# Homeowners insurance

> Homeowners insurance pays for damage to your home and belongings and covers liability. Why lenders require it, what it costs and what it leaves out.

URL: https://mortgage-math-us.com/glossary/homeowners-insurance/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## 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

| Fact | Value | Source | As of |
|---|---|---|---|
| Average annual premium | $1,522/yr | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data |
| Average premium per $1,000 of home value | $4.90 per $1,000 | [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) | 2023 data |
| Average Texas premium | $3,489/yr | [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) | 2025 (preliminary) |

## 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](https://mortgage-math-us.com/glossary/escrow-account/) as the “I” in [PITI](https://mortgage-math-us.com/glossary/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](https://mortgage-math-us.com/glossary/flood-insurance/). Homeowners insurance also isn’t the same as [private mortgage insurance](https://mortgage-math-us.com/glossary/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](https://mortgage-math-us.com/blog/homeowners-insurance-and-your-mortgage/), and add a real quote to the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/) before you shop.

## Sources

- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year)
- [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value; Average annual homeowners insurance premium (Freddie Mac borrowers) (2023 data)
- [Texas Department of Insurance](https://www.tdi.texas.gov/general/texas-homeowners-insurance-market-overview.html) — Average Texas homeowners insurance premium (2025 (preliminary))
- [CFPB: What is homeowner’s insurance? Why is homeowner’s insurance required?](https://www.consumerfinance.gov/ask-cfpb/what-is-homeowners-insurance-why-is-homeowners-insurance-required-en-162/)

_General information, not financial advice._