Homeowners insurance is a big decision, and the last thing anyone needs when choosing a provider is confusion. Down below are some of the most frequently asked questions about homeowners insurance.
Who Has the Cheapest Homeowners Insurance?
Determining which insurance company will give you the cheapest rates for homeowners insurance will vary according to the level of coverage you need as well as myriad factors about your home, its age, and location. Finding the cheapest home insurance requires a lot of research but we’ve reviewed companies that tend to offer cheaper rates, a great place to start if you’re looking for the cheapest rates.
How Can I Get Cheap Homeowners Insurance?
Finding cheap homeowners insurance can take some time but it’s worth it in the long run in making sure your home is protected without breaking the bank. Here are just some of the things that will help you get the cheapest homeowners insurance:
Read reviews. Consult customer reviews and scores in order to get an idea of the common complaints and praises for each provider.
Look for discounts, but don’t limit your decision to which provider has the most. Instead, look to maximize your opportunities by going with a provider that offers the most discounts that apply to you.
Improve your home’s safety and stability. Not only will installing a security system and utilizing weather-resistant materials make your home that much stronger, they might also save you some money.
Bundle policies. If you can get your homeowners insurance from the same provider covering your car, you should see if the provider offers a bundling discount. For example, providers like American Family will help you save 29% on auto by bundling, and you’d also get 20% off your home coverage.
Shop around. As with any big investment, you don’t want to pull the trigger on signing for a policy until you’ve exhausted every possible opportunity. Take some time to really shop around and put a list together of your top picks. You can use ours as a starting point.
What Factors Affect the Price of My Premium?
Coverage varies greatly among regions, homes, and asset portfolios. If you and your neighbor called all the same providers asking for quotes, there’s a good chance the lowest option for you would come from a different provider than the lowest option for them. There’s no universally cheaper carrier. For some context, premiums can range in price anywhere from $500 to $2,000 per year. This is a non-comprehensive list of factors that may affect the price of your policy:
- Credit score
- Condition of plumbing and electrical equipment
- Vulnerability to large-scale weather events (wind damage/earthquakes/floods/etc.)
- Claim history
- Replacement cost
- Dog breed
- Wood-burning stove
- Home-based business
- Home liability limits
- Insurance score
- Marital status
- Age and construction of home
- Ownership of trampolines, swimming pools, or hot tubs
- roof condition
- Proximity to fire station
- Square footage
- Number of inhabitants
- Local area claim history
- Home security system and safety features
What Is a Good Price for Homeowners Insurance?
Any of our top homeowners insurance picks could potentially be the cheapest for you. Most annual premiums for homeowners insurance range from $600 to $2,000 ($50 to $170 monthly) — the range is so vast because rates are influenced by numerous, and highly personal, circumstances. Is your home old or new? Is it framed with brick or wood? Is it in a busy city or a rural area? Is there a high risk of natural disasters such as hurricanes, floods, or tornadoes? Are you bundling your policy with other types of insurance, such as auto or life? Those are only a few of the circumstances that can affect your quote.
How Much Homeowners Insurance Should I Buy?
In order to know just how much homeowners insurance you should buy, you’ll need to consider a couple of factors, including:
- Estimated repair cost of your home
- Estimated value of your belongings
- If your home is located in an area prone to flooding or other weather-related concerns
We recommend putting together a home inventory and consulting with a home insurance agent to determine other factors, such as the value of your home and how much coverage you may need for natural disasters and liability.
Of all the variables that affect your premium, the most important is replacement cost value. This is the amount of money needed to completely rebuild or replace your home in the aftermath of a catastrophe. That number isn’t going to be the same as what you paid for your home (it should account for appreciation), nor the market value (which accounts for the plot of land and location). This value is critical — protection against loss is the whole point of carrying insurance.
What Is Covered by Homeowners Insurance?
Simply put, there are six main categories that homeowners insurance covers: your dwelling, other structures, personal property, loss of use, liability, and medical payments. Within each category are particular coverages and exclusions. For example, water damage is covered under “dwelling” as a result of burst pipes or water heater but not as a result of heavy rainfall or flooding (though coverage for the latter can be added separately). And while water damage from the burst pipe is covered, your policy won’t cover the cost of replacing those pipes.
Standard coverages of homeowners insurance
- Dwelling (also called Coverage A). This includes the main building and its plumbing, heating, and air conditioning systems against damage from outside forces.
- Other structures (or Coverage B). This pays for damage to fences, sheds, garages, guest cottages, and any other structure not connected to your house.
- Personal property (or Coverage C). This reimburses you for lost, stolen, or ruined possessions such as furniture, electronics, and clothing, even when they aren’t on your property. You can choose to insure them for their actual cash value (the original value, less depreciation) or their replacement value (what it costs to buy a replacement in similar condition).
- Loss of use (or Coverage D). This pays for your living expenses during the time you’re unable to live in your damaged home.
- Liability (or Coverage E). This covers your financial loss if you or anyone in your family is sued for damages or injuries to someone else. The event doesn’t have to happen on your property. Increased limits for liability coverage — important if you own valuable assets that could be targeted in a lawsuit — can be added on as “umbrella coverage.”
- Medical payments to others (or Coverage F). This is intended to pay for relatively minor medical bills resulting from an injury, like if a friend cuts their finger while helping you make dinner.
Generally, any damage from natural or national disasters like earthquakes or war will not be covered. Added to that list is fungi, contamination, wear and tear, and pests.
Will My Premiums Go up After Making a Claim?
In short, yes. Think carefully before filing a claim on your homeowners insurance, as it will directly affect the amount you’ll pay going forward. If you have two claims within three years, or three claims within five years, that increase can be as high as 20% as you’re shifted into a “high-risk” category. It could be another five years before those claims drop off your record and the premium prices decrease.
What’s the Difference Between Homeowners Insurance and a Home Warranty?
Homeowners insurance is there to protect you in the event of a disaster, not to cover normal wear and tear. A home warranty, on the other hand, covers the mechanical breakdown of appliances and systems in the home, like the refrigerator, the washing machine, and the electricity and plumbing that make them run. If that sounds like something you want, check out our review of the best home warranty companies.
Which Companies Offer Home and Auto Insurance Bundles?
Many home and auto insurance companies offer discounts if you purchase more than one policy. For example, Allstate advertises bundling deals up to 25% and State Farm up to 17%. But in reality, multi-policy discounts vary from person to person. Instead of taking your provider’s bundling discount at face value, be sure to compare quotes from multiple home and auto insurance companies. You may save more by insuring your home and car with separate, cheaper providers than by bundling them with one.