Homeowners insurance is a type of property insurance that provides financial compensation should your home be damaged as well as liability protection in the event that someone is injured on your property. Depending on what’s covered in your specific package, your homeowner's insurance may cover the exterior and interior of your home and your possessions inside.
Loss-of-use expenses, such as hotel stays and meals that you would normally cook at home can be reimbursed to you in the event that your home becomes so badly damaged that you cannot live in it.
The Cheapest Home Insurance:
- Best Overall: State Farm
- Best for Discounts: Allstate
- Best for Bundling: Progressive
- Best Customer Service: Esurance
- Best for Claims: American Family
- Best for Replacement Costs: Farmers
If you are applying for a mortgage to finance the purchase of a home, your mortgage lender may require that you hold a certain percentage of coinsurance before you’re actually issued the loan. Even if you are not required by your mortgage lender to maintain a certain level of coverage, you should protect yourself with comprehensive homeowners insurance.
But what influences your homeowners insurance cost and how much should you be expected to pay? We’ve created an easy-to-follow guide before you begin comparing policies.
Overview: Average Home Insurance Costs
The specifics of what is and is not covered by your home insurance package will depend upon a number of factors, including your provider, your premium, and your deductible. Most insurance packages include coverage for the most common “named perils,” including fires, electrical strikes, vandalism, smoke damage, hail, or collisions with aircraft and vehicles.
Additional coverage can be purchased to protect against damages from burglaries, falling objects (like tree limbs), accidental water damage resulting from a boiler explosion or leak or other named perils. Even the most comprehensive homeowners insurance policies have exclusions. Some of the most common exclusions include damage from nuclear accidents or power outages, damage that is intentionally caused, or damages caused by the effects of war.
Damage from earthquakes and flooding is also usually not covered by home insurance packages, but you may be able to purchase additional coverage for your home if you live in an area that’s prone to either one of these natural disasters. Make sure you read your entire homeowners insurance package so you understand what is and is not covered.
The Basic Types of Homeowners Insurance
- Dwelling protection. The most basic type of homeowners insurance is dwelling protection. Dwelling protection protects the home and attached structures (like a garage or mudroom) from damage from covered perils.
- Other structures protection. If you have structures on your property that are not attached to your home (like a tool shed or a fence), they will not be covered by your dwelling protection. Other structures coverage is a type of add-on insurance that will protect the buildings and structures that are not attached to your home
- Personal property insurance. Personal property insurance protects your possessions in the event that they are damaged by a natural disaster or stolen during a break-in or burglary. Personal property insurance does not usually protect against damage to your car or other vehicles, and personal property insurance usually has limits for coverage extended to high-value items like jewelry, heirlooms and artwork.
- Loss-of-use insurance. Loss-of-use insurance is an insurance add-on that covers additional costs associated with excessive damage to your home. Loss-of-use insurance can pay for hotel costs if your home is deemed unlivable, the costs of meals that you would normally cook at home, and even the immediate costs of things like clothing and shoes if they are damaged during the course of a covered peril.
- Liability insurance. Many homeowners are surprised to learn that they can be held legally liable if a guest (or in some states, even a burglar or trespasser) is injured on their property. Liability insurance provides finances to cover legal representation if you are sued for medical bills resulting from an injury sustained at your home. If you are found to be at-fault for an injury, your liability insurance will also help cover the injured party’s medical bills.
What Affects Home Insurance Rates
According to data from Credit Donkey, most Americans can expect to pay about $3.50 for every $1,000 of their home’s value. The average American pays $94.33 per month in homeowners insurance, which is a total of $1,313 annually. While most homeowners will end up paying somewhere around this number depending on the size and value of their home, there are a number of other factors that can influence what you actually end up paying for insurance.
Factor 1: Your Premium vs. Your Deductible
A premium is the amount of money that you pay each month to maintain insurance. Your deductible is a set amount of money that you’ll be required to pay in the event of a covered peril before coverage kicks in. As a general rule, if you have a higher premium you will have a lower deductible and vice versa. If you are looking to keep the costs of your insurance low, choose a plan with a higher deductible.
Factor 2: The Breed of Your Dog
Liability insurance is usually extended to your pets. This means that if someone is attacked or bitten by your dog, liability coverage can help pay for that person’s medical bills. However, some breeds of dogs (like Rottweilers, German shepherds, and pit bulls) are more likely to bite and thus can significantly increase the cost of your homeowners insurance.
Some insurers will even flat out refuse to insure you if you have an “aggressive” breed of dog or they may agree to extend coverage only if you sign away your rights to liability coverage for dog attacks and bites. If you know that your dog is not a danger, you may be able to persuade your insurer to maintain your coverage by getting a signed statement from a third-party training service attesting to the dog’s temperament.
Factor 3: The Physical Location of Your Home, Beyond City and State
You probably already know that the city and state where your home is built has a significant effect on its value, which in turn affects how much you’ll pay for insurance. But did you know that what’s near your home can affect your insurance rate as well?
If you live near a coastline or another body of water (like a lake or stream), you can expect to pay more for your insurance due to the increased risk of flooding. You will probably see higher insurance even if you do not purchase additional flood protection.
Your home’s location can also lower the cost of your insurance as well. Homes that are located closer to fire departments usually enjoy lower insurance premiums because they are less likely to be completely destroyed in the event of a fire.
Factor 4: Your Credit History
Unless you live in Hawaii, California, or Massachusetts, your insurance provider may request to view your credit history to determine your liability.
If you have no outstanding debts, you regularly pay off your credit cards in full, and you do not have a history of excessive credit overages or missed payments, you’ll be seen as a more trustworthy homeowner and thus you may enjoy a lower insurance rate.
Factor 5: Your Marital Status
Married couples typically have fewer insurance claims, so insurance companies are more likely to extend a lower premium to you if you own a home with a spouse.
Factor 6: The Age and Condition of Your Roof
Old roofs and roof leaks caused by a hail or wind storm can be a nightmare for insurance companies. If you have recently replaced your roof, make sure to provide documentation to your insurance company, as they may be willing to extend a lower premium policy to you even if your home is on the older side. If you have an older roof or one that has been damaged in the past, expect to pay more for your homeowners insurance.
Factor 7: The Claims You’ve Made in the Past
If you’ve made many claims to your homeowners insurance in the past, statistics show that you’re more likely to make a claim in the future. Before offering you coverage, an insurance company will probably request to pull your Comprehensive Loss Underwriting Exchange (CLUE) Personal Property report, which details all of the insurance claims you’ve made in the past seven years and the amount paid out as a result of those claims.
If you have filed a number of claims in the past, you can expect to pay more for insurance. If you’d like to view your own CLUE report, you can order it by mail. Click here to get started and learn more.
What is a Homeowners Insurance Quote and Why You'll Need One
Every insurance company uses its own unique formula to determine how much you’ll pay for coverage, how much protection it is willing to issue to you, and if it’ll even insure you at all. Because insurance rates vary depending on so many factors, it’s good to “shop around” for insurance by getting quotes from a number of different insurance providers.
A quote is an estimation of how much you’ll pay for coverage that most insurance companies provide for free to potential customers. Securing a number of quotes before you make your decision can ensure that you’re not overpaying for your protection.
You can get a quote by contacting local insurance companies and making a request for coverage. Some companies even offer online tools to estimate how much you’ll be asked to pay in monthly premiums for coverage. If you aren’t sure where to start, check out our list of the best home insurance providers in the country.
Protect Your Home and Family
Unlike a car, you can legally own and enjoy a home without maintaining homeowners insurance. However, you can be left in financial ruin if you do not have insurance and you are the victim of a natural disaster, so it’s highly recommended that all homeowners maintain at least some form of insurance.
The good news is that there are a large number of ways that you can lower the cost of homeowners insurance. From bundling home and auto insurance to installing an anti-theft system in your home, most insurance providers will work with you to extend the lowest rate possible. If all of your quotes seem unreasonably high, don’t be afraid to ask insurance providers what you can do to lower them.
The Cheapest Homeowners Insurance
It’s important to do your own research when you select a homeowners insurance company. Benzinga has compiled the top-rated companies you should explore.
- Customers who have existing policies with State Farm
1. State Farm
Some customers like to do business face to face with an agent. Customers in most areas are likely to find one or more agents nearby. While focusing this review on home insurance companies, many customers prefer to keep all their insurance business with one company.
Most of the insurers in our review offer the most common types of insurance, but State Farm stands out as having a complete insurance product offering, all underwritten by the company itself.
- No Recent Claims
2. Allstate
At Allstate, customers can expect quality coverage, local agents, and discounts.
They offer a multi-policy discount, claims-free discount, and 5% savings when you sign up for automatic payments and 7 more unique discounts.
Coverage is offered in all 50 states with 24/7 claims availability. Allstates mobile app makes it very easy to view policy documents, file a claim and reach a representative.
- Access to vetted companies
3. Progressive
If you already have auto insurance with Progressive, it’s definitely worth getting a home insurance quote as well. Multi-policy discounts will apply to both policies in most cases.
For its home insurance policies, Progressive works with affiliated companies to bind coverage. This means your policy might be bound through a third party company, but most policy management can be handled through Progressive and the policy can even be purchased online—with the company boasting same-day coverage.
4. Esurance
Esurance’s low-cost policies might be just what you’re looking for. Its host of discounts can also make your policy even more affordable, especially if you already have insurance with Esurance.
With an easy quote process, wide availability and simple-to-use discounts, Esurance is a top contender in the homeowners insurance space.
Their direct line is open from 6 am -12 am CST every day a week, which is almost 24/7 live help. They also promise to respond to email inquiries within 24 hours and encourage customers to reach out via Facebook and Twitter.
- Diminishing Deductible Option
5. American Family
Home insurance customers with Progressive or GEICO may be familiar with Homesite Insurance Company, which also underwrites for American Family Home Insurance in Illinois. Like Progressive, American Family is usually sold through independent agents.
An independent agent has access to insurance products from a number of companies, so you’ll be able to compare policy features and quotes to find a policy that best meets your needs. If you have a newer home or have purchased your home within the last three years, you may qualify for a discount with American Family.
There’s also a loyalty discount available for customers who have been with American Family for a long time.
- Those who own investment properties
6. Farmers
We’re all familiar with the humorous Farmers advertisements that highlight all the strange things that can happen to a house or car—and are still covered. While the ads poke a little fun at life’s surprises, Farmers is all business when it comes to insuring homes in Illinois.
The company offers discounts for bundling, for certain renovations, and even for a new roof. Proving its focus on customers, Farmers offers thoughtful policy options and features, such as replacement cost coverage and even coverage for trees and shrubs damaged in a covered claim. More populated areas are likely to find a local agent and policies can also be purchased online or by phone.
Protect Your Home and Family
Unlike a car, you can legally own and enjoy a home without maintaining homeowners insurance. However, you can be left in financial ruin if you do not have insurance and you are the victim of a natural disaster, so it’s highly recommended that all homeowners maintain at least some form of insurance.
Price can be a big consideration in many households and low price is certainly among the top marketing messages for insurance companies. However, home insurance can be a complex contract and coverage choices or policy limitations can play a huge role in the real value of a policy.
Frequently Asked Questions
1) Q: If my home is destroyed due to fire or weather, how long will it take for my insurance claim to be settled and my home to be repaired?
From start to finish, the process could take anywhere from 12 to 24 months. The variables that play the largest role are the size of the loss and the insurance company you choose. Check her for the cheapest homeowners insurance quote.
2) Q: What are the most common types of home insurance claims?
Wind and hail claims top the list with nearly 40% of all home insurance claims due to these two acts of nature. Fire and lightning are the second most common, but claims due to fire tend to much bigger than claims dues to other types of risk. The possibility of a total loss is why it’s so important to insure your home for the full cost of rebuilding. Get a custom quote today.
3) Q: If I drop my computer, will home insurance cover the cost of replacement?
Home insurance policies usually cover personal property for a specific list of risks, called named perils. These perils might include fire, theft, burst pipes, and more, but dropping your laptop or TV or spilling soda on your new game console isn’t covered. See the best home insurance providers for a custom quote.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.