Top Home Owner Insurance Companies: Compare Cheap Rate Quotes & Cost

Homeowners insurance is a necessity and could save you money in the long run if tragedy strikes. To learn more about the average cost of homeowners insurance and how to save on home insurance costs, keep reading.

The Average Cost of Homeowners Insurance

Homeowners insurance is a barrier of financial protection in the case of a natural disaster or event that destroys your home or belongings. The cost of homeowners insurance can vary by state and other factors such as the cost and age of the home. High-risk factors such as pools or nearby bodies of water like lakes can also affect the cost of homeowners insurance as will dangerous pets or trampolines.

The average cost of homeowners insurance is approximately $100 monthly or $1200 annually. The states with the highest homeowners insurance costs are Mississippi, Oklahoma, Louisiana, Teas, and Florida. This is likely due to these states’ propensities for natural disasters such as hurricanes or tornadoes.

The states with the cheapest homeowners insurance rates are Oregon, Idaho, Utah, Wisconsin, and Washington.

Homeowners Insurance Deductibles

A homeowners insurance deductible is the amount of money that a homeowner with a policy has to pay on their own before their homeowners insurance company will pay for a claim. For example, if a homeowner files a claim for $3000 dollars and they have a deductible for $300, then the homeowner must pay the $300 deductible before their homeowners insurance company provides the remaining $2700 to cover the claim.

There are two types of homeowners insurance deductibles available; dollar-amount based and percentage-based. Deductibles that are based on a specific dollar amount are like the example provided above. These deductibles are an agreed upon dollar amount that a homeowner must pay for any insurance claim.

Percentage-based deductibles are an agreed upon percentage that a homeowner must pay of each claim before their insurance company pays the remaining balance. For example, if a homeowner has a percentage-based deductible that requires that they pay 2.5% of their claims, and they submit a claim for $5000, then the homeowner would need to pay $125 of their claim before their insurance company pays the remaining $4,875.

The percentages for percentage-based homeowners insurance deductibles are decided by the insured value of the home being insured.

The Average Homeowner Insurance Deductible

Most dollar-amount based homeowner insurance deductibles fall between $500 to $1000. To save on the monthly costs of homeowner insurance premiums, homeowners can agree to pay a higher deductible in the event a claim is filed. Choosing to pay a higher deductible can save you up to 25% on your premium.

Factors that Increase and Decrease Homeowners Insurance Premiums

Having a poor credit score can significantly affect the cost of homeowners insurance premiums. In fact, a poor credit score can increase premiums up to 91%. Approximately, 85% of insurance companies use credit scores to determine homeowners insurance premiums in the United States of America.

Having a security camera, a security alarm, or any other security measures could decrease your homeowners insurance premiums. Many burglars avoid homes with security. This decreased risk in being robbed and needing to file a claim, entices some insurance companies to lower homeowners insurance premiums.

Like having a low credit score, filing an insurance claim increases a homeowner’s home insurance premiums. Filing a single claim can increase homeowners insurance premiums 9% on average. In Maryland or Connecticut, this amount is more than tripled to a 21% increase. By comparison, Texas and New York rarely, if ever, increase homeowners insurance premiums because of filing a single claim. And if a premium is increased, then it’s only for a small amount like 1%.

Loyalty to homeowners insurance companies can also decrease homeowners insurance premiums. Some insurance companies decrease premiums up to 5% for staying with the company 3 to 5 years. Staying with some insurance companies can increase insurance discounts up to 10%.

Homeowners who are willing to bundle their homeowners insurance with their auto insurance can save approximately 16% on their premiums. Of course your home and auto insurance rates depend on a number of personal factors. Renters will save around 8% if they bundle their renters insurance with their auto insurance.

The age of a home, and more specifically the age of the wiring and plumbing in a home, can increase the premiums of a homeowners insurance policy. Older homes and homes with older wiring or plumbing are at a greater risk of damage down the road. For this reason, insurance companies charge higher premiums to combat the added risks for claims being filed on the home.

Home with aluminum wiring may be excluded from an insurance policy unless certain safety standards and modifications are met and made by a licensed electrician. Some companies may even recommend copper rewiring to adjust risks downward.

A Homeowners Insurance Cost Factor Homeowners Control

Though a lot of the factors that affected the cost of homeowners insurance policies are out of the control of homeowners, there are some cost factors that homeowners can control. How much an insurance policy covers is one factor a homeowner can control, and it affects the overall cost homeowners insurance premiums.

If a homeowner wants a lower premium, then they can request a homeowners insurance plan that has less coverage. There are a few risks to consider though. The main thing that needs to be taken into consideration before a homeowner decides to have less coverage for a lower premium is that with less coverage comes a greater risk of having to pay out-of-pocket for damages that could have covered.

Why File a Homeowners Insurance Claim

There are many reasons why a homeowner may need to file an insurance claim. The most common reasons are due to weather conditions. Damage from winds is the #1 reason for homeowners insurance claims since they account for 25% of property damage.

Water damage from leaking pipes account for the highest number of non-weather related claims. Damages caused by natural disasters such as hurricanes or floods require having separate insurance policies to cover the costs of the claims. Though these additional policies are optional, any homeowner who lives in high-risk areas for floods, tornadoes, hurricanes, or earthquakes, need to get the relevant separate policies to financially protect themselves and their properties in the long run.

Average Rates for Flood Insurance

The average cost of flood insurance is about $700 a year for homeowners. Only 12% of homeowners have flood insurance, and 14% of those homeowners live in the southern portion of the United States. Homes in Florida have the greatest risk of flooding. Despite this, Florida doesn’t have the highest rates for flood insurance. Instead, that honor goes to Rhode Island. In Rhode Island, flood insurance can be as much as $1200 annually.

The state with the lowest rates for flood insurance premiums is Maryland. Low-risk areas in the state offer flood insurance policies for as little as $129 a year. Flood insurance in higher-risk areas in Maryland can cost around $540 a year.

Renters Insurance

Renters insurance is inexpensive and has an average cost of just under $200 a year. Despite this, only about 40% percent of renters have a renters insurance policy. Mississippi is the most expensive state for renters insurance, and South Dakota is the least expensive state for renters insurance.

Like homeowners insurance deductibles, renters insurance deductibles can vary. Renters insurance deductibles can range from $500 to $1000.

The Components of Homeowners Insurance

Medical Payments to Others Coverage

If a guest is injured in the home, then medical expenses may need to be paid on behalf of the homeowner. For this reason, having coverage for medical payments to others is a smart move to make. The maximum coverage for medical payments to others is $5,000 and the minimum is $1,000.

Liability Coverage

Liability coverage should cover any legal fees as well as any financial assets. Financial assets include the home and anything of value that is attached to it. The maximum amount for liability coverage is $500,000, but an umbrella coverage can be added to it for additional coverage. The minimum coverage for liability coverage is $100,000.

Dwelling Coverage

Dwelling coverage should cover the entire cost to rebuild the home being covered. It does not include other structures such as garages or fences. Dwelling coverage also does not include the cost of any belongings inside the home. The minimum coverage for dwelling coverage is $300,000 and the maximum is $750.000.

8 ways to Save Money on Homeowners Insurance

1. Don’t Settle for the First Homeowners Insurance Company You See

One of the best things a homeowner can do to save money on their homeowners insurance is shop around. It can be tempting to go with the option option that is found, but taking the time to find the homeowners insurance policy with the best deal is well-worth it in the long run.

There are many top insurance companies that offer homeowners insurance, and they are all competing with each other to get as many homeowners as they can to sign with their companies. For this reason, many homeowners insurance companies will offer great deals to potential new customers, especially if they know the customer is looking at the competition.

Homeowners have many resources they can use to search for the best homeowners insurance company for their needs. Homeowners can ask friends or neighbors, check the Yellow Pages phone book, or contact the insurance department for their state. The National Association of Insurance Commissioners (NAIC) is available to help homeowners gather information about insurers in their state, including any complaints an insurance company may have.

To help homeowners find the best insurance policy they can afford, states also provide information about the typical homeowners insurance rates charged by the major insurance companies in their state. Homeowners can also check insurance agents, consumer guides, or online insurance quote services to help them find the best insurance policy for their financial situation.

2. Search for Discounts

Many homeowners insurance companies offer many discounts to help sway homeowners to choose their company. Insurance companies do not provide the same discounts which is why it is important to shop around for them. Homeowners can receive homeowners insurance discounts for many reasons: age, employment, even group memberships.

Homeowners should check with their employer or any professional organizations they are members of to see if they can receive any homeowners insurance discounts due to their involvement with the company or the group.

3. Review Your Policy, Its limits, and the Value of Your Belongings Annually at the Very Least

It’s imperative that a homeowner’s homeowners insurance policy covers the value of the home and their possessions. Paying for an insurance policy that won’t cover the cost of your possessions following tragedy is a waste of money.

Regularly review your homeowner insurance policy to ensure that it covers everything you need. Homeowners also need to make sure that they keep up with any possible updates or changes to their insurance policy with the insurance company that provides it.

4. Check the Credibility of Your Insurer

An important step homeowners should take to save money on their homeowners insurance is to make sure their insurer is legitimate, trustworthy, and up-to-par. Paying money to an illegitimate insurer will not only leave you without any real protection since your policy contract may not hold up without a civil lawsuit, it will also cost you money that you could have saved by signing up with a legitimate insurer with great discounts.

Homeowners can check the histories and reputations of potential insurer by going to government websites such as the Better Business Bureau (the BBB). There, you can find out whether your potential insurer is licensed, reliable, or dishonest with a horde of complaints.

5. Keep Your Home Up-to-Date and in Good Shape

Another thing a homeowner can do to save money on their homeowners insurance premium is keep their home, and especially their roof, in quality shape. Having a home that is on its last legs or falling apart increases the risk that you will have to pay higher homeowners insurance premiums.

Homeowners insurance companies view houses and roofs in poor shape as a liability and a likely claim that is on the edge of being filed. To combat this inevitably in their eyes, many insurers charge a higher premium so that they can get their money’s worth in return in the long run should you have to file a claim.

6. File Claims Cautiously and Get A Second Opinion

A smart way homeowners can save money on their homeowners insurance policy is to get an expert opinion before filing an insurance claim. Hiring an expert to review your home and confirm whether you actually need to file a claim can save you from hastily and unnecessarily filing an insurance claim.

The reason you do not want to file an insurance claim if you do not really need to is because homeowners insurance premiums can increase when you file an insurance claim. If you file an insurance claim when you do not need it, not only will you potentially waste money paying a deductible you do not need to pay, you’ll also waste money by having to pay higher insurance costs.

If you cannot afford to hire an expert to guide you in deciding whether you need to file an insurance claim, then you can possibly ask a neighbor or friend with experience filing claims instead.

Homeowners can also save money on their insurance policies by not filing claims for damages they can pay out-of-pocket. Filing a claim for damages costs you can cover yourself can potentially cost you more money from the potential insurance premium increase than you’ll save by filing the claim. Be sure to make calculate the financial risk versus the potential financial reward or benefits before filing any insurance claims to save money on your homeowners insurance premiums.

7. Buy a Home in a Safer Location

The location of your home can affect how much your homeowners insurance will cost. Homeowners can save money of their homeowners insurance by purchasing a home in a safe location. This not only includes a location that is safe from crime, but also a location that is safe from large bodies of water and potential natural disaster zones.

The distance between your home and these high-risk areas does not have to be far. A few blocks between the two is enough to make a difference in how much you have to pay for your homeowners insurance. And remember that having a security system can reduce your home insurance rates by 20% on average. So read some home security systems reviews and notify you insurance carrier about it once you have it installed.

8. Only Buy What You Need

Another simple way homeowners can save money on their homeowners insurance is by only buying what they need. This may sound obvious, but many homeowners purchase insurance policies they do not need and end up paying way more in insurance than is necessary for their home.

If you live in an area prone to droughts and your water pipes and plumbing are up-to-date and in quality shape, then sidestepping purchasing flood insurance could potentially save you hundreds or even thousands of dollars.

To completely have a peace of mind for your home, consider looking at home warranty companies as well. 

FAQ

If you’re in the market for a homeowners insurance policy, you may have a range of different questions. While most insurance companies will be able to answer your questions, it’s still a good idea to do your own research before you make any decisions. We receive tons of questions from readers — let’s take a deeper look at some of them below.

General Home Insurance FAQ

If you have general questions about home insurance and home insurance claims, you’ll probably be able to find the answers to your questions in this section.

Pricing Home Insurance FAQ

Here are some of the top questions we receive about the pricing of home insurance.

Home Insurance Coverage FAQ

If you have questions about home insurance coverage, make sure to check out some of the FAQs below.

State-Based Home Insurance Questions

Here are some common questions we’ve have received about state-specific home insurance policies.