Everything you need to know about protecting your biggest investment — and how to keep more money in your pocket from day one.
Homeowners insurance is one of those costs that's easy to overlook until something goes wrong. Whether you're buying your first home or selling and downsizing, understanding what's covered — and what isn't — can save you thousands.
This guide breaks down coverage types, average costs by state, money-saving strategies, and how your choice of real estate commission structure affects your total home costs from day one.
A standard HO-3 policy (the most common type) covers six areas:
Structure of your home, attached garage, built-in appliances
Detached garage, fences, sheds, guest houses
Furniture, electronics, clothing, appliances
Hotel, meals, temporary living if home is uninhabitable
Lawsuits from injuries on your property
Minor injury costs for guests, regardless of fault
Premiums vary dramatically by location. Here's what homeowners pay across ShopProp's eight licensed states:
| State | Avg. Annual Premium | Avg. Monthly | Key Risk Factors |
|---|---|---|---|
| Arizona | $2,100 | $175 | Monsoons, dust storms, wildfires |
| California | $2,800 | $233 | Wildfires, earthquakes (separate policy) |
| Colorado | $2,900 | $242 | Hail, wildfires, winter storms |
| Hawaii | $800 | $67 | Hurricanes, volcanic activity, floods |
| Michigan | $2,200 | $183 | Winter storms, wind, water damage |
| Texas | $4,500 | $375 | Hurricanes, hail, tornadoes, flooding |
| Virginia | $1,600 | $133 | Hurricanes (coastal), wind, flooding |
| Washington | $1,400 | $117 | Rain/water damage, earthquakes |
Estimates based on $300K dwelling coverage, $1,000 deductible. Your actual costs depend on home value, construction, claims history, and specific location.
Raising your deductible from $1,000 to $2,500 can reduce premiums 15-25%. Only do this if you have an emergency fund to cover the gap.
Combining home and auto insurance with the same carrier typically saves 10-20%. Ask about multi-policy discounts.
Alarm systems, smart locks, water leak detectors, and fire/smoke alarms can earn 5-15% discounts. Ask your insurer which devices qualify.
Impact-resistant roofing can save 10-35% in hail-prone states (TX, CO). Updated electrical and plumbing reduce fire/water risk discounts.
Loyalty doesn't always pay with insurance. Get quotes from 3-5 carriers at renewal. Online comparison tools make this easy.
New construction, claims-free history, senior/military discounts, professional organization memberships, and new homebuyer discounts are often available but not automatically applied.
This isn't directly about insurance — but it affects your total home costs. On a $800,000 home, traditional 2.5% commission costs $20,000. ShopProp's flat $4,495 fee saves you $15,505 at closing. That's 5-7 years of homeowners insurance paid for before you even move in.
| Policy Type | Best For | Coverage Level |
|---|---|---|
| HO-3 (Special Form) | Most homeowners | Open perils for dwelling, named perils for contents |
| HO-5 (Comprehensive) | High-value homes | Open perils for both dwelling and contents |
| HO-6 (Condo) | Condo owners | Interior walls, personal property, liability |
| HO-8 (Modified) | Older/historic homes | Actual cash value (not replacement cost) |
This distinction matters more than most homeowners realize:
Always choose replacement cost coverage. The premium difference is small; the claims difference can be tens of thousands of dollars.
Your home's sale price includes land value. Insurance should cover the cost to rebuild the structure. In expensive markets, rebuild cost is often lower than market value. In rural areas, it can be higher.
Standard policies cover contents at 50-70% of dwelling coverage. Do a home inventory — most people underestimate the total value of their belongings by 30-50%.
Standard liability is usually $100K-300K. If someone is seriously injured on your property, that's gone in one lawsuit. An umbrella policy ($1M+ for $200-400/year) is one of the best insurance values available.
Kitchen remodel? New addition? Your coverage needs to reflect current rebuild cost. Notify your insurer after any major renovation ($10K+).
25% of flood claims come from outside high-risk zones. If you're near any water feature — river, coast, creek, drainage — consider flood insurance regardless of your FEMA zone. See our Flood Zone Guide.
Insurance is just one piece of your annual homeownership costs. Here's how the full picture looks on an $800,000 home:
| Annual Cost | Traditional Agent (2.5%) | ShopProp ($4,495) |
|---|---|---|
| Commission (amortized over 7 yrs) | $2,857/yr | $642/yr |
| Homeowners Insurance | $2,300/yr | $2,300/yr |
| Property Tax (1.1%) | $8,800/yr | $8,800/yr |
| Maintenance (1%) | $8,000/yr | $8,000/yr |
| Total Annual Cost | $21,957/yr | $19,742/yr |
| 7-Year Savings | — | $15,505 |
The $15,505 commission savings with ShopProp is the single largest controllable variable in your first-year home costs. It's more than most homeowners pay for insurance in 5+ years.
See exactly how much you'd save with ShopProp's $4,495 flat fee vs. traditional commission — and what that means for your total homeownership costs.
Calculate Your Savings Get Started Chat with Our AIThe national average is approximately $2,300/year for $300K dwelling coverage. Costs vary significantly by state — from ~$800/year in Hawaii to ~$4,500/year in Texas. Factors include location, home value, construction type, claims history, and deductible amount.
Standard policies typically exclude flood damage, earthquake damage, sewer/drain backup, mold (unless caused by a covered peril), normal wear and tear, pest damage, and intentional damage. You may need separate flood insurance and earthquake riders.
While not legally required without a mortgage, homeowners insurance is strongly recommended. Your home is likely your largest asset. Without insurance, you'd bear the full cost of fire, theft, liability claims, or natural disasters — potentially hundreds of thousands of dollars.
ShopProp's $4,495 flat fee (vs. traditional 2.5-3% commission) can save you tens of thousands at closing. Those savings can offset years of insurance premiums. On an $800K home, the $15,505 you save with ShopProp covers roughly 5-7 years of homeowners insurance.