Homeowners insurance exists to help cover one of your largest investments. At its most basic level, home insurance provides financial protection against various perils or damaging events that may affect your home, such as theft, fire, storms and incidents that happen on your property. If you have a mortgage, your lender will require you to carry homeowners insurance.
When you purchase a homeowners insurance policy, you pay either a monthly or annual fee. Typically, insurance experts recommend purchasing enough coverage to rebuild your home and replace the value of the assets inside in the event that it is destroyed. By doing so, you reduce the chance of being left with costly out-of-pocket expenses and allow yourself to recoup your losses more quickly. It is important to note that the cost to rebuild your home is not the same as your home’s market value.
While the core purpose of homeowners insurance is consistent regardless of the home insurance company you choose, every provider is unique in its policy offerings. You have the ability to personalize your policy by choosing your coverage limits and endorsements and taking advantage of any available discounts. Factoring in these variables, along with your personal and financial situation, you will likely see a range of premiums when getting home insurance quotes from different companies. To compare quotes effectively, it might help to know more about home insurance.
The average annual cost of homeowners insurance in the U.S. is $1,312 based on a home with a dwelling coverage limit of $250,000. Several types of coverage are included in most standard policies to ensure your home insurance financially protects you in certain situations:
There are several types of home insurance policies available, including:
Where you live, the condition of your home and the cost to replace it play the most significant role in determining your home insurance premium, but certain personal and financial factors, such as your marital status and claims history may also influence your rate. The insurance company’s goal is to collect information that helps determine risk to calculate your premium. When you start looking for a home insurance policy, it may help to do some research to determine your home’s replacement cost and the total value of your personal belongings to calculate how much coverage you will need. You might want to speak with a licensed insurance agent to determine what you actually need and what coverage options are available.
Every state has unique factors, such as extreme weather events, that could affect your homeowners insurance premium. To start your home insurance search, it may help to know how your state compares to others in the nation. Afterward, consider looking into the common weather hazards and other factors associated with your ZIP code that may further influence your premium.
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Each carrier has a unique underwriting process and coverage offerings, so do not be surprised if you get different quotes from different insurance companies for the same coverage options. That is why it is a good idea to get quotes from multiple carriers so you can see which ones offer you the best coverage for your money. The table below showcases average annual premiums for a home insurance policy with a $250,000 dwelling coverage limit from the top providers in the U.S., listed in order of market share.
|Home insurance company||Average annual premium|
Damage from floods is not covered under standard homeowner’s insurance policies, but flood insurance is available through the National Flood Insurance Program (NFIP) and some private insurers. Flooding can cause costly damage to your home and belongings and could happen at any time. If you live in an area prone to flooding, your lender may require you to purchase flood insurance.
On average, U.S. homeowners spend $700 per year on flood insurance, although like any insurance policy, your actual rates will vary. Flood policies usually require payment in full, so it is a good idea to research any area you plan to move to so you know in advance if flood insurance will be necessary.