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How to Estimate Your Homeowners Insurance

Danika Miller

Danika Miller

Staff Writer

4 min. read

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According to the Insurance Information Institute, the average cost for homeowners insurance nationwide is about $1,200. Homeowners in some states, like Oregon, pay an average of just $650 per year. While those who live in areas at higher risk for a natural disaster, like Florida, pay closer to $2,000. In addition to where you live, premiums will fluctuate depending on a number of factors about your home.

Your homeowners insurance premium is made up of several coverage types:

  • Dwelling: Covers your home and its main components (roof, plumbing, etc.)
  • Personal property: Covers personal belongings, like jewelry, electronics, and clothes
  • Liability: Protection against anyone injured on your property that files a lawsuit against you

There are a lot of factors that play into each of these coverage amounts and your annual premiums, and insurers may weigh those factors differently. We always recommend getting several quotes from a variety of companies to find the best value. Before you get started with quotes, there are a few ways you can get an idea of what your insurance may cost you.

History may haunt you

Your financial profile will have an effect on your premium quotes. Insurers will look at your claims history, and your premium may be higher if you’ve filed any costly claims in the past. In the eyes of an insurer, the more claims you’ve filed, the riskier it is to insure you. Your credit score will also affect the quotes you receive. A higher credit score is a good indicator that an insurance company can trust you to pay your premiums and they’ll offer you a lower rate as a result. When trying to build an estimate of your homeowners insurance, consider the financial track record that you’ll have to disclose.

Calculate rebuild costs

The amount of dwelling coverage your policy has should match the cost to replace your home. But remember, this isn’t the same number as the resale value of your home. Things like property size, neighborhood, and landscape all contribute to the value of your home when selling it but don’t affect the cost to rebuild.

An insurance company will send inspectors to evaluate the replacement cost, but to estimate it yourself you’ll need to do some research. The National Association of Home Builders last reported that the average cost to build a home is $103 per square foot. But this number will vary depending on your area. The type of materials and features will need to be included in your estimate, too — flooring, cabinets, fixtures, appliances, and roof replacement. If you’re committed to estimating this cost on your own, you’ll have to reach out to local suppliers and contractors for a variety of quotes.

Evaluate your assets

You’ll need to take stock of your assets for two reasons: to help you replace any valuable personal items that are lost or damaged, and to protect your financial assets in the event of a liability lawsuit.

Create a home inventory

Keeping detailed records of your valuable personal belongings will guide you in deciding how much personal property coverage you need. We recommend doing a home inventory and adding up the value of everything in your home, from furniture and appliances to sports equipment and clothing. If you were to lose everything in a house fire, you’d want enough coverage to get back on your feet. Don’t be afraid to be detailed and even take photos as evidence — it’ll pay off if anything happens.

Create a financial inventory

Less tangible assets, like stocks, investments, savings, and business assets, can all be at risk if you’re ever sued. Accounting for these things will affect the amount of liability coverage you purchase in your homeowners insurance policy. If the total of your assets exceeds the limit of your home insurance policy’s liability clause, you may want to look into purchasing an additional umbrella policy.

Consider your region’s risks

Keep in mind, where you live will always affect your insurance premiums. If your home is more at risk for flooding, hurricanes, tornadoes, earthquakes, or tsunamis, your insurance premiums will be higher and you may even need additional endorsements. Insurers will also look at how many claims are submitted in your zip code and what perils may be a higher risk in your neighborhood. You can use Allstate’s Common and Costly Claims tool to find information on the most common claims in your zip code. If you live in a particularly at-risk area, expect a higher premium.

Seek out discounts

The cherry on top of the quotes process is discounts. There are a number of ways you can lower your premium by taking advantage of discounts. Some common discounts offered by insurers include: installing home security devices, bundling insurance policies, disaster-proofing (storm shutters, reinforced roofs, etc.), and being claim-free. Even something as small as opting in for auto-pay can cut you a 5% discount. Before you sign an insurance policy, look at which discounts may be available to you to lower those premiums.

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