Quick answer
Homeowners insurance pays for losses and damage to your home and belongings when something unexpected happens, such as a fire or burglary, and usually covers your liability if someone is hurt on the property. Mortgage lenders require it because the home secures the loan.
Key facts
What it costs
Freddie Mac data put the average premium at $1,522/yr, or about $4.90 per $1,000 of home value a year. At that rate, a $361,000 home costs about $1,769 a year to insure — $147 a month, usually collected through your escrow account as the “I” in PITI. Costs vary a lot by location: the Texas average is $3,489/yr, or $291 a month.
What it usually leaves out
Standard policies don’t cover flood or earthquake damage. If you’re in a high-risk flood zone with a government-backed loan, you must also carry flood insurance. Homeowners insurance also isn’t the same as private mortgage insurance, which protects the lender if you stop paying.
If your coverage lapses, the servicer can buy a policy for you after giving notice and add the cost to your bill. This force-placed coverage is often more expensive and may protect only the lender, so keep proof of your own policy current. See homeowners insurance and your mortgage, and add a real quote to the affordability calculator before you shop.
Sources
- US Census Bureau, American Community Survey 2024 1-year — Median value of owner-occupied homes (2024 ACS 1-year)
- Freddie Mac Research — Average homeowners insurance premium per $1,000 of home value; Average annual homeowners insurance premium (Freddie Mac borrowers) (2023 data)
- Texas Department of Insurance — Average Texas homeowners insurance premium (2025 (preliminary))
- CFPB: What is homeowner’s insurance? Why is homeowner’s insurance required?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.