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How Much Does Homeowners Insurance Cost You?

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Wednesday, April 1, 2015

How Much Does Homeowners Insurance Cost You?

Yearly homeowners insurance rates range from $300 to $1,000. But you can figure out the cost of your policy with this simple formula:

  1. Take the value of your home.
  2. Divide it by 1,000.
  3. Multiply the result by $3.50.

Now you've got a basic estimate for a homeowners policy. That wasn't so bad, was it?

Buying homeowners insurance doesn't have to be stressful. Just know your basic rate, and talk to an insurance agent. They'll help you sort out everything in between.

Factors That Affect Your Homeowners Insurance Rates

Your basic rate estimate is a good place to start, but you'll see that it varies based on your insurer, where you live, and what your house costs. So if you want to get ahead of the game, find out other factors that affect your insurance rates. You'll be better prepared to ask questions and find the right price for your homeowners policy.

Here's a list of factors that might change what you pay in premiums and what you can do about it.

Likelihood of natural disasters in the area

Remember those "acts of God" we talked about? Natural phenomena like hurricanes, tornadoes, wildfires, and earthquakes are out of your control, but they do the most damage to your home. That's why states with the worst natural disasters have the most expensive insurance rates.

Florida, Mississippi, Louisiana, and Texas top the list because they're hit so frequently by major hurricanes tearing through the Gulf of Mexico. Oklahoma is high on the list because it has more tornadoes per square mile than any other U.S. state. California homes are subject to earthquakes and raging wildfires.

Meanwhile, the cheapest states—Washington, Oregon, Idaho, and Utah—avoid natural disasters. How often do you hear about the Northwest getting hit by anything more than fog and rain? Wisconsin, the fifth least expensive state, has blizzards and zero-degree weather. But unless you consider football games in snowed-in stadiums a natural disaster, Wisconsin has little to worry about.

How To Save:

If you live in an area that's susceptible to hurricanes, get window shutters. If you have the occasional hail storm, get shatterproof glass. Plus, earthquakes and floods aren't covered in a standard plan. But you can buy a separate policy through Insurance Clarity. So if you live in a high-risk area, look for added coverage today!

Building Costs

When you make major home repairs, you pay for the cost of labor and building materials. You don't pay for the value of the land it's sitting on. So don't assume your home's selling price is equal to its building costs. You might be sitting on a lot of land, or own property that's close to the beach, city, or good schools. These factors definitely up the value of your home, but not necessarily what it costs to rebuild after your home gets damaged or destroyed.

How To Save:

Get an assessment on building costs. Pay for a professional cost estimate, or ask a real estate agent, contractor, or building association about the average rebuilding cost in your area. They'll give you an estimate based on your home's square footage, and the cost of labor and building materials in your area.

After you've got your estimate, use Insurance Clarity to find the best rate for competing plans in your area!

House Size

More square footage means greater overall building costs. Having a larger home also means you probably have more furniture, decorations, personal goods to fill it. If your home gets damaged, the insurance company has to cover the cost of replacement or repair.

How To Save:

Buy a smaller home, so you have less square footage to rebuild and less space to fill. If you own a bigger home, make sure your home meets current building code, so it's less likely to get damaged after a natural disaster.

House Condition

Old plumbing, heating, or electrical systems are a big worry for insurance companies. New homes are more reliable because they're up-to-date with current building codes. So, unlike car insurance, owning a newer home can actually cost you less to insure.

How To Save:

Get a home inspection. You'll figure out where you might need to make home improvements, like retrofitting your house or reinforcing the roof, so your house is more resistant to wear and tear. The more up-to-date your housing systems, the less you'll pay in premiums.

Your Deductible

Your deductible is the amount of money you have to pay before your insurer pays for a claim. A deductible is standard in auto and health insurance policies, too.

How To Save:

Get a higher deductible, and you'll pay less each month in premiums. The recommended deductible amount is $500, but if you go up to $1,000, you could save as much as 25% each month.

Your Credit History

Insurers use your credit information to gauge how much to charge you for a policy. But what does credit have to do with buying homeowners insurance? Insurers know that people with better credit make fewer claims. (The same correlation goes for car insurance premiums.) If you take care of your bills, you'll probably take care of your home too.

How To Save:

Keep a good credit standing. Pay your bills on time. Keep your credit card balances low, and check your credit score regularly. Insurers will reward you with lower home insurance rates.

Insurers In Your Area

Each state has dozens, if not hundreds, of insurance carriers. And all of them have different rates for policies in your area. When choosing your plan, compare each policy's premium with what it actually covers.

How To Save:

Compare quotes online. That way you'll know you got the best price on a policy.

If you buy two or more policies from an insurer, you could get a 5 to 15% discount on rates. Plus, if you keep your policy with the same insurer for three or more years, your insurer might reward your loyalty with lower rates.

Look Here For The Cheapest Homeowners Insurance Rates

As long as you own your house, you'll be paying for homeowners insurance. Make sure it's a policy you can afford! Talk to an agent today. When you use Insurance Clarity, you'll be put in touch with an insurance expert. They'll help you figure out how much you should be paying for homeowners insurance.