Owning your own home is an excellent way to build wealth and lay down roots, but there are plenty of costs and pitfalls to be aware of.
Your mortgage company will require you to have homeowners insurance in place at all times, but you should want to have adequate coverage regardless to protect your family from a severe financial loss.
Fortunately, homeowners insurance can be an affordable addition to your arsenal of protective coverage.
With an appropriate amount of homeowners insurance, you can prevent most financial losses caused by fire, earthquakes, theft, or other damage to your home — and gain peace of mind.
Factors Affecting Homeowner’s Insurance Quotes
The best way to secure affordable homeowners insurance rates is by shopping around with more than one provider.
But which factors affect how much you’ll pay for a homeowners insurance policy? Here are the main issues that come into play:
The replacement cost of your property plays a huge role in how much you’ll pay for homeowners insurance.
The more expensive your property would be to rebuild, the higher your rates will need to climb.
When you shop for homeowners insurance, you are typically able to choose a deductible that works for your lifestyle and budget.
A higher deductible will result in lower homeowners insurance premiums, but you can pay more if you want a lower deductible in place.
Home Liability Limits
You also need to consider liability limits when you purchase homeowners insurance.
If someone is hurt on your property and files a claim against you for losses or medical bills, your liability coverage will kick in to protect you.
Replacing a roof is an expensive endeavor, which is why homes with a new roof may qualify for lower homeowners insurance premiums.
Older, worn down roofing is more likely to be part of a claim and will result in higher premiums.
If you’ve filed claims against your homeowners insurance in the past, any company that provides you with a new quote will take those into account.
You may also see your homeowners insurance premiums spike with your existing company when you renew your policy after a claim.
There are numerous other factors that can affect your homeowners insurance rates.
Here are a few:
- public hazards like a trampoline or pool
- your marital status
- the breed of dog you own
- the proximity of your home to a fire station or body of water
An insurance company may also consider your credit score when you apply for coverage.
Types of Homeowners Insurance Policies Available
While all homeowners insurance serves the same purpose — protecting the property owner from financial losses — there are a few different types of policies you can consider depending on your circumstances. Here are the most popular types of plans available today.
Basic form homeowners insurance offers simplistic coverage intended to protect property owners from most normal perils.
This coverage helps to safeguard against fire and smoke damage, explosions, hail and wind damage, theft, and vandalism, for example.
Basic form coverage may or may not account for the personal items you own (e.g. furniture, electronics, etc.) unless you specifically include them.
Broad form homeowners insurance covers all the basic perils as a basic policy, yet it goes a step further to provide additional coverage for:
- Freezing of HVAC systems
- Falling objects
- Breakdown of household systems
- Accidental water overflow
- Electrical damage
- Damage caused by ice or snow
This type of coverage protects your home and usually your personal belongings. Many families also purchase broad form insurance with personal liability coverage included.
The most common type of homeowners insurance is special form.
This type of coverage includes the provisions of basic form and broad form insurance, but it goes a step further to include most damages to your home and attached structures outside of damages that are specifically excluded.
Special form coverage safeguards against losses caused by damage to your home, any buildings on your property, your belongings, or your personal finances in a liability situation.
You can also buy a homeowners insurance policy that covers only your belongings and not any structure itself.
This type of insurance is typically called renter’s insurance since it is normally purchased by renters who want to protect their personal possessions when renting from an individual or a business.
If you want to save money on homeowners insurance, strive to shop around and compare quotes with at least a few different insurance companies.
While each one may offer comparable pricing, some may offer more coverage for your money and more “bang for your buck.”
Fortunately, receiving a quote for homeowners insurance (or several quotes) is easy. You’ll just need to set aside 5 to 10 minutes to fill out an application.
To receive a full homeowners insurance quote online without speaking to an agent, you’ll need to offer the following details:
- Name and address
- Age and condition of property
- Additional details such as whether you smoke and the breed of your dog
- The size of your home
- Current insurance status
- Claims history, if applicable
Top 3 Homeowners Insurance Providers
Before you sign up for a homeowners insurance policy that intends to protect you from losses caused by damage, theft, or a lawsuit, it’s crucial to make an apples to apples comparison between several different providers.
You should strive to find an affordable policy that offers excellent value, but it’s also crucial to purchase insurance from a high-quality company that offers coverage you can count on with adequate limits.
The following three companies scored high marks on J.D. Power’s 2018 U.S. Home Insurance Study thanks to overall customer satisfaction:
Amica Mutual offers high-quality homeowners insurance policies that can be tailored to meet your unique needs.
Not only can you save up to 15% if you insure both your auto and your home, but you can choose from different levels of coverage with add-ons such as flood insurance, identity fraud expense coverage, or home business coverage. Amica Mutual is rated A+ by A.M. Best.
Another insurance company that consistently earns high ratings for their homeowners insurance policies is Erie Insurance.
Erie offers homeowners insurance policies with the option to add additional coverage for water backup and sump pump overflow, floods, earthquakes, jewelry and high-end valuables, electronics, and more. You can also buy homeowners insurance with guaranteed replacement cost.
State Farm offers home and property insurance that can protect you financially in the event of storm damage, fires, lightning, freezing of a plumbing system, weight of ice or snow, theft, vandalism, and more.
Policies can be tailored to meet your needs and budget, and you can add liability coverage as well as coverage for your personal belongings.
If you’re in the market for a new homeowners insurance policy, it’s crucial to understand the factors which affect your premiums.
More importantly, however, you’ll need to shop around among several carriers to see how much you’ll pay for a policy that meets your unique needs.
With so many insurance companies competing for your business, it’s possible to find a high-quality policy at a price you can afford.