Best Home Owner Insurance – What Is The Best?
If you’ve been thinking about purchasing a home but would like to make sure you’re getting the best deal on your homeowner insurance, consider this blog post.
We will cover:
-What is homeowner’s insurance? Which coverage is the most important? What should I look for in a contract?
-What factors can affect my cost of homeowners insurance?-How to save money on homeowners insurance by giving discounts. (e.g., bundling coverage with other products) -Questions to ask your agent before buying. (e.g., what are the loopholes that could lead me to paying much more?) -Many additional resources and insights on home owner's insurance.
Homeowner’s insurance (also known as property insurance) is an insurance policy that protects you against damage or destruction of your home and its contents (e.g., furniture, garage), or legal liability for unintentional injuries to others on the premises.
Homeowner’s insurance does not protect you against so-called named perils. These are events such as hurricanes, tornadoes, floods, earthquakes and certain types of fires that are specifically included in the policy. To insure against these events, you must purchase a separate policy called “named peril” coverage.
Homeowner’s insurance is mandatory in all states except Florida, Georgia and Texas. The federal government requires it as part of its extension of homeowners’ insurance coverage to mobile homes and RVs.
Homeowner’s insurance is not the same as personal liability insurance (also known as an auto policy). Also called “policies a person should buy,” personal liability policies are designed to protect you against bodily injury or property damage that you might cause to other people in the event of an accident while driving your car. However, it does not cover loss of use or repair costs.
The most common kinds of homeowner’s insurance are: (1) All-risk, (2) named perils, and (3) replacement cost.
– All-risk – This policy protects against any loss or damage to your home and contents that happens due to covered events or hazards—including theft—regardless of whether the loss is intentional or unintentional, expected or accidental. It also covers losses caused by environmental pollution. The most comprehensive policy is considered the best but it is also the most expensive. – Named Perils – This policy provides protection only from covered perils such as fire, windstorm, hail, explosion, smoke, vandalism and malicious mischief. It does not cover loss due to flooding, earthquake or theft. Those who cannot afford an all-risk policy should consider this one. – Replacement Cost – This is a new type of coverage that pays for the cost of replacing damaged items rather than the actual cash value (“ACV”) of the items lost. The ACV is based on the original purchase price less depreciation. Replacement cost policies are exclusively marketed by select insurers, and insurance experts say they are good deals when bundled with other types of homeowner’s coverage.
The most common deductible for homeowner’s insurance is $500, although it can be as low as $250 or as high as $2,000.
The typical maximum monthly premium is $500, although it can be as low as $250 or as high as $4,000.
The typical premium for a 20-year term is $700 per year, but you may pay less.
The typical premium for a 30-year term is $650 per year, but you may pay less.
Don't let your insurance company recommend cancelling your insurance to save money! The State Farm® Agent Network (State Farm®) has over 2 million agents who are paid on commission. The State Farm® agent network is one of the largest in the nation and they have stolen billions of dollars from home owners. Push your agent to get quotes from other carriers. You will be amazed how much cheaper insurance is with other companies, even if you have a lower credit score.
Use HomeInsuranceCalculator.com to compare quotes from the top insurers to find out who will give you the best deal if you bundle your coverage. And remember, always ask for discounts!!
The first step in determining how much homeowners insurance costs per year is to decide which kind of policy you need—“named peril” or “all-risk”—and then choose your deductible. In doing this, you must also consider factors that could affect your cost, such as where you live and the kind of house you live in.
Research by the Consumer Federation of America revealed that between 2009 and 2010, the average annual premium per home was $942. That’s an increase of more than 6 percent. Over a 30-year period, your monthly premium would total $25,200 before adjusting for inflation.
To find out how much your home is worth, you can use our free online Home Valuation tool.
Named Peril Coverage
First, decide whether you need named perils coverage. In the past, many areas of the country did not require it. The North American Model Risk Index (or NAMI) identifies areas where homeowners insurers must offer it: Alaska, Delaware, Florida, Georgia, Hawaii (including federal military bases), Illinois, Louisiana (only for coastal properties), Maryland and Washington D.C. Residents in other parts of the country needing coverage for named perils should contact their local home insurance companies to determine if they too are required to offer named peril coverage in their local areas.
A second factor to consider in determining how much homeowner’s insurance will cost: How many people in your household and what kind of housing do you live in? (For a general description of the different types of insurance coverage and how they work, read our other article on home insurance.)
Named Peril Coverage for Multiple Dwellings If you have a house (or buildings) that are used for more than one purpose, such as an apartment building or hotel, you are required to list each building with a separate policy. If all the dwellings in your property have a separate policy written by an insurer, your policy should cover them all.
Conclusion: To determine how much a homeowner’s insurance policy will cost, first choose the kind of plan you need. If you decide the all-risk option is best for you, then add up all the deductible. If your household has more than one dwelling, include them with your total and subtract all the deductibles from that sum. Next, take the average of $817 per year per dwelling for a 30-year term and multiply that by the number of dwellings to get your required annual premium.