Jane Dotson
Homeowner insurance premium is the amount paid to an insurance company in exchange for a homeowner insurance policy. The national average cost of home insurance for a policy with $300,000 in dwelling coverage is $2,466 per year. The cost of the premium is dependent on various factors, such as the location of the home, the average cost of building materials, claim history, and credit score. Homeowner insurance premiums can be paid annually, bi-annually, quarterly, or monthly, and there are various payment methods available, such as credit card, check, or electronic funds transfer. It is important to note that the premium cost may increase if a claim is filed against the policy.
| Characteristics | Values |
|---|---|
| How to pay | Pay the insurance company directly, or pay through an escrow account |
| Payment methods | Credit card, mail a check, or set up an electronic funds transfer (EFT) |
| Payment frequency | Annually, bi-annually, quarterly, or monthly |
| Discounts | Signing up for automatic payments, paying the annual premium upfront, bundling policies |
| Premium calculation factors | Home location, age and structure, coverage levels, deductible, claim history, credit score |
| Premium refund instances | Lender mistake with premium payment in escrow, cancellation of policy early or after selling home |
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What You'll Learn
Payment methods
Annual or Monthly Payments
Home insurance premiums are typically paid annually or monthly. Some companies may offer discounts if you pay the annual premium upfront or sign up for automatic payments.
Credit Card
Depending on the insurer, you may be able to charge your premium to a credit card. However, keep in mind that some companies may charge higher premiums when optional coverages are added.
Check
You may be able to mail in a check to your insurance company.
Electronic Funds Transfer (EFT)
You can set up an EFT from a checking or savings account, which is a direct deposit to the insurer.
Escrow Account
If your down payment on your home is less than 20%, lenders typically require your homeowners insurance premium to be paid through an escrow account. The total amount you pay to your lender monthly typically covers your mortgage payment, real estate taxes, and home insurance premium.
It's important to note that payment methods may vary, and you should contact your insurance provider to confirm the accepted payment methods and any associated discounts or fees. Additionally, factors such as your deductible, coverage limits, and claim history can impact the cost of your premium.
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Discounts
Home insurance can be expensive, but there are many ways to reduce your premium through discounts. Here are some ways to save money on your homeowner's insurance:
Bundling Discounts
One of the most common ways to save on insurance is to bundle your home insurance with other types of insurance, such as auto insurance. By purchasing multiple policies from the same company, you can often receive a significant discount, sometimes up to 25% off your premiums. This is because insurers value having multiple policies with the same customer and are willing to offer discounts to keep your business.
Claims-Free Discounts
If you haven't filed a home insurance claim in several years, you may be eligible for a claims-free or no-claims discount. Most insurance companies offer this discount after three to five years of being claims-free. The discount remains until you file a claim.
New Home Discounts
If you're buying a new home, it's likely to be eligible for discounts as newer homes are less likely to experience certain types of damage due to being built according to more recent construction codes. Insurance companies may offer a "newer home discount" or "new construction discount" for homes built within the last 10 years, though the definition of a "new home" can vary between carriers.
Payment Method Discounts
Some insurers offer discounts if you pay your premiums annually instead of monthly, or if you set up automatic payments. Paying for the year upfront reduces administrative costs for the insurer, and they may pass these savings on to you.
Paperless Billing Discounts
Insurers may also offer a small discount if you choose to receive electronic monthly statements instead of paper statements by mail. While this discount is typically not significant on its own, it can help lower your costs when combined with other discounts.
Security System Discounts
If you have a security system, fire alarms, or eligible home monitoring systems installed in your home, you may be eligible for a discount. Insurers view homes with security systems as lower-risk properties, and they may reward you with lower premiums.
Roofing and Construction Discounts
Some insurers offer discounts for certain types of roofing or construction that meet specific standards or designations, such as impact-resistant roofing products or fortified homes that can withstand natural disasters.
Remember that not all discounts may be available in your state or with your specific insurer, so be sure to check with your insurance company to see what discounts you may be eligible for. Additionally, it's a good idea to re-shop your homeowner's insurance annually to ensure you're getting the best rates and taking advantage of any new discounts that may have become available.
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Refunds
If you receive a refund check from your homeowner's insurance company, it is most likely because you changed your insurance carrier or cancelled your policy early. In either case, you should call your insurance provider to find out why you received the check.
If you receive a refund because you changed insurance carriers, you will need to notify your mortgage lender about the switch and ask them to adjust your escrow account records. You should also send them proof of your new insurance policy. If you have an escrow account, your refund check will typically be credited to this account for future payments, so you should forward the check to your lender as soon as possible. If your lender made a mistake with your premium payment in escrow, you may receive a refund check, which you should also forward to your lender.
If you receive a refund check because you cancelled your policy early, you will typically receive a prorated refund for the unused portion of your policy. To receive this refund, you will need to notify your insurance company to cancel the policy, and you may need to sign a document or write a letter stating your intent. You should also check your escrow account to determine the amount paid to your insurance company, and calculate the unused portion of your policy.
If you sell your home, your lender should automatically mail you a refund check for the funds still sitting in your escrow account, as well as any surplus from the months during which you will not own the house.
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Deductibles
A homeowner's insurance deductible is the amount of money a homeowner must pay out of pocket before their insurance coverage kicks in. In other words, it is the part of a claim that you are responsible for paying before your insurance company covers the remaining expenses, up to your policy limits. The deductible is subtracted from the settlement amount that your insurance company agrees to pay you after your claim has been accepted.
When you buy a house, your mortgage lender will require you to purchase homeowner's insurance to ensure their interest in the property is protected in the event of a disaster. The cost of this insurance will depend on several factors, including the deductible amount. You choose your deductible when you purchase home insurance, but you can change it at any time during your policy term.
The deductible amount you choose will affect the cost of your home insurance and the coverage you're able to use. A higher deductible will make your homeowner's insurance more affordable but could make it difficult for you to afford repairs if you have to make a claim. On the other hand, a lower deductible can lead to expensive insurance rates. The lowest deductible typically starts at $100, while the most common deductibles are $500 and $1,000.
When choosing your deductible amount, you should consider your finances and risk tolerance. Ask yourself if you would rather have lower home insurance rates and risk higher out-of-pocket expenses if your home is damaged, or more expensive home insurance rates but less to pay when filing a claim. It is important to find a deductible that fits your budget and risk tolerance.
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Policy changes
If you have a mortgage, it is likely a requirement of your lender to have an escrow account. An escrow account is a third-party account that holds funds earmarked for specific purposes, such as your homeowners' insurance and property tax funds. The lender will set aside a portion of your monthly payment each month into this account. When an annual bill, like your homeowners insurance premium, is due, the lender will pay the insurance company directly out of the escrow account.
If you have an escrow account, you can change your home insurance whenever you want, but it is recommended to wait until the policy renewal date to avoid any cancellation fees. Before making the switch, review your current policy to make a proper comparison. Pay attention to the annual premium, coverage, limits, and deductible amount. This will help you compare insurance quotes and ensure your home is protected under the same terms.
Once you have found a new policy, do not cancel your current policy before you buy the new one to avoid a lapse in coverage. Ensure the new policy start date is on or before the current policy's cancellation. Notify your mortgage lender of the change, and cancel your old policy. You may receive a refund check from your previous insurer for any unused premiums, which you will need to forward to your mortgage lender to deposit into your escrow account.
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Frequently asked questions
Payment options vary by insurer, but you can typically pay annually, bi-annually, quarterly, or monthly. You can pay the insurance company directly by charging your premium to a credit card, mailing in a check, or setting up an electronic funds transfer (EFT) from a checking or savings account.
A homeowner insurance premium is the amount of money you pay to your home insurance company in exchange for a homeowners insurance policy.
Homeowner insurance premiums can cost more than $2,000 per year. As of July 2025, the national average cost of home insurance for a policy with $300,000 in dwelling coverage is $2,466 per year.
A homeowner insurance quote is the estimated cost of a home insurance policy before you decide to buy it. The premium is the amount you agree to pay for the coverage.
You should call your provider to find out why you received the check. If you pay your insurance through escrow, your lender may have made a payment to your old insurer instead of your new one. You should forward the check to your lender as soon as possible so they can put it into your escrow account to pay your new insurer.
