Effective ways to reduce home insurance costs: what is necessary to know

What do you need to know about the prices of home insurance: basic parameters, insurance conditions. How do insurance companies assess the degree of risk?

13 min.

In order to find the most proper coverage you should compare various quotes. Below is the information how it should be done.

Effective ways to reduce home insurance costs: what is necessary to know

The idea of homeowner's insurance rates

This is an approximate amount of money a client pays for a policy. It depends on a number of factors like:

  • The size of a dwelling
  • The area you live in
  • Presence of a fire station within easy reach

Note! Each company applies different formulae for calculating the household insurance cost, that's why prices can vary significantly.

When comparing quotes of various companies you raise the chances to find the best rate.

Due to the fact that rates for home insurance are approximate, they may not exactly coincide with the final price paid for coverage. In some cases, inspectors visit lodging in order to determine that different coverage is needed and this may emend the price.

What do rates for homeowner's insurance include?

Various factors influence homeowner's insurance rates, from the size of your home to the things in your closet. Companies evaluate these factors differently that means one insurance underwriter may be more lenient than another regarding your backyard trampoline or credit history.

Below are several issues affecting the rates.


  • Cost of restoration. The more it will cost to restore home in case it has been destroyed, the higher the home insurance value is likely to be. The cost of restoration depends on material, labor and local construction charges. The size matters as restoring a dwelling of 5,000 square foot normally costs much more than the one with the area of 1,000 square foot.
  • The age of a dwelling. Insuring older homes tends to be more expensive because the components may deteriorate over time and not meet current building standards.
  • Type of materials. Houses built with materials such as brick or stone are cheaper to insure than buildings made of wood that is highly flammable.
  • Security features. Alarms, smoke detectors, bolt locks and other security features might lower the homeowner's insurance value because they reduce the likelihood of damage or theft.
  • Home renovation. The insurance cost may be higher after you remodel your kitchen, add decorations or make other home renovation that increases the price of restoring.

Home location

  • Local protection against fire. If a building is near a fire station or a hydrant, you will probably be eligible for cheaper rates for household insurance rather than someone living in a more remote district.
  • Risks of a disaster in the area. Quotes are generally high in areas prone to hurricanes, wildfires, earthquakes and other natural hazards.
  • Crime rate in the area. Provided in the area there is a lot of burglary then rates for homeowner's insurance may appear to be higher.

You and your property

  • Your credit rating. In most states, quotes may be higher for people with questionable credit history. Clients with bad credit scores are likely to sue. But in California, Massachusetts and Maryland companies are not allowed to count creditworthiness when quoting homeowners insurance.
  • Pets. Quotes can be high if you have an aggressive dog because liability insurance may be paid in case your dog injures someone and you are sued as a result of it. A number of companies do not offer this type of coverage at all.
  • Your belongings. In case of having an expensive jewelry, musical instrument or other valuable things then additional coverage may be necessary and it will add the homeowners insurance value.
  • Backyard trampoline or pool. Possessing these items may increase rates due to the risk of injury. If someone is harmed by their use, you can be held liable whether or not you have given permission.
  • Your wood stove. Insurers may consider the stove as a fire hazard especially when it hasn't been installed professionally or does not comply with the standards.
  • Home business. Provided you work from home then you might need to add coverage to your homeowners policy of a standard type or purchase a business owners policy to cover business-related equipment, inventory and liability.
  • Your previous claims. If you have filed multiple claims in the past, insurance underwriters may view you as a risk and require premiums of a higher level.

Things that are covered by homeowner's insurance

A dwelling policy consists of several types of coverage, some are automatically included and others that you can add are called approvals or passengers.

Important! When you receive a quote for homeowners insurance you will select the amount of coverage needed and whether you want to use additional features.

Home Insurance of a standard type

  • Homeowner's insurance pays for damage repairs to your dwelling and other structures such as a porch or terrace. It is necessary to have enough coverage to rebuild your home if it collapses. The cost of reconstruction differs from the market value of a dwelling or the property tax which takes into consideration such factors as the land value and the location desirability. To obtain an estimate of the redevelopment cost you need to multiply the lodging square footage by the costs of local construction for a square foot. You may also ask an insurer or insurance agent to help find these costs and calculate the replacement value.

  • Coverage for other structures can help renovate or replace freestanding structures on your property like storage areas or a swimming pool. This coverage is usually 10% of your home's coverage.
  • Private property insurance cover expenses to repair or replace your items such as furniture and clothes in case they are stolen or damaged as a result of an incident covered by the policy. This coverage usually ranges from 50% to 70% of the housing coverage. You can purchase additional coverage for valuable items such as jewelry or art but it may be necessary to evaluate them.
  • Additional living costs coverage allows to pay for staying away from home for the period of your home renovation. This coverage is often around 20% of the home's one.
  • Liability insurance is payable if you accidentally injure another parson or cause damage of property. Typical amounts range between $100,000 and $500,000. A policy of umbrella insurance is able to add more coverage which can be important in case the circumstances put you at risk of prosecution.
  • Medical benefits insurance pays for the treatment of anyone injured on the territory of your property irrespective of whose fault it is. It also defrays expenses if a client, family members or pets hurts someone while being away from home. Usually limits vary from $1,000 and $5,000.

Attention! It is worth purchasing additional coverage if you have designs that would be expensive to replace.

Options of policies for home insurance

Additionally to standard coverage it is also necessary to check multiple policy options when you request and compare rates for homeowner's insurance. The aspects to be verified include:

  • Deductible. That is the sum paid by a client before the insurer covers any damage, it is generally in the range of $500 to $2,000. Opting a higher deductible can be a smart idea to lower your premiums if you are confident about being able to charge the deductible in the event of a claim.
  • Protection against earthquakes, floods or hurricanes. Standard type of insurance does not cover earthquake or flood damage, and hurricane insurance is limited in some areas which are hurricane-prone. If you live in an area with these risks it is worth asking for additional coverage. Generally it is necessary to have flood insurance for properties located in high-risk areas.
  • Reimbursement for the cost of items replacing. A lot of standard policies for home insurance do not pay for replacing old things with new ones unless this feature is opted.
  • Guaranteed or extended coverage of the replacement cost. Standard policies will not pay more to repair your home than the limit of coverage. The charge for extended coverage for replacement is higher in case required for repairs up to a specified limit, and if replacement coverage is guaranteed then the full cost will be charged.

What information is needed to obtain a quote for homeowner's insurance?

When you start checking rates for household insurance, underwrites usually have questions about you and your home. Here's some information you need to have on hand.

Details about you:

  1. Name, birth date, marital status and contact information
  2. Current address and the duration of living there
  3. Quantity of people with whom you share the dwelling
  4. Presence of a dog or other pets
  5. Whether you run a home business (childcare is included)
  6. Whether you need extra coverage for valuable items like home equipment or jewelry

Insurance details:

  1. The name of the previous insurance company, if you already had a policy, and the dates of its coverage
  2. Whether you have filed any claims within the past 5 years
  3. Validity start date of the insurance coverage
  4. The type of required coverage. Provided you already have insurance then the starting point is the declarations page of the current policy. You can see the coverage and additional features you have now but be prepared to make changes. Before making the comparison of rates for household insurance, it makes sense to reassess your needs.

Details about your home:

  1. The year of the house construction. If this is an old building you may also need to provide information when it was renovated and whether the plumbing and electrical system have been renovated
  2. House size, number of floors and style such as ranch or colonial
  3. Whether the exterior walls are built of brick, wood, stone as well as other materials
  4. The roof age and the material it was made of like metal, slate or shingles
  5. Quantity of bedrooms and bathrooms
  6. Presence of a fireplace, garage, smart home, burglar alarm or sprinkler system
  7. The way the dwelling is heated
  8. Whether there are free-standing structures like a gazebo or tool shed
  9. Presence of a mortgage
  10. Distance to the nearest hydrant or a fire station

Note! In case you don't know when the home was built or its square footage, you can probably get this information from your local tax officer's office and it can often be made through a free search in the Internet.

Just type "tax inspector" or "property records" and your county or city name. Additionally, some agents and insurers have access to building material, size and other information that they can fill out when they get the address of the house.

Obtaining a quote for homeowner's insurance

Several options to obtain a quote exist:

  • Purchase a quote by phone or online
  • Cooperate with captive agents who represent one company
  • Cooperate with independent brokers or agents

Irrespectively to which way is chosen, you should plan to receive at least three offers to be sure in getting a proper price. Moreover, when comparing quotes it is worth making sure that each policy has the same deductibles, endorsements and limits of coverage.

Checking rates for homeowner's insurance by phone or online

It is possible to receive free online quotes from various companies and provided you are happy with them, in some cases, you can purchase online. Some insurers allow you to start an assessment online but will ask you contact with an agent to complete it by phone.

When purchasing home insurance directly from an insurance underwriter and unaided by an agent, you may easily set up coverage and review the rates yourself but there are drawbacks as well.

Captive agents

Quotes can also be received through an captive agent working for one definite insurance company.

The agent's job is to help realize which policy suits you best and provide a proper quote. In return, they receive a commission or a percentage of your premium upon the policy purchasing. In contrast to other agents, captive ones can also receive a salary from the insurance carrier.

Independent insurance brokers and agents

If you want to consider options of home insurance beyond just one company, getting an offer from an independent broker or an independent agent might be a worthwhile idea.

Note! They cooperate with multiple insurers and may offer landlords a wide range of policies and options.

Due to the fact that independent agents operate on commissions they aim to provide clients with the best service and may push them towards higher priced policies.

The difference between independent brokers and agents is that the first ones charge a commission to the broker and must inform clients about the amount of a commission. Such transparency affords to know exactly the sum that the broker is making from your case.

Prices of home insurance

The report of the National Association of Insurance Commissioners states that the average price of homeowner's insurance is around $1,200 a year.

But rates may be lower or higher than the average and it depends on how much restoring of a dwelling will cost.

Average homeowners insurance rates vary according to location as well. The states apply various insurance rules and construction expenses differ across the country. Consequently, homeowners insurance prices change in line with the cost of the home.

For instance, in New Mexico and Georgia the average home price is approximately $170,000, as the US Census Bureau study of the American community informs. But the average rate for insurance in Georgia is 20% higher rather than in New Mexico.

How to get cheap homeowner's insurance rates

Search is the proper method to find the cheapest quotes for household insurance. Being a homeowner is a significant investment and you shouldn't save on insurance coverage. But unless various rates are compared it is a challenge to realize whether you have a good deal or not.

The following tips may be of real help to save on homeowner's insurance:

  • Increase deductible. In case you agree to take on most of the costs following a potential claim then premiums can be significantly reduced. As the Insurance Information Institute reports, deductible raising from $500 to $1,000 may cut premiums by 25%.
  • Combine home and auto insurance. A lot of insurers provide both types of coverage and you can get discounts when buying auto and household insurance at the same company.
  • Ask for a discount. Price privileges are frequently provided but they vary from company to company so they are worth checking out. You can get discounts for, for example, a nonsmoking home, retirement, purchasing a new home, automatic payments signing up or the absence of claims.
  • Make the dwelling safer. Such features as hurricane shutters, smoke detectors and bolt locks can lead to discounts. You might also be offered cheaper rates for homeowner's insurance by upgrading your outdated heating, plumbing and electricity systems.
  • Boost creditworthiness. In the majority of states a good credit rating leads to lower quotes. Try to clear bills on time and keep an existing debt, if any, as low as possible to improve your credit score.
  • Abandon the coverage which is no longer needed. Review your policies and make sure you are not paying for unnecessary coverage. For example, if your computer was insured a few years ago but it is no longer worth it then money can be saved by reducing this coverage.
  • Avoid risky functions. A backyard a pool, trampoline or treehouse can considerably increase the value of your home insurance. In order to save funds and keep your family safe you should consider ditching these items and choose less dangerous entertainment sources.
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