Insurance · United States

US home insurance, explained

Four kinds of insurance matter when you buy in the US — two your lender requires, two you choose. The headline warning: standard homeowners insurance never covers flooding, and in a few states the market itself is the real cost.

Homeowners Insurance (HO-3)

Usually required

Your mortgage lender — required before closing

Covers

Your home's physical structure (roof, walls, foundation)
Personal belongings inside the home (furniture, electronics, clothing)
Liability — if someone is injured on your property and sues you
Additional living expenses if your home is damaged and uninhabitable

Does not cover

Flood damage — requires a separate flood insurance policy
Earthquake damage — requires a separate earthquake policy or endorsement
Normal wear and tear or maintenance issues
Sewer or drain backup (available as an add-on endorsement)
High-value items above policy limits (jewelry, art, collectibles — need a rider)

Typical cost: $2,543/year nationally (Insurance.com 2026), ranging from $659 in Hawaii to $7,136 in Florida

Key tip: The 80% rule: insure your home for at least 80% of its full replacement cost (not market value — what it would cost to rebuild, which can be different). Underinsurance is the most common mistake homeowners make.

Flood Insurance (NFIP or Private)

Optional

Required by lenders only if your property is in a FEMA-designated high-risk flood zone (Special Flood Hazard Area). Worth considering in moderate-risk zones.

Covers

Physical damage to your home from flooding
Damage to personal belongings from flooding
Basement contents (limited — NFIP has restrictions on basement coverage)

Does not cover

Temporary housing costs while your home is being repaired
Landscaping, decks, patios, fences
Currency, precious metals, important papers
Sewer backup (unless directly caused by flood)

Typical cost: NFIP policies average $700–$1,000/year, but significantly higher in high-risk zones. Check FEMA's flood map (msc.fema.gov) for your specific property before assuming you don't need it.

Key tip: Standard homeowners insurance policies do not cover flooding — full stop. This surprises homeowners during claims. 'Flooding' means water coming from outside the home (storms, river overflow); internal water damage from burst pipes is typically covered by homeowners insurance.

Earthquake Insurance

Optional

Not required by lenders, but strongly recommended in California, Oregon, Washington, Utah, Alaska, and areas near the New Madrid Seismic Zone (TN, MO, AR, IL, KY).

Covers

Damage to your home's structure from earthquake shaking
Personal belongings damaged by earthquake
Additional living expenses if the home is uninhabitable
Emergency repairs to protect against further damage

Does not cover

Flood damage caused by an earthquake (tsunami, pipe breaks) — separate policy needed
Vehicles
Land damage or soil settling

Typical cost: $800–$2,500+/year depending on location and home value. California has a state program (California Earthquake Authority) for residents. In low-risk states, premiums can be much lower.

Key tip: Standard homeowners insurance explicitly excludes earthquake damage. In earthquake-prone states, not having earthquake insurance is a significant uninsured risk. The Cascadia Subduction Zone (Pacific Northwest) and Wasatch Fault (Utah) are considered major future earthquake risks by seismologists.

Title Insurance

Usually required

Lenders require lender's title insurance at closing. Owner's title insurance is strongly recommended (often required in some states) to protect your own ownership interest.

Covers

Undisclosed liens against the property from previous owners
Errors in public records affecting the title
Forgery or fraud in prior conveyances
Survey errors creating boundary disputes
Claims from unknown heirs of previous owners

Does not cover

Issues that arise after the policy is issued
Problems you knew about at the time of purchase
Environmental hazards or zoning violations

Typical cost: One-time cost at closing: typically 0.5–1% of the purchase price. On a $400,000 home, this might be $1,000–$4,000 depending on the state. Unlike other insurance, you pay once and it covers you for as long as you own the home.

Key tip: There are two title insurance policies at closing: the lender's policy (required, protects the bank) and the owner's policy (optional but strongly recommended, protects you). In some states and markets, the seller traditionally pays for owner's title insurance — it's negotiable.

Where the market itself is the problem

In some states the issue isn’t just the premium — it’s whether you can get covered at all. These are worth researching before you make an offer.

Alaska

Alaska has significant earthquake risk — the 1964 Good Friday earthquake was the largest ever recorded in North America. Earthquake insurance is strongly recommended.

Arkansas

Arkansas sits on the New Madrid Seismic Zone — a real but often overlooked earthquake risk in the central US.

California

California's ranked average is misleading — major insurers (State Farm, Allstate, Farmers) have exited or restricted new policies in wildfire-prone areas. Many homeowners in high-risk zones are on the state FAIR Plan at much higher rates with limited coverage. Research insurance availability BEFORE making an offer in any area with wildfire history.

Colorado

Colorado homeowners insurance rose significantly in recent years due to hailstorm frequency (Colorado has some of the most severe hail in the US) and expanding wildfire risk in the Front Range.

Florida

Florida is in a full insurance crisis — Citizens Insurance (the state insurer of last resort) is now the largest insurer in the state. Many private insurers have become insolvent or exited. Budget for insurance as one of the largest monthly homeownership costs, and research insurer financial stability before buying any policy.

Hawaii

Hawaii's low headline premium excludes hurricane coverage, which is required separately in the state. A homeowner seeking full protection pays significantly more. The 2026 Big Island floods are a reminder of Hawaii's real risk profile.

Illinois

Southern Illinois sits on the New Madrid Seismic Zone. Earthquake insurance is worth considering for properties in that part of the state.

Kentucky

Kentucky homeowners insurance rose 33% in 2026, partly driven by increasing severe weather and flooding events.

Louisiana

Louisiana homeowners insurance rose 58% in 2026 — the largest increase of any state. The market has contracted severely, with multiple insurers exiting. Many homeowners have few options. This is a serious financial consideration before buying anywhere in coastal Louisiana.

Michigan

Michigan homeowners insurance rose 48% in 2026 — one of the largest increases nationally. Shop aggressively and annually.

Minnesota

Minnesota homeowners insurance rose 29% in 2026 due to increasing severe convective storm activity.

Missouri

Missouri sits near the New Madrid Seismic Zone — earthquake insurance is worth considering, particularly in the southeast part of the state.

Oklahoma

Oklahoma has the highest or second-highest homeowners insurance rates nationally. The state also experienced a surge in minor earthquake activity (linked to wastewater injection from oil and gas operations) — earthquake insurance is worth considering in some areas.

Oregon

Oregon sits on the Cascadia Subduction Zone, capable of a magnitude 9.0 earthquake. Earthquake insurance is strongly recommended — and most standard policies explicitly exclude earthquake damage.

Tennessee

Tennessee sits near the New Madrid Seismic Zone. Earthquake insurance is worth considering, particularly in the western part of the state near Memphis.

Texas

Texas homeowners insurance costs vary enormously by region — coastal/Gulf areas near Houston pay far more than inland areas. Budget carefully and research your specific ZIP code.

Utah

Utah sits on the Wasatch Fault — seismologists consider Salt Lake City one of the most earthquake-exposed cities in the US. Standard policies exclude earthquake damage. Earthquake insurance is strongly recommended.

Virginia

Virginia homeowners insurance rose 37% in 2026. Coastal Virginia (Hampton Roads, Virginia Beach) carries significant hurricane and flooding risk requiring careful flood insurance consideration.

Washington

Washington sits on the Cascadia Subduction Zone. The Pacific Northwest faces a significant probability of a major earthquake in the coming decades. Standard policies exclude earthquake damage — strongly consider earthquake insurance.

Wisconsin

Wisconsin homeowners insurance rose 29% in 2026 due to increasing severe weather.

Every state, by cost

Average annual homeowners premium (for the same benchmark: $300,000 dwelling coverage, $1,000 deductible), against the national average of $2,543. Actual cost varies by home, location, credit and insurer.

State	Avg / yr	vs US avg	Main risk	Flood	Earthquake
Florida	$7,136	+181%	Hurricanes, flooding	Usually needed	Rarely needed
Louisiana	$5,700	+124%	Hurricanes, flooding	Usually needed	Rarely needed
Oklahoma	$3,519	+38%	Tornadoes, hail	Rarely needed	Worth considering
Mississippi	$3,200	+26%	Hurricanes, tornadoes	Coastal / flood zones	Rarely needed
Colorado	$3,100	+22%	Hail, wildfire	Rarely needed	Rarely needed
Texas	$3,000	+18%	Hurricanes, tornadoes, hail	Coastal / flood zones	Rarely needed
Nebraska	$2,816	+11%	Tornadoes, hail	Coastal / flood zones	Rarely needed
Alabama	$2,800	+10%	Hurricanes, tornadoes	Coastal / flood zones	Rarely needed
Kansas	$2,694	+6%	Tornadoes, hail	Coastal / flood zones	Rarely needed
Michigan	$2,400	-6%	Winter storms, hail	Coastal / flood zones	Rarely needed
Kentucky	$2,200	-13%	Tornadoes, flooding	Coastal / flood zones	Worth considering
Arkansas	$2,142	-16%	Tornadoes, hail	Coastal / flood zones	Worth considering
Minnesota	$2,100	-17%	Tornadoes, hail, winter	Coastal / flood zones	Rarely needed
South Carolina	$2,100	-17%	Hurricanes, flooding	Coastal / flood zones	Rarely needed
Missouri	$2,050	-19%	Tornadoes, hail	Coastal / flood zones	Worth considering
New Mexico	$2,024	-20%	Wildfire, hail	Rarely needed	Rarely needed
Illinois	$1,950	-23%	Tornadoes, winter storms	Coastal / flood zones	Worth considering
Georgia	$1,900	-25%	Thunderstorms, occasional hurricanes	Coastal / flood zones	Rarely needed
Montana	$1,900	-25%	Wildfire, wind	Rarely needed	Rarely needed
North Carolina	$1,900	-25%	Hurricanes, flooding	Coastal / flood zones	Rarely needed
Tennessee	$1,900	-25%	Tornadoes, flooding	Coastal / flood zones	Worth considering
Arizona	$1,800	-29%	Wildfire, dust storms	Rarely needed	Worth considering
Iowa	$1,800	-29%	Tornadoes, hail	Coastal / flood zones	Rarely needed
Massachusetts	$1,800	-29%	Wind, coastal storms	Coastal / flood zones	Rarely needed
Washington	$1,753	-31%	Earthquake, wildfire (eastern WA)	Rarely needed	Strongly recommended
Indiana	$1,750	-31%	Tornadoes, hail	Coastal / flood zones	Rarely needed
North Dakota	$1,750	-31%	Tornadoes, winter storms	Coastal / flood zones	Rarely needed
Connecticut	$1,650	-35%	Wind, winter storms	Coastal / flood zones	Rarely needed
Ohio	$1,650	-35%	Tornadoes, winter storms	Coastal / flood zones	Rarely needed
Virginia	$1,650	-35%	Hurricanes (coastal), winter (western)	Coastal / flood zones	Rarely needed
California	$1,600	-37%	Wildfire	Coastal / flood zones	Strongly recommended
Maryland	$1,600	-37%	Wind, coastal flooding	Coastal / flood zones	Rarely needed
South Dakota	$1,600	-37%	Tornadoes, hail, winter	Rarely needed	Rarely needed
New York	$1,500	-41%	Coastal storms, winter	Coastal / flood zones	Rarely needed
Alaska	$1,450	-43%	Permafrost damage, ice	Rarely needed	Strongly recommended
New Jersey	$1,450	-43%	Coastal storms, flooding	Coastal / flood zones	Rarely needed
Wisconsin	$1,450	-43%	Tornadoes, winter storms	Coastal / flood zones	Rarely needed
Rhode Island	$1,400	-45%	Coastal storms, hurricanes	Coastal / flood zones	Rarely needed
Pennsylvania	$1,200	-53%	Winter storms, flooding	Coastal / flood zones	Rarely needed
Idaho	$1,100	-57%	Wildfire, winter storms	Rarely needed	Worth considering
Maine	$1,100	-57%	Winter storms, wind	Coastal / flood zones	Rarely needed
Oregon	$1,100	-57%	Wildfire, earthquake	Coastal / flood zones	Strongly recommended
Wyoming	$1,100	-57%	Wind, hail, winter	Rarely needed	Rarely needed
District of Columbia	$1,100	-57%	Flooding (urban), wind	Coastal / flood zones	Rarely needed
Nevada	$1,050	-59%	Wildfire, flash floods	Rarely needed	Worth considering
New Hampshire	$1,050	-59%	Winter storms, wind	Rarely needed	Rarely needed
Utah	$1,050	-59%	Wildfire, earthquake	Rarely needed	Strongly recommended
West Virginia	$950	-63%	Flooding, landslides	Coastal / flood zones	Rarely needed
Delaware	$850	-67%	Coastal flooding	Coastal / flood zones	Rarely needed
Vermont	$700	-72%	Winter storms, flooding	Rarely needed	Rarely needed
Hawaii	$659	-74%	Hurricane, lava, flooding	Coastal / flood zones	Strongly recommended