How Much Should You Pay for Home Insurance?

How much should you pay for home insurance? The answer depends on several important factors. Here's what you need to know.
Written by Rochelle Miller-Hernandez
Reviewed by Carrie Adkins
According to the National Association of Insurance Commissioners (NAIC), the
average cost of homeowners insurance
is approximately $1,200 a year. However, the cost can significantly change from one home to another.
The type of home and its amenities are an integral part of estimating cost, but insurance companies look at many other things when determining overall policy pricing. Here's what you need to know.

Location, location, location

Location means much more than the state in which your home is located. While it's one of the considerations used by an insurance company to determine your insurance premium, it's only one of many factors.
For example, when determining how much you should pay for homeowners insurance, an insurance company will consider if your house is near the coast or inland. Some private companies don’t even offer coverage for homes on the coastline, because the risk of damage is so much higher. The ones that do, do so at considerable cost to the homeowner and then
incorporate several restrictions
and limitations.
Another consideration in terms of location is how far your home is from a fire station. Structure fires cause billions of dollars in damage every year. If you live near a fire station, chances are your homeowners insurance rates will be lower, because emergency response time will be shorter. Also, whether the fire station is operated by professional or volunteer firefighters can make a difference.

2. Age and construction

You might think a newer house might be more expensive to insure, but often it's the other way around. Insuring an older home can be more costly because repairs are higher. For example, newer homes tend to have concrete foundations and tile or carpeted floors. Older homes often have wood floors and custom features that cost more to replace. Also, depending on the year an older home was built, it may not meet current building codes. This makes it a greater liability as it may not have all the safety features a new home will have.
Another consideration is the age of your home’s roof. If your roof is old or neglected, the amount you have to pay for home insurance will be significantly higher. Your roof is meant to protect your home from the hazards of nature, such as rain, hail and so forth. If it is not in top condition, damage from leaks can lead to hefty repair costs.
Since wood frame homes are susceptible to more damage, they can be more expensive to insure than houses constructed of brick or masonry. Also, if built with higher-end materials, such as slate roof tiles instead of asphalt, insurance rates will increase as these products cost more to replace.
If you're thinking of installing an in-ground pool in your backyard, you might want to reconsider. Even though it would be nice to open your backdoor to such enjoyment, it can raise your home insurance significantly. In this case, it's much more than the potential repair costs. There is the
added liability of someone getting injured
and you being liable.

3. Coverage and deductibles

Most home insurance policies are actually made up of several different types of insurance coverage. Each one protects you and your home from specific losses. Here are a few of the most common types of coverage:
Dwelling coverage: This insurance will cover damages to the primary structure and attachments like a garage or covered patio.
Personal property coverage: This is insurance for the personal contents in your home, such as dishes, clothes, and furnishings.
Personal liability coverage: If you are held responsible for an incident occurring in your home that involves injury to persons or property, this insurance pays for those damages.
Medical payments coverage: No matter who is determined at fault, this insurance will cover the medical expense for anyone sustaining injury on your property.
The other thing to consider with coverage is the type of reimbursement you will receive if your home and belongings are damaged. If you have cash value coverage, your home insurance may be more affordable. This is due to the fact you will only get reimbursed for the value of your property, including home and contents, less depreciation.
If you opt for replacement cost coverage, you will receive reimbursement for the cost in today’s dollars to replace, repair or rebuild the damaged property.
Also, the amount of your deductible makes a difference. The more you are willing to pay out of your own pocket, the less you will pay for your home insurance premiums.
For more information on homeowners coverage, NAIC provides a
comprehensive guide
on what to consider when purchasing home insurance. Being prepared when looking for protection for your assets will help you make better decisions on what is right for you, your family, and your home.
Don’t overpay for car insurance. Download the
app and within minutes you will have access to quotes from multiple insurance providers. Jerry makes it easy to find the lowest rates, so you’re always getting the coverage you want at the best price.
Are you overpaying for car insurance?
Compare quotes and find out in 45 seconds.
Try Jerry

Easiest way to compare and buy car insurance

No long forms
No spam or unwanted phone calls
Quotes from top insurance companies
Find insurance savings