If you’re buying a home, then you’ll need to purchase a homeowners insurance policy. It’s important that you buy enough insurance to cover you in the event of a disaster while also keeping your premiums manageable.
Here’s a look at the cost of homeowners insurance and some ways you can save.
The Cost of Homeowners Insurance
A 2022 study by the National Association of Insurance Commissioners found that the average annual homeowners insurance premium was $1,311 in 2020.
You can find the cost of your homeowners insurance listed on Page 1 of your loan estimate under the section labeled “projected payments.”
How Is Your Premium Determined?
There are several factors that affect what you’ll have to pay for homeowners insurance, including:
- Claim history. Your premium may be more expensive if you’ve had to file claims in the past.
- Building materials. If your home was built with sturdier materials, that can reduce the cost of your premium.
- Credit-based insurance score. A higher credit-based insurance score could help reduce your premium. If your score is lower, then you may have to pay more.
- Neighborhood crime rate. If you live in an area with a high crime rate, then you may have to pay more for homeowners insurance because the insurer will consider your home to be higher risk.
- Risk of accidents. Homes that are built on uneven land or face a higher risk for accidents cost more to insure.
- Age and condition of the home. Newer homes can cost less to insure because their systems are less likely to be prone to issues.
- Fire protection class. Buying a home in a rural area could increase your insurance costs if it takes much longer for emergency response teams to get to you.
- Whether you have an existing homeowners insurance policy. If you already have an insurance policy on another home, that can help keep your policy costs reasonable.
“Home insurance premiums are based on a number of factors,” says Leslie Kasperowicz, an insurance educator and managing editor of Insurance.com based in the greater Minneapolis-St. Paul area. “The two biggest are the replacement cost of your house and where you live. Replacement cost is how much it would cost to rebuild your house completely. Where your house is located determines the type of risk it’s exposed to. A house on the Florida coast is more likely to be damaged than an inland house. Insurers look at a lot of data to see the risks in your area.”
5 Ways To Save On Homeowners Insurance
Here are different ways you can save money when you buy homeowners insurance:
- New customer discount. Many insurance companies offer a discount to new customers.
- Weatherproof your home. Weatherproofing your home can help protect the interior and get you a discount on your policy.
- Install safety features. Insurers often offer discounts if you install a burglar alarm, sprinkler system, and deadbolts.
- Bundle your policies. Car insurance is required in almost every state. So, if you have a car and need to buy homeowners insurance as well, you could get a discount for bundling your policies.
- First-time homebuyers discount. Some insurance companies also offer discounts to first-time homebuyers.
Here are the answers to some frequently asked questions about homeowners insurance.