How Much Does Homeowners Insurance Cost?

How Much Does Homeowners Insurance Cost?

we understand looking for homeowners insurance can be nerve-wracking nowadays. You’re researching a process that may be totally new to you, one you know very little about or don’t have a lot of experience working with personally. And the cost … that’s the one thing ALL our customers are worried about, especially when new homeownership or the things that might create changes in coverage tend to get pricey.

We called our company Insurance Geek because not only do we know the ins and outs of the industry – we love working those ins and outs, especially the ones that facilitate creative solutions for families just like yours, who want the best possible protection at the lowest available price.

So now that we’re past the intro, let’s tackle the big question:

How much does home insurance cost?

Nobody loves to hear “it depends”, but truly, there are so many factors that go into how a premium is determined, I don’t even always want to disclose average rates for homeowners, because when you consider the number of factors that are so personally dependent on what goes into a policy, “average” is sometimes out the door.

To truly understand the cost of homeowners insurance and what you might pay, there are a variety of important factors to consider. Let’s go through each of these with a fine-toothed comb so you have a better idea of how your personal situation might affect the amount of premium you pay.

How is a homeowners premium determined?

First things first: the underwriting process takes a number of universal factors into consideration. While each person’s situation is different, the means to measure what a person should pay are pretty standard.

Below, we dig into each of these top premium factors and give you an idea about how they could affect your total overall cost for the long haul.

Protection Class

This term refers to a 1-10 rating system underwriting uses to determine the risk of fire damage to your home. Generally, this metric is related to the proximity of your home to the fire station and also to available and accessible hydrants or water source.

As you might imagine, the further away your home is from protective measures against fire, the greater the risk of losing the home structure and related structures, as well as your personal belongings. The greater your fire protection class (1 and lower numbers on the scale), the more your home is viewed as being at risk.

Protection classes are usually broken down in this way:

1-4: The home is located in a city or municipality, with fire plugs and a fire department able to respond

5-8: The homes in the district are not unprotected. The fire department may be volunteer-led; the primary water source may be the fire truck.

9-10: These homes don’t have immediate access to a fire station or hydrants resulting in delayed response times and difficulty putting out a fire, resulting in a more severe loss.

Construction Materials

Your home’s materials matter. If you live in tornado alley and your home isn’t constructed of sounder building materials, the risk of total loss is higher. It doesn’t always necessarily matter if your home is older ((NEW HOMEOWNERS GET A BREAK))

Upon purchasing your home, details of its construction materials and quality are a part of the sales process, and construction materials are a matter of public record.

5 Year Loss History and Credit Score

Your financial and insurance purchasing habits also come into play when determining your premium. Underwriters will want to know if you’ve had any home losses in the past five years. A pattern of loss in your owner history may point to a pattern that indicates a larger risk.

Your personal financial habits also matter. Having a higher credit score indicates you’ll be more likely to keep up with your mortgage payments.

Year Built or Remodeled

It stands to reason that as structures age, exposure to the elements, use, and the nature of changing building codes influences the way they hold up. Newer homes get discounts but remodeled homes don’t always mean lower premiums for policyholders, but newer homes are often constructed with the most modern safety in mind and newer materials.

Fire & Burglar Alarm Protection

Ensuring safety is in place to protect you against some of the most common losses just makes sense. If you’re able to protect your home with fire and burglar alarms, the chance of a loss decreases, and underwriters take this into consideration.

Determining and understanding homeowners reconstruction costs

Marshall and Swift® is a leading valuation estimator in our industry. We use the information they provide to assess the cost of replacing your structure based on its value and key factors. Insurance companies will make you carry 100% replacement cost coverage on the dwelling.

To best assess the cost of reconstruction for your home in the event of a loss, we need to know what your home is built out of, the square footage, the quality of your home’s construction (Track, Custom and Special are typical quality ratings) and info such as the number of bathrooms, fireplaces, and other special features. Answering these questions gives us a better way to assess the amount of money it will take to replace your home, or part of it, in the event of a loss.

Carriers want to help policyholders protect their homes – making sure your home is insured to value is very important to assure a proper claim settlement.

Top five most expensive home insurance states

On average, our topmost expensive states alongside average annual premium are listed below*:

StateAverage Annual PremiumDifference From National
Florida$3,573191%
Louisiana$2,979143%
Oklahoma$2,654116%
Alabama$2,31488%
Mississippi$2,29086%

(Premium Based on Home with $200,000 in dwelling coverage, $100,000 in personal liability coverage, $ 1,000 deductible, and Form HO-3)

Why these states? If you glance through the list, you’ll notice most of these areas have something very important in common: They’re either coastal states affected by hurricanes or in the case of Oklahoma, they’re smack dab in the middle of tornado alley. States with more exposure to catastrophic natural disasters including hurricanes, brush fires, hail, tornadoes, etc. generally have higher homeowners insurance premiums.

Top Five Least Expensive Home Insurance States

StateAverage Annual PremiumDifference From National
Hawaii$337-73%
Vermont$589-52%
Idaho$622-49%
Utah$642-48%
Oregon$643-48%

(Premium Based on Home with $200,000 in dwelling coverage, $100,000 in personal liability coverage, $ 1,000 deductible, and Form HO-3)

To put it simply, the above states aren’t at a higher risk of hurricane, tornado or brush fire damage when compared with other states in the US. This presents an opportunity for residents of these states to save compared with national averages.

Things that increase the cost of homeowners insurance

If you have two or more home claims over time, it can be difficult for us to place coverage with you from any of our carriers. When you hit two claims, companies often consider you “high risk”. Not to worry – it will be pricier, but generally, a state FAIR plan can help. These shared-market plans allow “high-risk” homeowners to receive access to homeowners insurance.

Poor credit or poor property maintenance indicates a greater risk of not being able to maintain the property.

Things that lower the cost of homeowners insurance

Looking to save? No problem – there are ways to get that premium down!

First, many policyholders opt to go with a higher deductible. The higher your deductible, the less you’ll pay monthly. Policyholders typically opt for $1000, $2500, or $5000 deductibles. Before you file a claim and receive a payout, you’ll need to make sure your deductible is met.

You can add optional wind/hail deductibles to your policy – so if your property is damaged by wind or hail, you’ll need to pay a separate deductible before you’re able to recover your loss.

One of the best ways to save is to bundle. We can write auto, fire, RV or life insurance policies along with your homeowners policy that will help you save through your carrier.

How to determine your premium cost

We’re excited to say we have an easy, no-obligation way to get you a quote that will save you on your premium cost! All you have to do is enter your home data JUST one time, and we’ll send that information to carriers to determine your construction cost!

We provide real-time quotes from multiple carriers using the info you provide. You won’t have to talk to multiple people just to get a quote, you won’t have to fill out your information over and over again (just once does it!) and you won’t deal with endless, annoying phone calls from multiple agents. When you put in your info? You work with us, and we get you taken care of. Period.

Check out our quote tool and let us help you save on your homeowners insurance premium today!