Average Annual Premium
Our Top Pick
One of Tennessee’s greatest threats is the risk of tornadoes. In addition, due to the New Madrid Fault Line, which weaves its way through southern Illinois, Tennessee, Arkansas, Kentucky and a few other states, earthquakes are a distinct possibility in Tennessee.
Heavy rain and floods also challenge the state, and these risks require home insurance up to the task.
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The Best Homeowners Insurance in Tennessee
- The Best Homeowners Insurance in Tennessee
- Average Annual Premium in Tennessee
- Finding the Best Premium for Your Home
- Coverage for Other Structures
- What’s Not Covered
- Sinkhole Coverage
- Earthquake Insurance
- Flood Insurance
- Most Affordable Cities
- Most Expensive Cities
- Top Picks for Tennessee
- Final Thoughts
- Frequently Asked Questions
Average Annual Premium in Tennessee
Housing is generally affordable in Tennessee with a median home value of $145,000 compared to $205,000 nationally, which suggests that Tennessee homes cost less to rebuild than in some other states.
This helps to keep insurance costs more stable than might be expected, given the numerous risks to homes from Mother Nature. Homeowners in the Volunteer State pay close to the national average, with average Tennessee rates also kept lower by a higher percentage of mobile homes than in some other areas of the country.
Finding the Best Premium for Your Home
Both nationally and locally, the most common covered claims are for wind and hail damage to homes. This is covered under dwelling coverage, which pays toward repairing or rebuilding your home if it’s damaged in a covered claim, including wind/hail, fires, lightning, and other risks — but not all risks.
Insurers use specialized software to calculate the cost of rebuilding your home in the event of a complete loss. Important details of your home such as square footage, type of construction, number of floors, and any special features are all part of the calculated rebuild cost.
This rebuild cost is used as a basis in claims, even smaller claims, and is frequently the amount chosen by homeowners for a dwelling coverage limit. Choosing the rebuild cost as your coverage amount is the safest option, but pay attention the number. If it seems too low, an important detail of your home may have been overlooked — so ask to review the details.
The calculated rebuild cost is used to determine the insurance to value ratio, which can trigger smaller claim payouts if the ratio falls below 80 percent. Some homes may be insured for less than the rebuild cost if a different amount was chosen by the homeowner or if an older policy’s coverage limit hasn’t kept up with inflation.
Recent reports indicate up to 60 percent of homes are underinsured, having coverage for less than 80 percent of the true cost of rebuilding the home. Coverage amounts at less than 80 percent of the rebuild cost trigger a policy clause called coinsurance — meaning the homeowner pays a percentage of the claim in addition to paying any applicable deductibles.
|Insured value||Rebuild cost||Insurance to value||Coinsurance(paid by homeowner)|
In the example above, the homeowner is responsible for the first 25 percent of any claim, even if there isn’t a total loss. The policy also doesn’t provide enough coverage to rebuild the home if there is a total loss.
Once you have a policy in force with sufficient coverage, it’s important to review your coverage every year or two to be sure your policy still meets your changing needs — and to be sure that coverage amounts are keeping up with inflation. Many of the homes that are underinsured likely became that way over time, as the cost of rebuilding increased each year and their coverage didn’t keep pace.
Most of your home’s structure is covered at replacement cost value (RCV), meaning the insurer will pay the full cost of repair or replacement in a covered claim, subject to coverage limits and less your deductible. However, due to increasing roof claims for older roofs, many insurers have moved away from replacement cost coverage for roofs, instead of paying roof claims on a depreciation schedule.
With these insurers, a roof that is older will have coverage for actual cash value (ACV), which means the insured item (the roof) is depreciated for wear and tear due to age in a covered claim.
The depreciation formulas used by insurers vary, but to use an example from one national insurer, they use straight-line depreciation based on the life expectancy of the item.
A common composite shingle roof has a life expectancy of 25 years, so the roof would depreciate by four percent each year, reducing the amount of coverage each year — until the coverage goes to zero after 25 years.
|Life expectancy||Roof age||Depreciation||Original value||Depreciated value|
|25 years||10 years||40%||$15,000||$9,000|
|25 years||20 years||80%||$15,000||$3,000|
The lower claim payout based on depreciation, combined with a deductible, which is the part of the claim that you pay, can reduce the claim payout for covered damage to older roofs down to almost nothing. When shopping for a home insurance policy, review your roof coverage carefully and ask your agent for examples of how a roof claim would be paid. Some insurers offer a better bargain with regard to roof coverage.
Coverage for Other Structures
In-ground pools, sheds, storage buildings, fences, and other unattached structures on your property are covered under coverage for other structures, sometimes called coverage B. Most policies assign a default coverage amount equal to ten percent of the total dwelling coverage.
A home insured for $200,000 would have a default coverage amount of $20,000 for other structures. You can adjust this number as needed, up to the top coverage limits available through your insurance company.
Personal property coverage. Personal property coverage, sometimes called contents coverage, insures the things you own that help make your house a home. Appliances, clothing, furniture, and other common household items are covered by your personal property coverage — but it’s important to understand the details of this coverage because some policies can leave large coverage gaps.
Personal property coverage is also assigned a default coverage amount, often about 50 percent of the dwelling coverage limit. Again, you can adjust this coverage amount as needed, up to the maximum amount allowed by your policy. A home insured for $200,000 might be assigned a default coverage limit for personal property of $100,000.
There are two important considerations for personal property coverage, the first of which is actual cash value (ACV) vs. replacement cost value (RCV). Most home insurance policies insure personal property at actual cash value, which depreciates the insured value of your items due to wear and tear based on age.
With actual cash value coverage, a covered claim in which $10,000 worth of personal property was damaged might only pay a fraction of the loss based on the age of the items. Some insurers provide an option to insure personal property at replacement cost value, which pays for the actual cost of replacement in a covered claim.
For larger claims, the difference in the two types of coverage becomes evident quickly, with actual cash value coverage paying much smaller claim payouts for your damaged belongings.
Personal liability coverage. The second important consideration for personal property coverage is how your valuables are insured, or specifically, how coverage is limited. Most home insurance policies place a coverage limit on certain categories of valuables, including jewelry, firearms, furs, musical instruments, and others. Limits vary by insurer and by category, but to use jewelry as an example, you might find a limit on jewelry coverage of $2,500.
It’s also common to find limits by item, so a per-item limit for jewelry might be $1,000. In a fire or theft loss where $10,000 of jewelry was lost, the insurer will pay a maximum of $2,500 — and the loss would be subject to your deductible as well, further reducing your claim payout.
To provide better protection for your valuables, you can add valuables to your policy as scheduled items, which insures precious items to their full value and often does not require that you pay a deductible if you have a covered claim. Instead of scheduling items on your home insurance policy, some insurers provide personal articles policies, which also insure your precious items to their full value, but which can be managed separately from your home insurance policy.
With either of these coverage solutions, your insurer will require a recent receipt or a recent appraisal that describes the insured item and verifies its value. If you’re insuring items that appreciate in value, like jewelry, you’ll want to submit updated appraisals periodically to ensure full coverage.
A standard home insurance policy comes with $100,000 in personal liability coverage, which pays toward personal liability due to accidental injury to others or unintentional damage to the property of others. In the event of a personal liability lawsuit, your liability coverage can pay towards your legal defense as well, and often legal costs are outside of your coverage limit, meaning that your legal expenses won’t reduce the amount of coverage available for a liability settlement or judgment.
Increasing your personal liability coverage to $300,000, the next step up in coverage, typically only costs about $20 per year and is money well spent. Injury lawsuits often involve not just the medical costs, but also pain and suffering and lost wages. Liability totals can add up quickly.
If you have a pool, frequent guests, or children who have their friends over, consider a higher coverage limit or even an umbrella policy, which extends your personal liability coverage for both your home and auto policy by a minimum of $1,000,000.
Medical Payments. Your policy probably also has coverage for medical payments, a simpler way of paying for small injuries to others. Base coverage is $1,000. However, with the average medical payment claim at about $3,000, stepping up to $5,000 in coverage makes sense — especially at less than $10 per year in additional premiums.
Loss of use. If your home is temporarily uninhabitable while being repaired due to a covered claim, loss of use coverage helps pay for hotels and the additional cost of eating out, subject to coverage limits. Review your coverage for loss of use and bear in mind that complete rebuilds or extensive repairs to your home can often take months.
Deductibles. The deductible is the part of the claim paid by the insured homeowner, and while choosing a higher deductible can reduce your premiums, a higher deductible also places more risk on the homeowner. In a covered claim, the insurer calculates the value of the loss (sometimes depreciated based on age) and then subtracts the deductible. A high deductible can take a big chunk out of the payment for a covered claim or even prevent the claim for being paid at all.
Your home insurance policy will have at least two deductibles, each for a different type of risk. It’s common to have a separate deductible for wind and hail damage, with another deductible for all other covered perils. Your deductible might be structured as a dollar amount, usually with a minimum of $500 to $1,000, or your deductible might be structured as a percentage of the dwelling coverage.
A home insured for $200,000 with a two percent deductible leaves the homeowner responsible for the first $4,000 in a covered claim. Pay special attention to how your deductibles are structured and choose a deductible you’ll be able to pay if your home is damaged and needs repairs.
Discounts can help reduce premiums and pay for any add-ons or changes in coverage you make to your policy. Among the most common discounts available through insurers is the multi policy discount, usually used with home and auto insurance, which reduces the cost of both policies.
Additional policies, like life insurance or an umbrella policy, can create further discounts. Bundling home and auto through the same insurer can create savings on your home insurance policy of up to 30 to 35 percent.
Common home insurance discounts:
- Multi policy discount
- Home safety features
- Discounts for seniors
- Discounts for affinity groups or government employees
- Claims free discounts
- Loyalty discounts
- New home buyer discounts
- Discounts for new customers
It’s likely that you’ll qualify for more than one discount, so ask your agent for ways to save. Also be aware that some discounts, such as welcome discounts, don’t last forever — so base your buying decision on the value provided by the policy without considering discounts that may expire quickly.
What’s Not Covered
Every insurance policy comes with a list of exclusions, meaning situations or losses that will not be covered by your policy. On a home insurance policy, you’ll find exclusions such as war and acts of government — but you’ll also find some things you may have thought to be covered are excluded, like land movement and floods.
Common home insurance exclusions:
- Ordinance or law (building code requirements)
- Earth movement: earthquakes, shockwaves, sinkholes, landslides and mud flows
- Water damage: floods, sewer back-ups and water that seeps through the foundation
- Power failure
- Nuclear hazard
- Intentional acts (by the insured)
- Governmental action
- Loss to property: faulty zoning, workmanship, faulty construction materials defective maintenance
Legal verbiage and descriptions vary by insurer, but these exclusions apply to most if not all homeowners insurance policies in Tennessee.
The most common types of policies sold for single family homes in Tennessee are HO-2 and HO-3 policies. An HO-2 policy covers the most common risks, like damage from wind, hail, or fire, but limits coverage to only the perils (risks) specifically named on the policy.
An HO-3 policy, also sometimes called an all-risk policy, covers all perils except for the perils specifically excluded, which makes an HO-3 policy a better choice if you are concerned about gaps in coverage.
Much of the land in Tennessee is formed of porous limestone, which can easily erode due to underground water, forming caverns and causing the soil above to collapse into sometimes massive holes that can appear instantly. As residents in a top five state for sinkhole risk, Tennessee homeowners have good reason to be concerned about their home’s safety.
A state law passed in 2014 requires home insurers in Tennessee to offer coverage for sinkholes. Unlike Florida’s sinkhole coverage law, which require insurers to provide coverage for “catastrophic ground cover collapse” with home insurance, Tennessee’s law makes sinkhole coverage, catastrophic or otherwise, an optional add-on.
The law requires coverage be offered for loss due to structural damage, as expected, but does not require coverage for land stabilization — meaning the insurer will pay to rebuild your home on solid ground if you’ve chosen sinkhole coverage, but you may be responsible for expenses associated with filling the sinkhole and stabilizing the land at the home’s foundation.
Tennessee’s optional sinkhole coverage excludes coverage for earthquakes, mudslides, or any other type of land movement. Optional coverage for sinkholes can often be purchased for as low as $40 to $50 per year. Deductibles, the part of the claim paid by the homeowner, range from one percent up to ten percent.
The last major earthquakes to shake Tennessee were in 1811 and 1812, when three earthquakes of magnitude 7 to 7.7 rattled the area, causing church bells to ring In Charleston and waking befuddled New Yorkers; east coast quakes travel further than their west coast rivals.
The New Madrid Fault Line, 20 times larger than California’s infamous San Andreas fault, sits just west of the Memphis metropolitan area, home to over 1.3 million people. The past 200 years have brought smaller quakes to the state, but the USGS now estimates the risk of a magnitude 7 quake in the next five decades at up to ten percent and a magnitude 6 quake at up to 40 percent.
A standard home insurance policy does not cover earthquakes, large or small, and coverage will require a separate policy if desired. Most earthquake policies have a ten percent deductible. That ten percent is not ten percent of the loss, as is sometimes misunderstood, but ten percent of the dwelling coverage, typically a much larger number than the loss.
A home insured for $200,000 with a ten percent deductible leaves the homeowner responsible to pay the first $20,000 toward repairing the damage from the earthquake — for each occurrence. If a second quake-damaged your home, that’s a separate occurrence.
Tennessee, landlocked and over 300 miles and two state forests away from the nearest coast, is spared the brunt of hurricanes, but the state often gets the remnants of storms both from the Atlantic and the Gulf of Mexico, contributing to erratic rainfall totals throughout the state. May of 2010 brought one to two feet of rain to central and western parts of Tennessee within a few days, causing widespread flooding which damaged homes and sadly led to over 20 fatalities.
Floods can be unpredictable and damage to homes and personal property due to flooding isn’t covered by a home insurance policy. Water damage from accidental household mishaps and burst pipes is covered by home insurance, but water that touched the ground before entering your home is a flood and requires a dedicated policy.
Most insurance agents can provide flood insurance quotes or bind a policy and rates vary based on the FEMA assigned flood zone for the property as well as the insured value of the home and personal property. A flood policy only covers the building and contents, and only those contents at or above ground level and belongings stored inside. Cars and other vehicles aren’t covered by the policy, but you may have coverage for flood-damaged cars on your auto insurance policy if you have comprehensive coverage.
Premiums for flood insurance range from a few hundred dollars per year in lowe- risk areas up into the thousands for flood-prone properties or homes insured for higher amounts. Coverage limits, however, top out at $250,000 — well below the average flood claim of about $40,000.
Premiums can be managed in part by choosing higher deductibles, with options for deductibles as high as $10,000. If your lender requires that you have flood insurance, many lenders won’t approve deductibles higher than $5,000.
Covered flood claims for damage to the structure are paid at replacement cost value and claims for personal property losses are paid at actual cash value, depreciated for wear and tear due to age.
Most Affordable Cities
Tennessee’s average home insurance rates are close to national averages, but averages include highs, lows, and everything in between. Also included are rates for mobile homes, which account for ten percent of the housing in Tennessee but are insured with a less expensive type of policy. Where you live can have a dramatic impact on your premiums when insurers account for local risks, which include risk of wildfires, distance from a fire station, proximity to water, and crime rates.
Even with all those factors weighing on premiums, insurance rates are still affected by individual rating factors like your claims history, insurance and credit history, and even driving records. Where you live affects your premium — but your rate might differ dramatically from your neighbor’s rate.
Some of the most affordable cities in Tennessee for home insurance include:
- Johnson City
- Lenoir City
Most Expensive Cities
Among some of the more expensive cities in Tennessee for home insurance are:
Top Picks for Tennessee
1. State Farm
State Farm invests heavily in its network of 18,000 exclusive agents, providing a local office in most communities for customers who have coverage questions, service needs or are ready to bind coverage.
State Farm’s wide offering of insurance products makes this insurer a viable choice for customers who have broader insurance needs, including business insurance, life insurance, and insurance for landlords.
Home insurance policies are usually priced competitively for claims-free customers and State Farm offers a personal articles policy to insure your valuables to their full value. Discounts are aggressive for customers who bundle home and auto with State Farm.
2. Liberty Mutual
Since 1912, Liberty Mutual has operated as a mutual insurance company, owned by its policyholders as opposed to investors, making customer satisfaction a top priority.
Whether home insurance, auto insurance, life insurance, or even business insurance, Liberty Mutual has a product lineup designed to meet the needs of most homeowners and it’s home insurance policy provides options to pay for unforeseen expenses in covered claims or automatically adjust coverage to keep pace with inflation.
Liberty’s list of available discounts is expansive, including discounts for bundling policies, claims-free discounts, and discounts for new home buyers.
3. Tennessee Farm Bureau
As part of the largest state Farm Bureau in the nation, Tennessee Farm Bureau Insurance provides a full line of insurance and financial products, ranging from auto insurance to annuities.
To purchase insurance through Tennessee Farm Bureau, you don’t have to be a farmer, but you do have to be a member, and membership is open to all residents of Tennessee. Membership includes not only access to insurance products with thoughtful coverage options — but also includes extras such as identity theft protection and discounts on autos, hotel stays, and more.
With over 160 years of experience, Travelers knows insurance inside and out, offering a policy for nearly any insurance need. Sold through a network of nearly 14,000 independent agents, Travelers stacks up competitively with the best policies in the market.
Policy options include full replacement cost coverage for personal property and additional replacement cost coverage for your dwelling, which can be a lifesaver if repair or rebuild costs exceed expectations. Multi-policy discounts are available for bundling as well as discounts for new home buyers, claims-free discounts, and discounts for certified green homes.
For many homeowners in Tennessee, buying a home is among the largest purchases they will make in their lifetimes, and for many families, represents a significant part of their net worth.
With so much time, money, and so many memories ensconced in a home, it makes sense to find the best protection you can afford. Price is an important consideration for many households, but the lowest priced policy might leave costly gaps in coverage.
Try to make some time to meet with an agent face to face, even if you don’t ultimately buy your policy through that agent. The dialogue exchanged as you discuss your insurance needs will raise questions your agent can answer, helping you to better understand your coverage and make a well-educated buying decision. Your agent might even point out some eligible discounts to help make the coverage you need more affordable.
Frequently Asked Questions
1) Q: What does home insurance cover?
Most modern home insurance policies cover your home for nearly all risks. However, every policy has exclusions, among which you’ll find things like neglect, wear and tear, and ordinance or law. Land movement, including earthquakes, and floods are excluded as well but can be insured with a separate policy. Personal property and liability coverage is also part of most home insurance policies. Get the best policy quote here.
2) Q: How long will it take for my homeowners insurance claim to be processed?
It depends on the company, but you can expect an initial response between 24 and 48 hours.