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The average homeowner in the United States pays $1,383 per year, or $115 per month, for a homeowners insurance policy with $250,000 in dwelling coverage. However, your homeowners insurance rate will likely vary from the average because it’s calculated based on numerous factors, including the age of your home, your location and other related metrics. If you’re looking for even cheaper coverage without sacrificing quality, here’s how you can take some steps towards getting the best 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 might 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. However, not all states allow ZIP codes to be used as a rating factor.
- 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 may need additional coverage for those high-value items. Other carriers may offer better policy terms for other unique needs, such as your dog breed, or if you have a history of making homeowners insurance claims.
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 more than one company could help you pinpoint which insurance companies offer the cheapest home insurance policies for you. However, also keep in mind that you’ll want to keep the coverage as similar as possible so you can understand which company is truly offering the lowest premiums for your desired coverage. Only after this baseline is established is it recommended to start adding optional endorsements to further personalize your home insurance policy.
4. Look for applicable discounts
When purchasing a policy, you may be surprised by the number of available discounts from your chosen home insurance provider. These discounts can provide significant savings on the cost of your policy, but you should ask your insurance agent about discounts you qualify for to make sure you don’t miss out on savings opportunities. Some common discounts 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 historical 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
If you want to find the cheapest home insurance company for your unique situation, it typically helps to compare personalized quotes from multiple home insurance providers. Obtaining quotes from a number of different insurance companies will let you compare the cost and coverage to determine which option may be the cheapest for the type and amount of coverage you need.
Homeowners insurance is not mandated in each state like car insurance is. However, mortgage lenders will almost certainly require you to purchase a homeowners insurance policy if you are purchasing your home with a mortgage loan. Still, the right homeowners policy can help to relieve the financial burden of having to pay for the damages caused by covered events out of pocket, so a policy may be worth considering even if your home is paid off.
Depending on the renovations and updates you’ve made to your home, these changes could now make it more expensive to rebuild your home after a covered claim. Because of this, you’ll want to speak to your home insurance company to see if any adjustments need to be made. But it’s not all bad news – some home insurance companies may even offer discounts or rate changes for making certain improvements to your home, like making it more energy efficient or adding a new roof.