How Much Is Home Insurance: Complete Guide

August 8, 2019 by  
Filed under Finance

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How much is home insurance is not a question that’s easily answered. It’s one of the first things people ask when they consider buying or building a new home, but there is no right or wrong answer. Everyone pays a different amount, and each amount is based on specifics personal to each individual homeowner. Home insurance is required if you have a mortgage, and it’s highly recommended even if you do not. It’s the insurance that protects you if something happens to your home or your belongings. You never know what might happen, and you need the kind of protection homeowner’s insurance offers.

How much is home insurance is a question everyone asks, and it’s because it affects how much home you can afford. When you’re buying a home, you must know how much it will cost you to pay for the house. It’s not just your mortgage you’re paying for when you sign on the dotted line. Your monthly mortgage payment can increase hundreds of dollars a  month if you escrow your home insurance and your taxes, and you must know this ahead of time to ensure you buy a home you can afford. If you can afford to spend $1,800 per month for a home, you must make sure you buy a home that allows you to keep your mortgage payment, taxes, and insurance at or under this amount. It’s a complicated process.

What Is Home Insurance?

Aside from asking how much is home insurance, the other question people ask is what, specifically, is home insurance? It’s financial protection from the unknown, the unexpected, and unplanned for emergencies that might happen in your home.

  • Hurricanes
  • Tornadoes
  • Floods
  • Fires
  • Theft
  • Damage

Home insurance is designed to protect you, and it comes in many forms. What you pay for depends on where you live, what kind of zone your house is located in, and how much protection you feel you need for your home and family. It's an insurance policy that pays for the things you cannot afford to pay for if the unexpected occurs. You pay a yearly premium, and you're protected as long as you live in your home. 

Why Do You Need Home Insurance?

If a tree falls on your home during a storm and goes through your roof, can you afford to pay out of pocket to have the tree removed, the roof repaired, and the interior damage to your home repaired? It could cost tens of thousands of dollars to repair this. If your home floods in a storm, can you afford to have all the water removed, the drywall removed and replaced, and the flooring re-done? If your new home is in a flood zone, you are required to have flood insurance, which is actually a whole different policy than a standard home insurance policy.  If your home burns down in an accidental fire, can you afford to pay off the remainder of your mortgage and replace all of your belongings as well as buy or build a new home out of pocket? Most people do not have the funds to deal with this kind of devastation, which is why home insurance is necessary, no matter which disaster you are protecting your home from.

​Legal Protection

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One thing many homeowners fail to realize is that home insurance is not just about protecting you from damage to your home. It’s also meant to protect you from lawsuits filed against you. Let’s say someone comes to your home for a gathering, and they slip and fall down your stairs. They are injured, and they decide to sue you for damages. They could be awarded hundreds of thousands of dollars to cover the cost of their medical bills, injuries, and any other damages they seek.

How much is home insurance? It’s invaluable if you’re sued for hundreds of thousands of dollars because someone was injured on your property. You are not personally liable for that if you have home insurance, which means the person suing you isactually suing your insurance company. Keep that in mind when you think about potentially not paying for home insurance.

​Damage

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Damage can occur anytime and in any way. If you live in a flood zone, it takes one storm to flood your home. If you live in Florida, a hurricane can hit any time. If you live anywhere with any kind of weather, you could face damage from snow or ice, lightning or wind, or worse. Not all damage that your home might face is catastrophic, but your insurance company will cover the cost of replacing or repairing anything that’s damaged in a storm or in a burglary or theft. You will need to read your policy and ask questions because there are some instances, such as runoff water that are never covered.

It’s A Requirement

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How much is home insurance is a question you must consider when you buy a home using a loan.You are required to carry insurance or the bank will apply a policy to your mortgage, and it might not be the most affordable policy or the best one for you. The bank that lends you the money to pay for your home is the owner of your home until that loan is paid in full.

This means the lender needs to protect their own investment, and they require all homeowners to carry a home insurance policy. If for no other reason, you need home insurance because it’s a requirement with your mortgage.

How Much Is Home Insurance?

How much is home insurance is the question on your mind, but the answer is not as specific as the question. Generally speaking, the average cost of home insurance for homeowners can be anywhere between $400 to $4000 depending on the replacement value to put your home back to the condition it was in before the damage occurred.. This is not a direct quote, and it does vary based on many factors. Some rates are lower, some are higher, and some are in the middle.

Some people pay significantly more depending on the state in which they live and the zone in which they live. For example, someone who lives in a flood zone will pay more for home insurance because they are in a risky area prone to flooding. Other risk factors that might cause your home insurance premium to cost more than the average is the crime rate where you live, whether you live in a storm-prone area, and even the kind of home in which you live.

Manufactured homes are more likely to suffer damage than block homes in an area where storms are common, but they are less expensive to repair. A person who has expensive furniture, art, and jewels in their home might pay a lot more than someone who doesn’t have that kind of stuff in the house. Personal property coverage is a part of your home insurance policy, and that might cause your home insurance rates to rise significantly.

What Factors Are Used to Answer How Much Is Home Insurance for a Homeowner?

Your home insurance company will consider many things before they quote you on your insurance premium, and the things they consider include many of the following:

  • Your marital status
  • The age of your home
  • The materials used to build your home
  • Whether you have a home-based business
  • Where you live
  • The condition of the roof
  • The proximity of your home to a fire station
  • Your credit score
  • How much you want to pay for a deductible
  • Whether you have a dog and what breed it is
  • If you have a pool or a hot tub
  • If you’re located on or near a body of water
  • The cost of replacement

​These are a few of the things home insurance companies consider when issuing rates for homeowners.

Can I Lower The Cost of Home Insurance?

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You can control the cost of your home insurance marginally if you try a few things. Bundling all your insurance policies with the same company can lower your rates. For example, your home, life, and auto insurance policies can be bundled in order to save you some money. You can opt for a much higher deductible to equal a lower monthly premium. The higher your deductibles, the lower your premiums.

You can opt to live in a home without a pool or hot tub, one that is not near a body of water or located in a flood zone, and one that is not in a neighborhood where there is a high crime rate. You can get married, and you can buy or build a new home with all the updated safety features to save you a bit of money on your home insurance. You can also protect your credit score to ensure that you are not viewed as a risky homeowner.

​Pets and Insurance

If you have a dog, you can expect to pay more for your home insurance. If your dog attacks someone and they decide to sue you for damages, your insurance company needs to protect itself. They do this by charging homeowners with certain dog breeds more money for their insurance. Breeds that are more inclined to attack people are listed below, but this is not an all-inclusive list.  Each insurance company has its own list of breeds it will not write at all.

 

  • Rottweilers
  • Pit bulls
  • Chows 
  • German Shepherds
  • Mastiff

However, your dog and your insurance company might have their own relationship. Many insurance companies make their own decision about the cost of your insurance policy and the type of dog you have, and some will refuse to insure you at all if your dog falls into what they consider their own personal breed of “Dangerous Dog Breed”.

Other insurance companies will charge you more if you have an exotic pet such as a snake, ape, or even a game cat. Exotic pets are considered wild animals, and owning one could make your home insurance price skyrocket.

Conclusion

If you want an answer to the question, “How much is home insurance?” you need to get quotes from several companies. It’s the best way to ensure you know what you’re getting if you’re being charged fairly, and what you can expect to pay for what you need. No two people pay the same amount for the same policy, which means you want to be sure you’re shopping for only what you need to cover the cost of your home, valuables, and belongings.

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