Homeowners insurance is a crucial protection that homeowners need to secure their property and personal assets against various risks and damages, such as fire, theft, vandalism, natural disasters, and liability claims. However, homeowners insurance cost can vary widely depending on various factors, such as location, home value, coverage type and amount, deductible, and discounts. In this article, we will explore the average homeowners insurance cost in the US, what factors affect it, how to compare different insurance companies and policies, and frequently asked questions about homeowners insurance.
What is Homeowners Insurance?
Homeowners insurance is a type of property insurance that protects homeowners from financial losses due to damages or losses to their home, personal belongings, and liability claims. Homeowners insurance typically covers various perils, such as fire, lightning, windstorm, hail, smoke, theft, vandalism, and some natural disasters, such as earthquakes and floods, depending on the policy and location. Homeowners insurance also provides liability coverage for third-party injuries or damages that occur on the homeowner’s property, such as slip and fall accidents or dog bites.
Homeowners insurance is not mandatory by law, but most mortgage lenders require borrowers to have it to protect their investment. Moreover, homeowners insurance can give homeowners peace of mind and financial security in case of unexpected events and accidents.
What Factors Affect Homeowners Insurance Cost?
Homeowners insurance cost can vary widely depending on various factors, such as:
Factors |
Description |
|---|---|
Location |
The riskier the location (e.g., prone to natural disasters or crime), the higher the premium. |
Home Value |
The more expensive the home and its contents, the higher the premium to replace or repair them. |
Coverage Type and Amount |
The more comprehensive and higher the coverage, the higher the premium. |
Deductible |
The higher the deductible (i.e., the amount the homeowner pays before the insurer covers the rest), the lower the premium. |
Discounts |
The more discounts (e.g., for safety features, multiple policies, loyalty), the lower the premium. |
Other factors that can affect homeowners insurance cost include the age and condition of the home, the roofing material, the presence of a swimming pool, and the homeowner’s credit score and claims history. Therefore, it is important to shop around and compare different insurance companies and policies based on your specific needs and budget.
What is the Average Homeowners Insurance Cost in the US?
According to the National Association of Insurance Commissioners (NAIC), the average homeowners insurance premium in the US in 2017 was $1,192 per year, based on a policy with a dwelling coverage of $200,000 and a $1,000 deductible. However, the average homeowners insurance cost can vary widely depending on the state, region, and insurer.
For example, the states with the highest average homeowners insurance premiums in 2017 were:
- Florida: $1,993
- Louisiana: $1,987
- Oklahoma: $1,875
- Texas: $1,837
- Mississippi: $1,584
On the other hand, the states with the lowest average homeowners insurance premiums in 2017 were:
- Oregon: $643
- Idaho: $692
- Utah: $730
- Wisconsin: $735
- Washington: $772
Therefore, it is essential to compare different insurance companies and policies based on your location and coverage needs. Moreover, some insurance companies offer online quotes and tools to estimate your homeowners insurance cost based on your information and preferences.
How to Compare Homeowners Insurance Companies and Policies?
When comparing different homeowners insurance companies and policies, consider the following factors:
- Coverage: Check the types and limits of coverage offered by different insurers and policies, such as dwelling, personal property, liability, medical payments, and additional living expenses.
- Cost: Get quotes from at least three insurance companies and compare their premiums, deductibles, and discounts based on your specific needs and budget.
- Financial strength: Check the financial ratings and stability of the insurance companies you are considering, such as A.M. Best, Standard & Poor’s, Moody’s, or Fitch.
- Customer service: Read reviews and ratings from other customers and consumer organizations, such as J.D. Power, Better Business Bureau, or Consumer Reports, to evaluate the quality and responsiveness of the insurance companies you are considering.
- Claims process: Check the procedures and timelines of filing and handling claims with different insurers, as well as the satisfaction rates and speed of claims processing and settlement.
Moreover, you can ask for recommendations and referrals from friends, family, or professionals, such as real estate agents or mortgage lenders, who have experience with homeowners insurance in your area. You can also consult with an independent insurance agent who can help you compare and select the best homeowners insurance policy for your needs.
Frequently Asked Questions about Homeowners Insurance
What Does Homeowners Insurance Cover?
Homeowners insurance typically covers various risks and damages to your home and personal belongings, such as:
- Fire, smoke, and lightning
- Wind, hail, and tornadoes
- Explosions and riots
- Theft and vandalism
- Water damage from burst pipes or accidental leaks
- Some natural disasters, such as earthquakes and floods, depending on the policy and location
- Liability claims for third-party injuries or damages that occur on the homeowner’s property
However, homeowners insurance does not cover all types of damages and losses, such as:
- Flood or sewer backups (usually require separate flood insurance)
- Earthquake or sinkholes (usually require separate earthquake coverage)
- Mold, fungus, or rot (usually excluded or limited)
- Wear and tear, deterioration, or neglect (usually excluded)
- Intentional acts, war, or nuclear hazards (usually excluded)
Therefore, you need to read and understand your homeowners insurance policy and endorsements to know what is covered and what is not, as well as any limits, exclusions, or deductibles.
What is a Homeowners Insurance Deductible?
A homeowners insurance deductible is the amount the policyholder agrees to pay out of pocket before the insurer covers the rest of the claim. For example, if your home suffers $10,000 in damages and your deductible is $1,000, you will pay $1,000, and the insurer will pay $9,000.
The deductible can affect the homeowners insurance cost because the higher the deductible, the lower the premium, and vice versa. Therefore, you need to choose a deductible that you can afford to pay and balance it with the premium savings.
What Discounts Can I Get on Homeowners Insurance?
Homeowners insurance companies may offer various discounts to their policyholders, depending on their eligibility and preferences. Some common discounts include:
- Multi-policy discount: If you bundle your homeowners insurance with other insurance policies, such as auto or life insurance, with the same insurer, you may get a discount on each policy.
- Safety and security features discount: If you have smoke detectors, fire alarms, burglar alarms, deadbolts, or other safety devices in your home, you may qualify for a discount on your homeowners insurance.
- New home or renovation discount: If your home is brand new or recently renovated, you may get a discount on your homeowners insurance because it is less likely to have damages or problems.
- Loyalty discount: If you have been with the same insurer for a long time, you may get a loyalty discount on your homeowners insurance.
- Claims-free discount: If you have not filed any claims in a certain period, such as three years, you may get a claims-free discount on your homeowners insurance.
Therefore, it is essential to ask your insurance company about any discounts you may be eligible for and maximize your savings without compromising your coverage needs.
Do I Need Additional Coverage for Expensive Items?
If you have expensive items, such as jewelry, art, antiques, or collectibles, you may need additional coverage beyond your standard homeowners insurance policy. Most homeowners insurance policies have limits on coverage for certain types of personal belongings, such as jewelry and cash, which may not be enough to replace or repair them in case of theft or loss.
You can add a rider or endorsement to your homeowners insurance policy to increase the coverage limits or purchase a separate policy, such as a floater or an inland marine policy, specifically designed for high-value items. You also need to provide proof of ownership and appraisal of the items to your insurer and update the coverage regularly.
How Do I File a Homeowners Insurance Claim?
To file a homeowners insurance claim, you need to follow these steps:
- Notify your insurance company as soon as possible after the damage or loss occurs, either by phone, online, or in writing.
- Provide your policy number, contact information, and details of the damage or loss, such as the date, the cause, and the extent.
- Take pictures or videos of the damage or loss, if possible.
- Cooperate with your insurance company’s adjuster, who will assess the damage and estimate the repair or replacement costs.
- Get estimates or bids from licensed and reputable contractors or vendors to compare with the adjuster’s estimate.
- Review and negotiate the settlement with your insurance company’s claims representative, including the scope of repairs, the cost of materials and labor, and any deductible or depreciation.
- Sign a release form or waiver of subrogation to receive the settlement payment.
It is important to follow your insurance company’s claims process and requirements, keep records and receipts of all expenses related to the claim, and ask any questions or concerns you may have during the process.
How Can I Lower My Homeowners Insurance Cost?
You can lower your homeowners insurance cost by:
- Shopping around and comparing quotes from different insurance companies based on your specific needs and budget.
- Raising your deductible to a higher amount that you can afford to pay out of pocket in case of a claim.
- Getting discounts for safety features, multiple policies, loyalty, claims-free history, or other eligibility criteria.
- Maintaining a good credit score and claims history.
- Reducing the risk of damages or losses by maintaining your home, upgrading it with safety and security features, and avoiding risky behaviors or conditions.
Therefore, you need to balance the cost and benefits of your homeowners insurance policy and adjust them as needed to meet your changing needs and circumstances.
Conclusion
Homeowners insurance is an essential protection that homeowners need to secure their property, assets, and liability against various risks and damages. However, homeowners insurance cost can vary widely based on various factors, such as location, home value, coverage type and amount, deductible, and discounts. Therefore, it is important to compare different insurance companies and policies based on your specific needs and budget. Moreover, you need to understand your homeowners insurance policy and endorsements, as well as any limits, exclusions, or deductibles. Finally, you need to follow the proper procedures and requirements to file and handle a homeowners insurance claim and maximize your savings without compromising your coverage needs.