Greatest Hacks To Cut Extra On Average Cost of Home Insurance: Double Your Savings Today!

TLTR: This article will discuss average home insurance cost and some tips on how homeowners can save money on their insurance by following a few simple guidelines. You’ll also learn what factors are important when determining your insurance premium and why costs vary depending on where you live in the U.S., as well as some common exclusions from a typical homeowner’s policy.

Homeowners insurance is something that most people have to pay for, but few know what it actually covers. You need to know the average home insurance cost in order to be able to make an informed decision about which type of policy you should get.

Home insurance is a policy that protects you in the event of damage or loss at your home. This can include natural disasters, fire, theft, and more. You have to pay premiums every month for this coverage; average home insurance cost varies by state and location, as well as other factors which are to be discussed below.  

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How Much Does Average Home Insurance Cost

According to the National Association of Insurance Commissioners (NAIC), home insurance rates have gone up 47% in the last decade. The annual average home insurance cost is somewhere between $1,400 to $1,500 in 2021. Just in 2017, the average premium was around $1,100 a year.

With a heated economic climate and an ever-increasing demand for home insurance, companies have an open market to increase the premium rates as the years go by. As a homeowner, home insurance isn’t mandated but it certainly is essential for your home.

There are so many uncertainties that can harm your home. Take the recent 2021 Hurricane Ida for example. The recent hurricane in the state of Mississippi has devasted hundreds if not thousands of homes. The repair is likely to take months and cost billions of dollars. According to Reuters, insurers are estimating to pay out $30 billion or more in claims.

With such devastating natural calamities becoming increasingly common, insurance companies have no choice but to increase the cost of your premiums. However, the average home insurance cost can still be made budget-friendly. Having a good policy that covers your home doesn’t mean you need to pay more than your budget allows you to!

Note: It’s important to remember that many factors contribute to the cost of home insurance premiums, so the average rate may or may not be applicable to your home.

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Typical Home Insurance Cost Factors

When calculating an average home insurance cost, insurers consider many factors. Some of these factors are:

Replacement Cost

The more your home costs to replace, the more you will likely pay in coverage. This is because replacement cost takes a lot of variables into consideration. It changes depending on square footage and local construction costs as well as its unique features and architecture.

However, you can get an approximated estimate by basic calculation. Contacting your insurance agent or insurance provider will help!

Credit Score For Home Insurance

Insurers use credit scores as a factor in determining the likelihood of timely premium payment. Credit is often used to measure risk which helps with determining the rate of home insurance. Poor credit scores may lead insurers to see you as someone who is more likely to file claims in comparison to those who have very good credit.

Your personal credit score can highly affect the premium rates thus changing the average home insurance cost for you. A good credit score could lead to being perceived as a lower risk which will help you get a reduced rate.

Claims History

When it comes to determining the average home insurance cost, a history of filing claims might indicate an even greater risk for the homeowner’s insurance company.

When you make your first claim on your homeowners’ policy you are likely doing so because something unexpected happened that may have left you financially responsible or worse: without a way out of the difficult situation.

Insurance companies often base decisions like this on data patterns. However, claimants who have filed multiple times before may be considered higher risk than those with just one previous claim.

Personal Demographics

A person’s demographics, i.e., their age, marital status, and gender make a big difference in determining the cost of a home insurance premium.

According to Bankrate, insurance companies are likely to charge lower rates to married couples because of the common assumption of them being in a lower risk category.

There are many insurance companies that tend to capitalize on their senior clients. According to Quote Wizard, If you are someone who is over the age of 55, you might be eligible for a senior citizen discount when buying home insurance.

Deductibles For Home Insurance

The homeowner’s insurance deductible is the amount that a homeowner will pay out of pocket before they can receive compensation for repairs to their property. It also sets how much you’ll save on your monthly premium.

If you set your deductible higher, then it could decrease the premium amount every month. However, if there is a claim in an accident that happens to be very costly then it might cost more than what was saved on premiums.  

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How To Save Money On Home Insurance

Now that you know the average home insurance cost and the factors that determine the premium rates, let us tell you some of the best practices you can adapt to as a homeowner. These tips can help you save money:

Disaster-Proof Your Home

According to the Insurance Information Institute (III), in 2020, more homeowners were found taking bigger steps to protect their homes against natural disasters. Steps such as building stronger roofs or even upgrading to breakage-proof windows. Such changes come as disasters such as hurricanes and floods are expected to increase in number as well as intensity. If you work towards protecting your home against disasters, you can definitely get a lower premium on insurance.

The easiest way to save money on your average home insurance cost is by making sure that you are adequately covered for any natural disasters. There are a few ways of doing this. Like – add storm shutters, reinforce the roof or buy stronger materials among them. Also, consider modernizing heating and electrical systems since they could reduce fire damage.

You can also consider adding hazard insurance endorsements to your existing insurance plan. Having multiple policies that cover different aspects can be more economical.

Bundle Your Home Insurance

Homeowners insurance and car insurance are two of the most crucial policies to have, with the latter one being mandatory in almost all states if you have a car. While you already know the average home insurance cost, the average premium rate for cars is quite an expense as well. According to Nerd Wallet, the national average for car insurance is $1,592 annually.

Despite both the policies being essential as well as costly, you can save 5-15 percent on each policy if you bundle them together. So, companies that sell homeowners and auto coverage will give you a discount on your premium if you bundle home and auto insurance from them.

Although, make sure the combined price is lower than buying the different coverages from different companies.

Shop Around For Home Insurance

Despite the average home insurance cost being the same, regardless of which company you approach, we recommend shopping around before you settle with a policy.

There are many ways to find cheap insurance. With just a quick search on your phone, you can find several quotes and even insurance directories that can help you get all the information you need.

If you prefer going old school, you can ask your friends, check the yellow pages, or contact your state’s department of insurance. Some states provide information on typical rates charged by major insurers and what companies have had frequent complaints from customers in their area.

However, don’t just consider price alone because a good insurer will give you fair quality services as well. Here are some insurance companies which are excellent overall:

  1. Lemonade
  2. USAA
  3. Renegade Insurance
  4. Nationwide
  5. Allstate
  6. Liberty Mutual
  7. Progressive
  8. Farmers Insurance
  9. State Farm

Consider Raising Your Deductible

Insurance companies recommend a high deductible because it can save you money. For example, your yearly premium is $1,500 and the average deductible in your state is $3,000.

Then by switching to a higher amount of deductibles (let’s say $5,000) you could be saving as much as 25% on your premium.

Most people have separate deductibles for the area they live in. For example, someone living near coasts with wind damage or certain states where hail storms are common have separate deductions from their total insurance policy costs.

Analyzing what kind of damage your home may be prone to and separating a deductible accordingly may also help to add on to savings in an average home insurance cost plan.

Know Your Rebuilding Costs

People often mistake the cost of their entire home as the building cost. The land under your home obviously doesn’t come under rebuilding costs. Be sure to plan your budget accordingly.

If you have a higher rebuilding budget, you may end up getting a higher quote on your insurance premium. Calculate wisely!

Invest To Make A More Secure Home

You can avoid paying an arm and a leg for home insurance by installing some safety devices, such as deadbolt locks, smoke detectors, or fire sprinkler systems. Some companies even offer discounts of up to 20% if you install these security precautions.

However, make sure the security equipment is compatible with what makes sense in your situation

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How Much Is Home Insurance In Different States

The average home insurance cost varies heavily based on the state you live in. Here is an approximate estimation of the yearly premium you may have to pay according to the state you live in:  

State  Average home insurance cost (annual) 
Alabama  $1,630 
Alaska  $1,100 
Arizona  $1,200 
Arkansas  $2,200 
California  $1,000 
Colorado  $1,690 
Connecticut  $1,284 
Delaware  $770 
Florida  $1,358 
Georgia  $1,400 
Hawaii  $400 
Idaho  $890 
Illinois  $1,422 
Indiana  $1,100 
Iowa  $1,390 
Kansas  $2,767 
Kentucky  $1,850 
Louisiana  $1,813 
Maine  $956 
Maryland  $1,130 
Massachusetts  $1,307 
Michigan  $1,120 
Minnesota  $1,785 
Mississippi  $1,773 
Missouri  $1,572 
Montana  $1,878 
Nebraska  $2,900 
Nevada  $822 
New Hampshire  $794 
New Jersey  $751 
New Mexico  $2,024 
New York  $987 
North Carolina  $1,297 
North Dakota  $1,941 
Ohio  $1,116 
Oklahoma  $3,518 
Oregon  $712 
Pennsylvania  $736 
Rhode Island  $1,193 
South Carolina  $1,142 
South Dakota  $1,997 
Tennessee  $1,695 
Texas  $1,883 
Utah  $646 
Vermont  $686 
Virginia  $1,017 
Washington  $900 
Washington, D.C.  $909 
West Virginia  $1,127 
Wisconsin  $990 
Wyoming  $805 

Conclusion

Home insurance is extremely important for your home to be well protected from many kinds of uncertainties. With knowledge about average home insurance cost and how you can get a lower premium, we are sure you will be able to insure your home without any trouble.

If you have any additional queries about home insurance, feel free to reach out to us. Connect to a local insurance agent today!

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Frequently Asked Questions (FAQs)

What Are Some Common Exclusions From Home Insurance?

Homeowners should be aware that there are some common exclusions from a typical homeowner’s policy. The types of damage not covered by insurance typically include earthquake, flood, war-caused property damage, and wear and tear. Damage caused by mold or termites is also excluded in many cases. 

Is Home Insurance Policy For Condo Different?

Technically, yes. Although a condo is a category of home too, the insurance policy differs. Condo insurance (an HO-6 policy) covers the important areas of personal property and liability. It also provides coverage for some situations specific to condominium unit owners, such as their walls in which means covering their personal liability, property inside a condo unit including its interior – essentially anything excluded from the association’s policy.

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