Homeowner Insurance, also known as homeownerâ€™s policy, is a set of insurance plans designed to protect your property, its contents, or both. There are different types of home insurance policies and each usually provides a unique set of protection.
The policy plans help to guard against significant financial loss that you may incur as a result of fires, storms, legal liability, vandalism, and earthquakes among others. Generally, the process of looking for the best home insurance isnâ€™t easy due to a large number of insurance companies. However, with our insurance directory, you can conveniently find the best insurance that meets your needs.
If you are looking for the best homeowner insurance policy, below is a review of this coverage including the types and some of the factors you need to consider?
Types of Home Insurance
There are several types of house insurance designed to protect the property, its contents, or sometimes both. The most common forms of home insurance include:
Itâ€™s designed to protect the whole structure that you call a house. Dwelling insurance also protects other permanent fixtures within the building. This includes kitchen fittings, the roof, and the bathroom. Additionally, it may extend to outdoor buildings such as garages, greenhouses, and sheds.
The policy protects the belongings in your house against damage from flood, fire, or theft. Content insurance is used to cover possessions such as clothes, bags, books, and other equipment that you may find valuable.
The policy provides coverage against bodily injury. For instance, if a guest sustains serious injuries while at your property, then you can be protected against expensive lawsuits. Personality liability can be joined with Medical Payments Insurance that helps to cover medical expenses in case someone is injured while they are in your property
Other Types of Home Insurance Policies
- Earthquake insurance: itâ€™s designed to cover your property in case there is damage caused by an earthquake.
- Flood insurance: it protects your property against all types of flood-related damages.
- Water-backup of sewer: itâ€™s meant to protect your house in the event of a drain or sewer backup. Note that this is a common issue that a lot of homeowners usually face.
- Replacement cost plus: itâ€™s an additional type of coverage that can be applied on top of the standard home insurance. This can help you to rebuild your home in case there is total damage that leads to a significant loss. Additional cost coverage is a good alternative for those homeowners who have old properties and they fear they will depreciate.
Note: home insurance policies are the most diverse. You can easily find what you are looking for since there are numerous sub-categories to choose from. Whether you want a better roof replacement plan, brand new belongings, or landlordâ€™s insurance, you can easily find a policy plan that meets your needs.
What is the Average Home Insurance Rates?
At the moment, the average home owners insurance costs around $1,200 in premiums annually. However, there is a significant difference between state to state as well as house to house. Oklahoma and Kansas are the most expensive states to pay house insurance premiums. Their annual premiums are more than 70% above the national average.
If you want to pay cheap premiums then you must consider states such as Washington, Delaware, Hawaii, and California. The premium here is 30% less or more from the national average. There are several factors that cause significantly high and low home insurance rates in different states.
For instance, the high rates in Florida are due to good climatic conditions. Besides that, this Sunshine State also has high incidences of fraud involving contractors who love to exploit insurance companies, especially after natural disasters.
California has one of the lowest insurance rates thanks to its low population. The state also has well-outlined laws that protect policyholders from exploitation. There are strict limits to what insurance companies can do in order to increase their profits.
Hawaii is known to have the lowest home ownerâ€™s insurance rates nationally. Well, this is because the standard insurance policies donâ€™t normally cover hurricane damage. In case you are looking for a home owners insurance agent that can help you get a hurricane policy, then you have to buy it separately.
Factors That Affect House Insurance
While there are specific factors that affect homeowner’s insurance in specific states, there are also general factors that are applicable everywhere. Some of these factors include:
You have probably remodeled and changed certain parts of your home. General home improvements may include updating the kitchen, bathroom, and bedrooms among others. In case all the remodeling you have done ends up increasing the value of your home, the new insurance coverage has to take these new updates into account. This may consequentially affect the premiums.
In case you add a backyard pool, then there are chances of insurance premiums increasing. You may see a swimming pool as it a vital place to relax and enjoy those sunny days, however, if someone gets injured while using the pool, you may be liable if itâ€™s not insured.
Note: For safety purposes, make sure that you secure your pool areas with a fence in addition to self-locking gates.
Your Insurance Score
Note that your insurance score works just like your credit card score. This means that it can massively affect your ability to secure a good housing insurance policy. Generally, those who have low insurance scores are considered as a financial risk by firms hence they are more likely to get costly premiums. But how can you improve your home owner insurance credit score?
- Donâ€™t have a bankruptcy record on your name
- Ensure that you have a modest credit card balance
- Avoid having debts
The Age and Construction Style of Your Home
How and when your home was constructed matters. These are big factors that insurance agencies have to consider in order to determine the rates. Understand that as your roof and home generally age, they end up becoming more susceptible to damage. Insurance companies consider old homes a big risk and may, therefore, charge you high premiums.
The design also matters and thatâ€™s why the â€œhowâ€ factor is critical. Does the design make it easy or difficult to repair or replace certain areas? Itâ€™s important to know that things such as the heating system, installation of plumbing pipes, and the electrical system can all affect the overall insurance rates.
Your Marital Status
Married homeowners make insurance companies smile. From historical data, couples usually file fewer claims compared to singles. Thatâ€™s why they are seen as more attractive because they are more mature and less risky to deal with.
People have wood-burning stoves in their homes in order to reduce their total energy costs. Meanwhile, the presence of these stoves can also increase house insurance premiums. Thatâ€™s why itâ€™s important to ensure that the stoves meet the stipulated code of requirements. To avoid being charged an extra amount of money, ensure that you provide the insurer with proof that the stoves are safe for use and were installed by a licensed contractor.
Proximity to the Closest Fire Department
In 2018 alone, Fire departments in the US responded to house fires every 24 seconds. Research reports indicate that there are new house fires almost every 87 seconds. This data speaks volumes because in 2018, almost 380, 000 residential houses got burned.
The loss caused by the fires resulted in over $10 billion of property damage. Thatâ€™s why insurance companies consider your houseâ€™s proximity to the nearest fire department. Because if your house is close, then chances of it getting damaged completely are low. This consequentially minimizes the risk that comes with claims.
Besides that, the quality of the local fire department also affects home insurance rates. Departments that are known to work faster and respond effectively lead to better rates. Meanwhile, if you are living in a rural area or a location thatâ€™s mainly serviced by volunteer firefighters, be prepared to pay higher insurance premiums.
Proximity to the Coastline
Generally, homes found in inland areas end up receiving lower insurance rates. On the other hand, homes that are in coastal regions have higher house insurance rates. Thatâ€™s why itâ€™s rare to find private insurance companies that insure houses found near beaches.
In such cases, homeowners have to live without insurance, which is a massive risk. Besides that, they can depend on insurance programs that are government-sponsored. This is because the effects coast by rising water haves, tornadoes, and hurricanes are usually massive and private insurance companies canâ€™t afford this.
Note: regions at risk of often experiencing earthquakes or floods and other calamities usually need separate policies. This is because the effects of such environmental factors are usually significant and no insurance company wants to spend large sums of money frequently to pay claims.
In summation, here are how the premiums are calculated:
- The type of loan cover you want
- The construction materials used to build your property
- The location of your home
- The year it was built
- The risk profile of your property
- Applicable government charges
- How you use your home i.e. is it a residential house or do you use it for business purposes?
Benefits of Home Owner Insurance
Whether you have successfully paid off your mortgage or you are a new homeowner, you need home insurance. Your house is definitely one of the most prized possessions you have and you have to protect it at all costs. Some of the benefits of insurance include:
Protecting your home
The main reason why a homeowner may seek the services of an insurance company is that they want to protect their main dwelling. Policies come in handy to ensure that you retain the value of the property and help to minimize losses. Whether you want a total replacement or you are dealing with minor damage, you are guaranteed that most of the costs will be covered by the company.
Protecting Your Homeâ€™s Content
When you are seeking house insurance, the company has to get the inventory of all electronics, appliances, and furniture in your home. They may also look for other personal items such as jewelry and ensure that itâ€™s covered by the policy.
In case there is fire, theft, or a tragedy that leads to the destruction or loss of a property, you may be reimbursed part or whole amount depending on the type of insurance policy you have. This helps to protect the contents of your home.
Loss of Use Insurance
In certain circumstances, you might be actually forced out of your home. For instance, you may need to stay in a hotel for a few days if there is an extensive repair process going on. Sometimes you may be forced to vacate your home due to the anticipated dangers caused by floods, tornadoes, and volcanic eruptions among other things.
If you end up staying in a hotel and incur food and travel expenses, these have to be covered by the insurance company. They can reimburse you a certain percentage to ensure that you donâ€™t spend much.
In the US, it would cost you hundreds of dollars if someone gets injured on your premises. The medical bills in addition to lawsuits may be extremely expensive for you to afford. While you will be held liable, liability coverage provides great cushioning.
But donâ€™t get confused. There is no type of homeownerâ€™s insurance that will directly cover injuries sustained by visitors. However, if there is a lawsuit such as in the case of a dog bite, the insurance policy will protect you from such expensive claims.
The Bottom Line
Owning a home is definitely good. You live in the comfort of your space and you get to modify it how you wish. However, there are accidents and unpredictable circumstances that may happen, leading to damage or loss of a property.
To ensure that you are protected against natural disasters, lawsuits, and theft, itâ€™s important to get a home owner insurance. It provides you with a stress-free lifestyle and helps you to save more money in the long run.