Homeowners Insurance
Most Expensive Homes in US Cost 66% More, on Average, to Insure
Being a homeowner comes with myriad expenses. And while most might immediately think about mortgage rates or property taxes, home insurance is another key cost. But insuring homes can be costly — particularly expensive ones.
The latest ValuePenguin study finds that a home insurance policy with at least $500,000 in dwelling coverage costs 66.4% more, on average, than an average policy — though that rate varies by state.
Here's what else we found.
On this page
- Key findings
- Home insurance policies with $500,000+ in dwelling coverage cost significantly more on average
- States with the biggest gaps in home insurance costs
- States with the smallest gaps in insurance costs
- Full rankings
- Cost to insure expensive homes dropped the most in South Dakota
- Top 3 things to know about insuring your home
- Methodology
Key findings
- A home insurance policy with at least $500,000 in dwelling coverage costs 66.4% more, on average, than an average policy. It costs an average of $2,181 yearly for at least $500,000 in dwelling coverage, far more than the $1,311 average for a typical policy.
- The gap between the cost of a typical home insurance policy and one with at least $500,000 in dwelling coverage is biggest in South Carolina. Homes in South Carolina with at least $500,000 in dwelling coverage cost 124.4% more to insure than a typical home. Florida (113.8%) and Oklahoma (113.6%) have the next biggest gaps.
- The gap between the cost of a typical home insurance policy and one with at least $500,000 in dwelling coverage is smallest in New Jersey. Homes in New Jersey with at least $500,000 in dwelling coverage cost 40.6% more to insure than a typical home. Hawaii (41.4%) and the District of Columbia (44.1%) are closest.
- The cost to insure a home with at least $500,000 in dwelling coverage dropped the most in South Dakota. Doing so cost $2,281 in 2020 — a 20.1% drop from $2,856 in 2018. The next biggest drops were in North Dakota (18.3%) and Kansas (16.6%). The biggest increases in this period were in California (7.9%), Florida (6.9%) and Rhode Island (6.5%).
Home insurance policies with $500,000+ in dwelling coverage cost significantly more on average
Homeowners in the U.S. should generally expect to shell out significantly more if they live in an expensive home. Across the U.S., a home insurance policy with at least $500,000 in dwelling coverage costs an average of $2,181 a year, while a typical policy costs $1,311. That's a difference of 66.4%.
ValuePenguin researchers analyzed homes with HO-3 policies. This is the most common form of home insurance, accounting for 78.3% of policies in 2020, according to the Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner's Insurance Report. Unlike others with more limited coverage, HO-3 policies cover houses against all perils unless specifically noted.
Why do expensive homes cost more to insure? According to ValuePenguin home insurance expert Divya Sangameshwar, it largely boils down to rebuilding costs.
"A large part of what you'd pay for homeowners insurance is determined by how much dwelling coverage is in your policy," she says. "This part of your home insurance pays to rebuild your home if it's damaged or destroyed. Higher rebuild costs will lead to higher premiums as insurers must manage the added risk."
States with the biggest gaps in home insurance costs
While there's a notably large gap between insuring expensive homes and average homes, that gap is biggest in South Carolina. The average home in South Carolina costs $1,327 to insure, versus $2,978 for homes with at least $500,000 in dwelling coverage. That means expensive homes cost 124.4% more, on average, to insure.
The reason for the difference? It could be partially due to real estate values — particularly in popular vacation and retirement areas. While the median home value in South Carolina was $213,500 as of 2021 (neither remarkably high nor low compared to other states), the state is home to many famous coastal towns with high-value homes. The median value for properties on Hilton Head Island, for example, is $520,700; meanwhile, in Charleston, the median home value is $369,500.
Another reason for the difference (and the famous downside to living in a coastal area) may be the likelihood of experiencing a natural disaster. According to a 2022 ValuePenguin study on flood risk, South Carolina is one of the 10 states with the highest percentage of properties at risk of flooding in a Federal Emergency Management Agency (FEMA) Special Flood Hazard Area (SFHA). Similarly, a 2020 ValuePenguin study on hurricane-prone states found that South Carolina experienced the most declarations per county of any state examined.
Given that homes in South Carolina have a higher likelihood of experiencing hurricanes and flooding, it's understandable that insurance premiums are higher here — particularly for those expensive coastal properties.
5 states with the biggest gaps in insurance costs
Rank | State | Average cost to insure home with $500,000+ in dwelling coverage | Average cost to insure typical home | Difference |
|---|---|---|---|---|
| 1 | South Carolina | $2,978 | $1,327 | 124.4% |
| 2 | Florida | $4,629 | $2,165 | 113.8% |
| 3 | Oklahoma | $4,357 | $2,040 | 113.6% |
| 4 | Louisiana | $4,327 | $2,038 | 112.3% |
| 5 | Mississippi | $3,508 | $1,674 | 109.6% |
Source: ValuePenguin analysis of National Association of Insurance Commissioners (NAIC) data.
Following South Carolina, Florida has the second-biggest gap. The average cost to insure a home with $500,000 or more in dwelling coverage is $4,629 — 113.8% more than the $2,165 average cost of insuring a typical home. The median home value in Florida is somewhat similar to South Carolina — $290,700 — but the state's popular coastal cities have much higher median values:
- The median home value in Key West is $728,500
- The median home value in Miami Beach is $450,700
Like South Carolina, homes in Florida — particularly those in high-value coastal cities — are disaster-prone. Overall, Florida has the second-highest percentage of properties at risk of flooding, according to the ValuePenguin flood risk study. Another study found that Florida had the fifth-highest amount of weather-related damages between 2017 and 2021, costing $1,010 per household and business in the state.
Meanwhile, Oklahoma (113.6% difference) claims the third spot. While the average home costs $2,040 to insure, expensive homes cost $4,357 to insure. Unlike South Carolina and Florida, the median home value in Oklahoma is just $168,500 as of 2021. As such, expensive homes may be more costly to insure because they're remarkably more costly than most properties in the state.
States with the smallest gaps in insurance costs
On the flip side, New Jersey has the smallest gap between the cost of a typical home insurance policy and one with at least $500,000 in dwelling coverage. Homes in New Jersey with at least $500,000 in dwelling coverage cost 40.6% more yearly to insure than a typical home — $1,795 versus $1,277.
Unlike the states with the highest gaps, the real estate value in New Jersey is high across the entire state. As of 2021, the median home value is $389,800 — the eighth-highest across the U.S. Because homes already require a high level of coverage on average, the gap is much smaller.
5 states with the smallest gaps in insurance costs
Rank | State | Average cost to insure home with $500,000+ in dwelling coverage | Average cost to insure typical home | Difference |
|---|---|---|---|---|
| 1 | New Jersey | $1,795 | $1,277 | 40.6% |
| 2 | Hawaii | $1,761 | $1,245 | 41.4% |
| 3 | District of Columbia | $1,771 | $1,229 | 44.1% |
| 4 | Colorado | $2,416 | $1,667 | 44.9% |
| 5 | California | $1,822 | $1,241 | 46.8% |
Source: ValuePenguin analysis of NAIC data.
Hawaii (41.4%) follows, with typical homes costing an average of $1,245 yearly to insure, versus $1,761 for expensive homes. Meanwhile, the median home value in Hawaii is $722,500 — the highest across the U.S. While that's significantly higher than New Jersey's median home value, Hawaii might have a higher gap in insurance costs because it's more prone to some natural disasters. According to the ValuePenguin study on flood risk, the percentage of properties at risk of flooding in Hawaii is among the highest in the nation (depending on the flood model). Hawaii's cluster of volcanoes means it's also prone to earthquakes, according to the U.S. Geological Survey (USGS).
The District of Columbia (44.1%) is the next closest. While typical homes cost an average of $1,229 yearly to insure, expensive homes cost an average of $1,771 to insure. Similar to Hawaii and New Jersey, the median home value in the District of Columbia is high at $635,900.
To account for its slightly-larger gap, despite having higher median housing prices than New Jersey, it's worth noting that the District of Columbia is particularly prone to flooding — and outdated building codes may play a role. According to a 2022 ValuePenguin study, properties in the District of Columbia could prevent $2,499 in flooding losses per analyzed building by adopting modern building codes — the most of any state affected by flooding.
Full rankings
States with the biggest/smallest gaps in insurance costs
Rank | State | Average cost to insure home with $500,000+ in dwelling coverage | Average cost to insure typical home | Difference |
|---|---|---|---|---|
| 1 | South Carolina | $2,978 | $1,327 | 124.4% |
| 2 | Florida | $4,629 | $2,165 | 113.8% |
| 3 | Oklahoma | $4,357 | $2,040 | 113.6% |
| 4 | Louisiana | $4,327 | $2,038 | 112.3% |
| 5 | Mississippi | $3,508 | $1,674 | 109.6% |
| 6 | Arkansas | $3,132 | $1,498 | 109.1% |
| 7 | West Virginia | $2,016 | $974 | 107.0% |
| 8 | Kentucky | $2,305 | $1,174 | 96.3% |
| 9 | Idaho | $1,572 | $810 | 94.1% |
| 10 | Nebraska | $3,069 | $1,586 | 93.5% |
| 11 | Tennessee | $2,498 | $1,296 | 92.7% |
| 12 | Maine | $1,823 | $956 | 90.7% |
Source: ValuePenguin analysis of NAIC data.
Cost to insure expensive homes dropped the most in South Dakota
While expensive homes are understandably more expensive to insure in some states, others have seen the cost of insuring expensive homes drop. In fact, the cost to insure a home with at least $500,000 in dwelling coverage dropped the most in South Dakota. While it cost $2,856 to insure an expensive home in South Dakota in 2018, it cost $2,281 in 2020 — a 20.1% drop.
The next biggest drop was in North Dakota, where the cost to insure an expensive home fell from $2,566 to $2,097 (18.3%). Following that, the cost in Kansas fell from $2,839 to $2,367 (16.6%).
It's worth noting that median home prices in these states have risen at a generally slower rate than homes in other states, which may play a role in the decline here.
According to a LendingTree study on home value and income growth:
- In South Dakota, median home prices rose 18.9% between 2019 to 2021
- In North Dakota, median home prices rose 9.3%
- In Kansas, median home prices rose 12.6%
That means that home prices in these states rose by 13.6% on average.
On the other hand, California has seen the biggest increase in the average cost to insure an expensive home, rising from $1,689 in 2018 to $1,822 in 2020 (7.9%). That's followed by Florida, where the average cost to insure an expensive home rose from $4,332 to $4,629 (6.9%). Rhode Island comes in third — the cost here rose from $3,025 to $3,221 (6.5%).
Unlike the states with the biggest drops in the cost to insure expensive homes, those that saw prices increase the most also saw home values increase at a higher rate. Two of the three states saw home values rise higher than in the states with the biggest drops in cost to insure expensive homes:
- In California, median home prices rose 14.0% between 2019 to 2021
- In Florida, median home prices rose 18.6%
- In Rhode Island, median home prices rose 23.0%
That means that home prices in these states rose by 18.5% on average.
For comparison, median home prices rose the most in Idaho (44.7%) and the least in Hawaii (8.0%).
Top 3 things to know about insuring your home
Whether you live in a state with high or low home insurance costs, protecting your property against financial loss is crucial — particularly if you live in an expensive property. According to Sangameshwar, there are a few things homeowners should keep in mind when it comes to insurance. Particularly, she says:
- If you made any safety upgrades to your home, tell your insurance company. "You may be eligible for discounts, which can offset rising insurance premiums," she says. "These include installing a burglar alarm, a new roof, hurricane shutters or fire extinguishers. It also includes upgrades you made to your electrical or plumbing, or if you repaired or replaced your roof."
- While shopping around for insurance will save you money, don't just go by price. "Take a close look at what the policy covers and the type of protection it offers," she says, "For example, raising your deductible could save you thousands of dollars, but you'll need to pay more out of pocket if your home gets damaged."
- Pay close attention to what your dwelling insurance doesn't cover. "Your policy will include a list of uncovered perils (also known as policy exclusions) that your dwelling insurance won't cover," she says. "Common exclusions include flooding, earthquakes, normal wear and tear, infestations or sewer backups. It's important to ask about extra coverages or policy options to fill in those gaps to ensure you're fully covered."
Methodology
ValuePenguin researchers analyzed Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner's Insurance Report: Data for 2020 — the latest report released in 2022 — to determine where it costs the most to insure expensive homes relative to the typical cost of home insurance.
We compared the average cost of HO-3 homeowners insurance to that of an HO-3 policy with at least $500,000 in dwelling coverage. We ranked the states from highest to lowest based on the percentage change in cost for a policy of $500,000 or more relative to the typical homeowners policy.