Every person searching for insurance asks the same first question: how much does homeowners insurance cost?
It's no secret that homes are expensive. From mortgage payments to repairs, a home is a top expense for many people. In addition to home repairs and your mortgage, you likely also have to pay for homeowners insurance.
You may be tempted to skimp on your homeowners insurance coverage to save money. But this can be a big (and costly) mistake. Underinsuring your home could leave you without the proper coverage to be made whole.
So how much should you expect to pay for your homeowners insurance? How much money do you need in order to fully protect yourself from incidents, acts of God, and other cosmic forces of the universe?
Unfortunately, the answer isn’t so clear-cut. What you pay could vary drastically from a friend in a different city or state. There are numerous factors that can influence the cost of your homeowners insurance. This guide will help you better understand what factors can influence the cost of your homeowners insurance, so you can thoroughly protect your home from potential disasters.
Factors that can affect how much homeowners insurance costs
1. Where do you live?
Homeowners’ insurance differs by state and city, largely due to that area’s susceptibility to natural disasters. The likelihood of a natural disaster is considered the highest “risk” in your homeowners’ premium.
2. How much would it cost to rebuild?
Insurance companies will value your house not on the price you paid but on the square footage (size), exterior material, age, and location. If your house suffered total damage due to some disaster, you would need insurance money to cover a complete rebuild from the ground-up. Thus, your insurer will consider the cost of rebuilding per square foot.
3. What is the value of your belongings?
Along with the value of your house, your insurance company will take into account the overall value of your home contents and belongings. The more you need to cover, the more it will cost.
4. What are your home’s risk factors?
Certain “risks” can make your homeowners’ premium more expensive. These risk factors include:
- Age of house
- Location of house within the city/town
- Owning a pool or trampoline (learn the basics of insuring a swimming pool here)
- Owning a dog (dependent upon breed)
- Housing farm animals
- Distance from emergency services, like fire departments
- Condition of plumbing and electrical systems
- Susceptibility to wind, extreme temperatures, and earthquakes
- Inspection and maintenance results
Click to learn more about the types of homes that are harder or more expensive to insure.
Installing safety features in your home can help mitigate some of these risk factors and their related costs. Talk to your agent about potential safety discounts for fire sprinklers, security systems, cameras, and more.
5. How risky are you?
That’s right—your insurance company will take you into account too. Depending on what state you live in, your credit score, martial state, age, and level of education can all affect your premium.
6. What is your history of past claims?
In a similar vein, your insurance company will look at your past homeowners claims. This gives them a sense of how risky you are in terms of insurance. Those with fewer claims tend to pay less, while those with more claims are considered “higher risk” and have to pay in accordance with that risk.
7. How much is your deductible?
Deductibles remain fairly constant, usually ranging between $500 and $1500, with the average around $1,000. Nevertheless, choosing to raise your deductible can save you money on your monthly insurance costs. The higher the deductible, the lower the annual premium cost. People with high-value homes and large premiums tend to opt for a bigger deductible, choosing to pay less monthly and more upfront in the case of an incident.
8. What other insurance needs do you have?
Other aspects of your insurance will affect the overall cost, including your liability limit and additional umbrella policies. Bundling auto and home with the same company can also lower the homeowners’ insurance costs. It’s important to discuss all of your insurance needs with an agent to find the best overall price.
The Bottom Line
Homeowners insurance costs can vary greatly depending on risk factors and insurance coverage needs. Never choose a lower premium just for the cost, though. Underinsuring based on monthly cost could impact your financial wellbeing in the future if something were to happen to your house, belongings, or family.
Compare quotes for homeowners insurance with expert advice from our licensed insurance advisors at (844) 522-0543 today.
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