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Home insurance typically pays to repair or replace your home in many cases if it is damaged by fire, crime, or another unexpected event.
The price you will pay for your policy can vary greatly depending on a number of factors, including where you live. This article covers these factors, as well as the average cost of home insurance.
You can easily compare home insurance quotes with Credible.
This figure has been increasing in recent years. This is due to increased costs of repairing and rebuilding homes, higher disaster losses from extreme weather conditions, and more people being relocated to disaster-prone areas.
The actual cost of your home insurance can vary greatly depending on the type of policy you choose, your location and a host of other factors.
Factors that affect the cost of home insurance
- House age — Newer homes may have lower insurance costs than older homes. If a house is particularly old, you may have trouble finding adequate coverage.
- Type of construction — The construction style of your home can affect its risk of being damaged in a fire or storm. Frame homes, for example, can be more expensive to insure than brick homes.
- Location – The setting of your home can affect the price of insurance in both directions. For example, homes in urban areas may face a higher crime risk but have better fire protection services, while homes in rural areas may have the opposite dynamic. The quality of the fire department in your area is especially important to home insurance companies. Your city may have a fire protection class rating that insurers use to set prices.
- Deductible — A deductible is the amount you pay for a repair before the insurance takes effect. The higher your deductible, the lower your premium tends to be, but the more you pay out of pocket when you file a claim.
- Amount of insurance coverage — You’ll want to buy enough insurance to cover the cost of replacing your home in the event of a total loss, making your total coverage heavily dependent on real estate and construction costs. The more cover you need, the higher the price you will pay.
- Risk of natural disasters — Some parts of the country are more prone to disasters like hurricanes, bushfires, and tornadoes. These areas may require you to pay higher premiums.
- Local laws and regulations — Home insurance is heavily regulated, with rules varying from state to state that can affect insurance costs. Some states may require specific levels of coverage, which may increase your costs.
- Your claims history — If you have filed many home insurance claims in the past, you may face higher costs when renewing or purchasing a new policy. This can happen even if the claims you filed were not your fault.
Average cost of home insurance by state
Here is the average cost of home insurance in the United States by state, according to the National Association of Insurance Commissioners:
The most expensive states for home insurance are all on the Gulf Coast, an area particularly prone to hurricanes. All three states have been hit hard recently, with homeowners suffering billions in damages.
- Florida — Average annual premium of $1,954, or $162.83 per month
- Louisiana — Average annual premium of $1,906, or $158.83 per month
- Texas— Average annual premium of $1,878, or $156.50 per month
The three states with the cheapest homeowners insurance are not in areas traditionally prone to hurricanes or tornadoes. Their premiums are less than half of the average premiums in the most expensive states.
- Oregon — Average annual premium of $731, or $60.92 per month
- Utah— Average annual premium of $737, or $61.42 per month
- Idaho- Average annual premium of $787, or $65.58 per month
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Average cost of home insurance by coverage amount
Home insurance policies usually have a the housing coverage limit or the maximum amount an insurance company will pay to repair or replace a damaged home. More expensive homes require you to purchase a higher housing coverage limit, which can have a major effect on your premium.
Here is the average cost of home insurance by coverage amount, according to the National Association of Insurance Commissioners:
How to reduce the cost of home insurance
If one of the average prices shocks you, keep in mind that it is possible to reduce the cost when you take out home insurance. Consider these strategies:
- Combine several insurance policies. You can have a number of different insurance policies, including auto insurance, life insurance, and business insurance. Some insurance companies may give you discounts if you choose to have multiple policies with the same company, which is called bundling.
- Take advantage of discounts. Some insurers will give you a discount on your policy if you do things like install a security system or sprinkler system.
- Increase your deductible. The higher your deductible, the more you will pay out of pocket if you file a claim, but the lower your insurance premium will be.
- Compare the prices. Once you have determined the level of insurance coverage you need, you can obtain quotes from several companies. You may find that the price is significantly cheaper from one insurer to another. Just be sure to compare similar policies.
Home Insurance FAQs
Read on for answers to some of the most common questions people have about home insurance.
Why is home insurance increasing?
The cost of your home insurance can increase over time for a variety of reasons, and some of them are specific to your home. Your home insurance may also become more expensive as your home ages, for example, as older homes tend to be more at risk of damage. You may face a higher premium if you have a history of filing home insurance claims, even if the issues were not your fault.
In addition, factors outside your home can influence price increases. One of them is inflation: the price of construction, materials, and other items you would need to repair or replace your home go up over time, and so does your insurance. Your policy may automatically increase its coverage (and likely its cost) to keep up with overall inflation. Home insurance rates may also increase in your area if your city has recently been hit by an unusual number of natural disasters or other disasters.
Does home insurance affect your mortgage payment?
Yes, kind of. Generally, you will not pay your home insurance company directly for your policy. Instead, you’ll pay for your home insurance as part of your monthly mortgage payment, with your lender keeping the money in an escrow account and making premium payments on your behalf. This allows the lender to ensure your home insurance is paid on time, protecting their investment as well as yours. If the cost of your home insurance increases, your mortgage payment will also increase.
What is not covered by home insurance?
Home insurance policies usually specify when damage to your home will be covered and when it will not. (It usually depends on the cause of the damage.) In most cases, your policy will cover damage caused by fires or storms, but will not cover damage caused by floods or earthquakes. Your policy may or may not cover damage caused by hail or windstorms.
Wear and tear is generally not covered by a home insurance policy. Your vehicles are generally not covered, even if they are damaged in an event that also damages your home, and your pets are not covered either.
You can usually see what’s not covered by your policy in the “exclusions” section, or you can speak with your insurance agent to find out.
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