Current census data shows homeownership rates are around 65% in the U.S., which means millions of households may be looking for the additional financial protection homeowners insurance offers. The average cost of homeowners insurance in the U.S. is $1,312 per year for a policy with $250,000 in dwelling coverage, according to 2021 data analyzed from Quadrant Information Services. Whether you need high-value coverage for special items in your house or need a policy with numerous discounts, there are multiple options to consider when you are trying to determine how to choose the right, cheap home insurance for your budget.
How to choose the right, cheap home insurance
Budget can definitely be a driving factor when it comes to choosing a homeowners insurance policy. However, other considerations are worth incorporating into your research as you choose the best cheap homeowners insurance provider for your dwelling. Considerations such as customer service ratings and the financial stability of a carrier may also influence your decision. While there is a wide range of carriers and policy options to choose from, there are a few simple steps you can take to narrow down the options and make sense of the process.
1. Consider details about your home
Your home is as unique as your household. Factors such as the size, location and building materials all impact homeownership rates and the coverage you need.
- Age of home: You will likely pay more for insurance if you are the homeowner of an older home. Chances are generally higher that your house will need costly repairs if there is damage.
- Size of home: Home size is tied to the replacement cost portion of the homeowners policy. Usually, the more square footage, the higher the replacement cost for rebuilding a structure.
- Your home’s materials: The more expensive the materials used for building a home, the higher the insurance rates can be.
- ZIP code: Whether you live near the coast, where water damage is more likely to occur, or close to a fire station in case of an emergency, location and relative common causes of loss have a significant impact on insurance rates.
- Replacement cost: Your policy will help you repair your home and replace personal items following a covered loss. Replacement cost value is used if you choose to replace your damaged property at its current value, minus depreciation. This is more expensive versus actual cash value, which factors in depreciation for items.
- Personal property: This covers contents within your property and includes items outside of your home, such as in a storage shed. It helps to take a personal inventory of items you need covered, ensuring your high-value items are covered. As you get rid of certain items over time, revisiting your inventory could help you reduce coverage.
- Attractive nuisance: If you have any items on your property that may attract an accident, such as a swimming pool or trampoline, then this is considered an attractive nuisance. Being mindful of how many attractive nuisances are on your property could help control home insurance costs.
2. Consider your personal needs
Choosing a carrier based on your personal needs should be given consideration. For example, if you have an extensive antique collection you inherited, you would need additional coverage for those high-value items. You could select a carrier offering an affordable home insurance quote for this particular option. Other carriers may offer better policy terms for other unique needs, such as your dog breed or if you have a history of making homeownership claims. Some companies put more weight on these particular factors than others.
3. Compare quotes based on coverage
Quotes provided by carriers can vary greatly from one to the other. Shopping around and obtaining multiple quotes from various providers could go a long way in finding the cheapest homeowners insurance available to you. You should also see how much adding a particular endorsement, such as adding identity theft coverage to your policy, impacts your homeowners insurance premiums. When comparing carriers, be sure you are using an apples-to-apples comparison to know which company is truly offering the lowest premiums for your desired coverage.
4. Look for applicable discounts
When purchasing a policy, you may be pleasantly surprised by the number of available discounts from a home insurance provider. These discounts can provide significant savings on the cost of your policy. Discounts may include:
- Multi-policy: Choosing the same carrier you purchase your auto insurance from usually results in a multi-policy discount.
- Security alarm: Installing extra security features, such as a security alarm or fire protection system, can often help lower costs.
- New construction: If your home was recently constructed, you may qualify for a new construction discount.
- Loyalty: If you have been with a carrier for a certain amount of time, then you may qualify for a loyalty discount.
5. Research trusted third-party ratings
Trusted third-party ratings can provide a snapshot of a company’s performance so you do not have to spend hours researching each one. For example, ratings from the J.D. Power U.S. Home Insurance Study show how top carriers perform in overall customer satisfaction. AM Best and Standard & Poor’s provide ratings to showcase the financial strength of a carrier and its ability to pay out claims. These considerations may be equally important as rates in case you ever need to deal with customer service or file a claim.
Frequently asked questions
What is the cheapest home insurance company?
The best method for determining the cheapest home insurance company is to compare multiple quotes from different providers. This lets you to see which carrier offers the least expensive coverage while still providing the exact coverage options you need.
Is homeowners insurance a legal requirement?
Although homeowners insurance is not mandated in each state like auto insurance, it will likely be required if you have a mortgage lender. However, insurance agents typically recommend maintaining a homeowners insurance policy even if your mortgage is paid off, since the cost to replace the structure out of pocket could be a financial burden.
If I make updates to my home does it lower my homeowners insurance?
There are some upgrades that will lower the cost of your homeowners insurance, either with lower premiums or additional discounts. For example, if you add a new roof to your home, you may qualify for lower premiums. You may consider making a home update that is eligible for an additional discount, such as installing a security system.