pay for insurance. We earlier mentioned bundling coverage and going paperless. Here are some other ways you can save money:

Where you reside

If your home is in a low-crime location, your home insurance rates will be lower.

Install security cameras

Installing security cameras will keep an eye on things, deter criminal activity on your property, and qualify you for a discount on your homeowners insurance.

Deductible and coverage limits

Insurance professionals recommend adjusting your deductible versus lowering your coverage limits, which can leave you financially exposed to a loss. While a higher deductible will lower your premium, it’s important to note you will be responsible for more out-of-pocket costs if you suffer a loss.

Construction code

If your house is up to code or you’ve had work done so that it’s retrofitted for storms, you can get discounts.

Factors That Affect the Cost of Homeowners Insurance

We mentioned that where your home is located is a big factor in determining your homeowners insurance cost. But let’s look further at things that impact Homeowners Insurance.

Age of the home

How old is your residence? A newer home will typically cost less to insure than an older home. It’s more likely that a newer home is more current on codes.

Building materials

The materials used to build your home will impact your homeowners insurance costs. So, whether your home is constructed out of brick, wood, sheetrock, or some other material, you’ll either pay more or less than average for coverage.

Proximity to fire station

Living close to a fire station and having fire hydrants on your street will lower your homeowners insurance

Weather

Living in an area prone to tornados, or other adverse weather systems can increase the amount you pay for insurance. You also must keep in mind that a rider in addition to your homeowners insurance is needed to cover some issues.