How Much is Homeowners Insurance on A Million-Dollar Home?

Owning a $1 million-dollar home means taking on big responsibilities – one of them is finding the right homeowners insurance. The average cost of home insurance on a million-dollar home is $5,000 per year. Allstate provides the cheapest home insurance policy in America, at an average cost of $4,791 per year.

However, these rates are based on a home’s dwelling coverage and not its market value, as insurance companies base their coverage on the replacement cost of a home.

Average Cost Of Homeowners Insurance On A Million-Dollar Home – By State

One of the largest factors that goes into determining your homeowners insurance cost is your location. One person might pay $351 per month for home insurance in Alabama and pay $468 for the same coverage in Oklahoma.

For that same million-dollar coverage amount, let’s see some average premiums in some other U.S. states.

Most Expensive States For Homeowners Insurance On A Million-Dollar Home

On average, Florida has the most expensive home insurance rates for million-dollar homes in the U.S., at an average cost of $1,476 per month. Here are the most expensive states for home insurance on a million-dollar home in the United States:

Cheapest States For Homeowners Insurance On A Million-Dollar House

Now, let’s check out the states offering the lowest monthly premiums for million-dollar homes. Hawaii homeowners can get the cheapest policies in the U.S., on average, at $159 per month. Other affordable states include the following:

Average Cost Of Homeowners Insurance On A Million-Dollar Home – By Company

No two insurance companies are the same. That is why you should seek quotes from three or more insurers and select the right one for your needs. As we touched on earlier, insurers put together their policy rates based on factors like your location, credit history and deductible.

Here is a tble showing the average cost of home insurance for a million-dollar home across 5 insurance companies:

How To Calculate Your Home Insurance Needs For A $1 Million House

If you bought your home for $1,000,000, that doesn’t necessarily mean that you need that amount of coverage. Remember, you need to calculate the replacement cost value of your home to determine how much coverage to pay for.

It is vital to consider factors like the following prior to making your purchase.

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 Home Insurance Cover On A Million-Dollar Home?

A million-dollars in coverage means that this is the maximum amount that your insurance company will pay out to you, in the case of a loss.

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.

A regular HO3 policy has lots of coverage levels, but there are many exclusions also. Among the exclusions are the following:

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

While this is the case, you can get some riders to cover some of these excluded items.

Earthquake Damage

A standard HO3 won’t usually include earthquake-related damage. But you can add an earthquake rider to get the coverage you want for your home or possessions.

Flood Damage

A home insurance policy will cover water damage if the water falls from the sky. The policy will also cover most damage caused by hurricanes without you needing to buy a separate rider or deductible. You won’t be covered if the water rises from beneath the earth. You’ll require a flood rider for such coverage.

How to Save On Homeowners Insurance For A $1 Million House

It’s possible to save money on your homeowners insurance. Earlier, we discussed bundling and going paperless. But there are other ways that you can cut your costs down, as you’ll see below.

• Construction code – If your house is up to code or you’ve retrofitted it for storms, you can lower your premium.
• Installing security cameras – Installing security cameras in your home and on your property can deter criminals and lead to lower premiums.
• Improve your credit score – Insurance companies look at your credit score when figuring out your insurance rates. Improving your credit score can reduce your premium.

Factors That Affect The Cost Of Homeowners Insurance On A Million-Dollar Home

We mentioned that where you live is a big factor when determining premiums. Other factors include things like the following:

• Age of the home – How old is the home? A newer home will be cheaper to insure than an older one since, among other things, the newer home will likely be more up to code.
• Weather – Living along the Gulf Coast, in earthquake country, or in tornado alley, will lead to higher insurance rates. You’ll need add-on riders to cover some of these potential incidents.
• Proximity to fire hydrant – The closer your home is to a fire hydrant, the lower your house insurance will be.
• Building materials – What your home is constructed out of will influence your insurance cost. Wood and sheetrock or brick and mortar can play a role in what you pay in premiums.

Other elements that can play into your insurance premium are how many people live in your area, specific state regulations, and marital status.