Cheap Homeowners Insurance
The cost of home insurance stops many people from purchasing a policy. Fortunately, there are ways to cut costs and save money while finding cheap home insurance coverage that protects your home and your possessions. We’ll share tips here, along with a rundown on what type of coverage is available, and how to figure out what policy is right for you.
- 25 Tips for Finding Cheap Homeowners Insurance
- 1. Shop Around and Compare Quotes
- 2. Research the Home and Property
- 3. Think About Government Programs
- 4. Check for Bundling and Other Discounts
- 5. Do Your Research
- 6. Set a Higher Deductible
- 7. Install Emergency Devices
- 8. Earn Fire Preparedness Discounts
- 9. Take Advantage of Home Security
- 10. Ask About Other Discounts
- 11. Know the Property Risks
- 12. Get the Right Coverage
- 13. Think About Home Features
- 14. Eliminate Risks on the Property
- 15. Concentrate on the Roof
- 16. Use Automatic Payments
- 17. Carefully Consider Claims
- 18. Take Care of Credit
- 19. Review the Terms Periodically
- 20. Check Coverage Amounts
- 21. Plan for Pets
- 22. Understand the Plan
- 23. Insure Valuables Separately
- 24. Maintain the Home and Property
- 25. Pay Off the Mortgage
- Cheapest and Most Expensive States for Home Insurance
- Types of Home Insurance Coverage
- Estimating How Much Coverage You Need
- Types of Coverage Levels
25 Tips for Finding Cheap Homeowners Insurance
Not all plans are affordable, and not all are worth the cost. Depending on where you live, how old your home is, and other factors, you might be surprised by your options. Here are our top tips for finding cheap homeowners insurance that is a good deal in terms of value.
1. Shop Around and Compare Quotes
Purchasing a policy with your existing insurer may seem like the easiest and least expensive route. But depending on your insurance needs, another company may provide lower rates. Don’t be afraid to shop around and source quotes from a few companies before making a choice.
The easiest way to compare home insurance providers online is through our free comparison tool. Input your Zip code in the form below and find a list of most-recommended insurers in your area. Then you can obtain an online quote from companies that fit your needs.
2. Research the Home and Property
If you are about to purchase a home and want to know what to expect when it comes to costs, you can save money by doing a little research before buying. Find out whether the home you want to buy lies in a floodplain or has other questionable history.
Homes that have weathered a few heavy storms may incur more considerable insurance costs, whether in the form of higher premiums or higher deductibles, if not both. A property that is in an area with a high crime rate may also cost more to insure.
If you already own your home and it’s in a high crime rate area or a floodplain, consider whether you can use other money-saving tips to reduce costs elsewhere in your policy.
3. Think About Government Programs
In some cases, government programs for properties in high flood risk or other potentially dangerous areas can help bring down the cost of your premium. However, the opposite can also prove true. Carefully compare the terms of both types of plans before you commit.
4. Check for Bundling and Other Discounts
Although you won’t always find the best deal with your current provider, it’s possible that they offer bundle discounts that can save you money. If you already have car insurance or previously took out a renter’s insurance policy, you could save money by sticking with your existing provider for homeowner’s coverage too.
Other discounts may apply, such as a clear claims history, your status as a non-smoker, or the fact that you are married or even widowed. Some companies also give new customers a discount for switching to their services.
Similarly, a good payment record with your other obligations can help bolster your qualifications when it comes to qualifying for the cheapest home insurance. Ask whether a positive payment history can help your case.
5. Do Your Research
Although referrals from friends or family are helpful and online search tools help narrow your choices, it’s worth performing background research before agreeing to the terms. Consider looking up the company you have chosen on the Better Business Bureau website. You can find out if the carrier has any pending litigation, customer complaints, or other issues.
6. Set a Higher Deductible
A deductible is the amount you pay before your insurance provider will take responsibility for any damages. The higher your deductible, the more you pay out of pocket if disaster strikes. However, a higher deductible also means lower monthly costs, an important consideration when calculating the overall price. If you can raise the deductible and pay less per month, it might be a better deal than continuing to pay higher premiums.
7. Install Emergency Devices
Depending on your insurer, you may be eligible for discounts on emergency preparedness. Between storm protections such as roof repairs or storm shutters, and other additions, you could receive valuable discounts in exchange for planning ahead.
8. Earn Fire Preparedness Discounts
Functioning early warning equipment like smoke and carbon monoxide detectors are essential in every home, but did you know that installing a fire protection system can earn you discounts on home insurance? Some systems even notify fire personnel remotely, but even sprinkler setups reduce the odds of a fire disaster in your home.
9. Take Advantage of Home Security
Another advance protection that can reduce costs is a home security system. Along with sensors and alerts, adding deadbolts to your home’s doors, and other protections, you reduce the chances of experiencing a break-in that could cost you and your insurer money. A burglar alarm is a relatively small price to pay in terms of savings over time on insurance costs.
10. Ask About Other Discounts
If you have an existing policy with your insurer, you’ll want to ask about multi-policy discounts. But whether you are sticking with your current provider or shopping around, ask about any other discounts they may offer. For example, some companies offer discounts to unions or employees of specific companies. Many insurers also give senior or military discounts.
11. Know the Property Risks
Depending on your home’s location and local regulations, you may have to purchase additional insurance beyond a standard homeowner’s policy. Flood insurance, for example, is mandatory in many areas that experience flooding. It’s helpful to know your home’s flood risk before buying, as flood policy add-ons may raise your costs significantly.
12. Get the Right Coverage
Like homes in flood plains, your home may have unique qualities or vulnerabilities that require additional insurance. For example, a storm could cause flooding in your home due to the property layout and features. Even if you don’t live in a flood zone, your house could sustain water damage.
13. Think About Home Features
Before you install an in-ground pool or order a hot tub, consider the impact those features will have on your insurance costs. Pools are a liability for homeowners because of the drowning risk they pose to not only the inhabitants of the home, but also visitors. The higher the risk, the higher the premium for your insurance plan.
14. Eliminate Risks on the Property
Although pools and hot tubs are common risk factors, other property features can cause your insurance rates to rise. For example, old buildings on your property, although uninhabited, create additional hazards. Plan to remove any old storage sheds, garages, or outbuildings before signing up for your plan.
15. Concentrate on the Roof
Because the roof is your home’s primary protection against water damage, its condition effects your overall insurance costs. Consider performing repairs on the roof or replacing it if possible. The up-front cost may be high, but the long-term savings on your insurance and the protection a new roof gives your home are worth it.
16. Use Automatic Payments
Automatic payments are a convenient way to guarantee you never miss a billing cycle, but many companies also give discounts if you pay automatically. Discount amounts vary, but you could save 5 percent or more each month. Signing up for your company’s autopay feature is one of the easiest ways to get the cheapest home insurance possible.
17. Carefully Consider Claims
Having a homeowners’ policy is reassuring when something goes wrong in your house. However, you should think carefully before submitting a claim. Insurers may refuse to pay if they see multiple similar claims from a client, or if they suspect that any claim is fraudulent. This can cause problems later if a larger issue comes up that you can’t pay for on your own.
18. Take Care of Credit
Like any other large purchase, it helps to have good credit when applying for insurance. However, maintaining decent credit over the long term will help save you money. Check regularly to ensure that your credit score is decent and ask your agent if any discounts apply if it increases.
19. Review the Terms Periodically
Although you sign a contract for insurance, just like any other service, it pays to revisit the terms occasionally. Whether you start a new job, make upgrades to your property, or bumped your credit score up a few points, you may be leaving money on the table by keeping your policy as-is.
20. Check Coverage Amounts
Because the cost of your plan depends on what it would cost to rebuild your home after a disaster, you may not necessarily use the price tag amount to determine coverage needs. The rebuild costs can also vary depending on the market value of your home, so this is worth checking out before you renew your policy.
21. Plan for Pets
If you are considering adopting a pet, check whether your existing or prospective insurance carrier has limitations on pet species or breeds. Many carriers blacklist particular breeds of dogs, especially those with a reputation for being vicious. However, some carriers also list dogs that most pet owners do not consider a risk. Check ahead and put off adopting a pet until you can confirm it won’t affect your rates or insurability.
22. Understand the Plan
If you’re purchasing a new home, it can be difficult to wade through all the paperwork, including insurance-related information. However, it’s important to read through your plan and understand your responsibilities. For example, many new homeowners think that homeowners’ insurance covers home systems like heating and air or other major appliances. The higher price of a plan isn’t so palatable when you realize it doesn’t cover the interior or appliances of your home.
23. Insure Valuables Separately
Although homeowners’ policies require itemization of many big-ticket items, insuring those items separately can save you money. If you have valuables such as jewelry or expensive electronics in your home, taking out another type of insurance on those items can reduce your overall insurance costs.
24. Maintain the Home and Property
A homeowner’s worst nightmare is finding out that an insurance policy won’t reimburse them for the loss of their home due to the property owner’s negligence. Unfortunately, if you don’t perform regular maintenance on your home, an insurance company can refuse to pay out and accuse you of neglecting your responsibility. Conditions like mold, termites, leaking or broken pipes, or sewer disasters are mostly preventable, so odds are, your agent won’t cover them.
25. Pay Off the Mortgage
If you already own your home outright, your insurance costs will likely be lower than if you are making payments. Confirm that your company or agent knows that your home is paid off to see if you qualify for a lower rate. If not, consider shopping around to see if another insurance company will give you a discount for outright home ownership.
Cheapest and Most Expensive States for Home Insurance
If you’re shopping for a new home, comparing the cheapest and most expensive states for home insurance might help you narrow down a geographical location. If you’re moving across state lines already, choosing an area with lower costs is a smart way to save money. Regardless, knowing how your state measures up can indicate how expensive your premiums will be.
Which States Have the Cheapest Rates?
According to the Insurance Information Institute, the average cost of homeowners’ insurance is about $1173 per year. However, within the US, rates vary widely.
At an average of $643 per year, Oregon holds the number one spot for cheap homeowners insurance in the nation. Utah and Idaho are comparable choices at just under an average of $700. Conversely, Florida is the most expensive overall. The average costs there are $1993 per year, alongside Texas and Louisiana, where premiums are just over the $1900 mark.
Overall, the top five states with cheapest rates were:
The five states with the highest rates were:
At first glance, it might not make much sense that some states have nearly double the homeowners’ insurance costs as others. However, states like Florida and Texas commonly experience flooding and hurricanes. Oklahoma and Kansas are more susceptible to fires and earthquakes.
Still, not all cities in each state have the same calculated risk. Averages are helpful in determining trends, but your quote may not match up exactly with what your state’s average is. Relatively affordable home insurance is available nearly everywhere, as long as you know where to look and how to save money.
What Factors Influence Home Insurance Rates?
In general, the value and location of the home and the property it sits on will dictate the value and therefore cost of your coverage. However, there are other factors affecting home insurance quotes that are less visible.
Natural Disaster Risk
Many areas in the United States are at higher risk of natural disasters than others. For example, Florida is more prone to flood-related disasters than landlocked states. Along with the fact that many areas of Florida are densely populated, its exposure to the sea means more residents there experience hurricanes, mudslides, floods, and more.
Property conditions can also influence home insurance rates. For example, if your home has sinkholes or seasonal flooding, your risk of a disaster may be higher than average for the area. That means your premiums are higher than average, too.
Other factors like construction costs can also affect the cost of your insurance plan. If you live in a state with higher construction costs, you can expect to pay more in premiums because the insurer will have to pay more for related claims.
Areas with lower construction costs often have lower insurance rates, despite the potential presence of environmental hazards.
Construction costs vary based on where you live and how much labor costs, but materials can affect the bottom line as well. If your house is wood, you may pay a higher premium than if your home is mostly brick, cement, or stone.
Homes that are wood have a higher risk of damage than more sturdy construction, meaning your house is less of a risk to the insurance company if it’s brick or stone.
Although the location is a significant factor because of the odds of a natural disaster affecting your home, your proximity to emergency services is also crucial. Homes that are farther away from fire hydrants or firehouses are more likely to sustain worse damage in a fire than homes that are close to water sources and personnel.
You know that having a wood burning fireplace is more dangerous than a typical HVAC system, but did you know it could affect your home insurance rates? Even if you purchase smoke detectors for every area of your home and equip yourself with fire extinguishers, your rates may be higher if your property has one or more fireplaces.
Other hazards that can affect people’s safety are trampolines, pools, and potentially aggressive pets. The age of the home and the presence of old pipes or electrical systems can also affect premium amounts.
Types of Home Insurance Coverage
Comparing homeowners’ insurance coverage options can easily become a headache. There are categories for different types of coverage, so you need to know which ones cover what occurrences before you purchase. Each policy’s name begins with HO, which is short for homeowner’s insurance.
While most homeowners purchase HO-3 coverage, we’ll explain the options, so you know which plan provides the most coverage for your unique situation.
A basic policy, HO-1 offers minimal coverage for both structures and property. It covers eleven basic areas:
- Vandalism/malicious mischief
- Damage from vehicles/aircraft
- Riots/civil commotion
- Broken glass
- Volcanic eruptions
- Personal liability
However, most states don’t offer this basic coverage anymore, due to the availability of more comprehensive options at a reasonable cost.
An HO-2 policy is a broader type of coverage and covers the eleven components of HO-2 coverage plus more “named perils.” Your agreement will outline which perils it covers, but typically those are:
- Frozen household systems
- Burst or broken pipes
- Water or steam damage
- Electrical damage
- Falling objects
- Damage from the weight of snow or ice
Generally, your personal belongings and liability fall under the HO-2 umbrella. Still, since it’s a named peril policy, anything not included in the contract won’t be covered.
The most common type of coverage homeowners choose, HO-3 is a special form that works for most single-family homes. While this plan doesn’t include all the possible “perils,” it names an extensive list and has “open risks.” Among the perils HO-3 covers on your home are:
- Power failures
- Nuclear hazards
- Water damage
- Government damage
- Fungus, rot, or mold
- Animal damage (even pets)
- Pollutant leakage
- Earthquakes or other natural disasters that produce movement
- Property collapse
You can also add endorsements to HO-3 for additional coverage if necessary.
This type of insurance is for renters and covers personal property the same as HO-2 or HO-3. It can also include liability coverage for personal injury and property damage. However, it does not cover the property, because the law requires the property owner to maintain an insurance policy for the structure.
HO-4 or renter’s insurance usually includes the cost of your living expenses if you must vacate a rental property while professionals repair the damage.
Although HO-3 is the most common, HO-5 is the most comprehensive plan available for homeowners. It explicitly names what is not covered by the plan, therefore protecting your property and belongings against all types of hazards.
Also known as an “open perils” policy, the HO-5 does leave off dangers such as earthquakes and water damage. Still, you can add these endorsements for further protection if necessary. However, you cannot add an endorsement for flood insurance, meaning that you’ll need a separate policy for that purpose.
HO-6 is for condominium owners, protecting an individual’s unit separately from its neighboring units. HO-6 policies cover the personal property of the homeowner plus the walls, floors, and ceiling of the condo. While homeowners can purchase this coverage, which includes all perils in the HO-2, the rest of the condo must have separate coverage through the homeowners’ association.
If you own a mobile or manufactured home, you might be wondering what type of coverage your house needs. The HO-7 option extends coverage to mobile homes that don’t meet the requirements for typical homeowners’ insurance policies. However, the coverage is like that of an HO-3 for a stick-built home.
For older homes that would cost more to repair than to rebuild entirely, the HO-8 is appropriate. This modified coverage form typically covers historical properties and registered landmarks, and it includes variations of HO-3 coverage depending on the features of the home.
Estimating How Much Coverage You Need
You know that you need homeowners’ insurance to protect your investment in your home. But how much coverage do you need? What happens if you need to submit a claim? Is the cheapest home insurance the best bet? Here we’ll explain how to determine what coverage you need to protect yourself and your home.
Calculate Replacement Costs
Homeowners’ insurance aims to repair or replace your home after a disaster strikes. Therefore, you need to come up with a figure that would sufficiently replace or restore your home to its current state. Hiring an expert can help with this, but don’t expect their appraisal to match your home’s exact market value.
In addition to the structure of your home, you should also assess your possessions. If your policy only covers the home, you will have the burden of replacing all your belongings after a disaster. Consider additional coverage for replacing both valuable belongings and everyday items.
While most homeowners don’t expect that their friends will sue them in the event of an accident during a party or other event, it does happen. Think about the fact that a court could find you responsible for injury or even death.
Also, even a criminal who receives an injury while trying to steal from you or damage property can still take you to court to pay damages. Liability insurance covers these types of incidents so that you don’t have to pay out of pocket.
Check the Geography
Again, if you live in a flood plain, now is the time to tack on flood insurance to your policy. Other circumstances may require additional insurance endorsements, so think about what your city or state’s weather patterns are like.
Also, consider the location and whether your area is prone to mudslides, fires, or any other natural disaster. Even if you live in a relatively safe area that doesn’t experience flooding or earthquakes, your property may have risks beyond what the typical policy covers.
Think about the location and position of your home’s lot and double check before purchasing a policy that doesn’t address those concerns. For example, you may want a specific type of coverage if you have:
- Water runoff near the home
- Potential for mold or fungus because of water presence
- Trees near or above the roof or windows
- Older outbuildings or other structures that may fall
Types of Coverage Levels
Like car insurance, homeowners’ insurance policies aren’t one-size-fits-all. Once you select the HO that fits your home and your life, you also need to decide what coverage level you want. Keep in mind that the level you choose can impact your overall costs, however.
Actual Cash Value
The cheapest insurance policy only covers what your property is worth today. It’s the cheapest policy because it accounts for depreciation of your home and possessions, making the payout amount lower. An ACV policy is what providers prefer because reimbursing you costs less than other options.
For example, if you own a flat screen TV that you purchased three years ago, the amount that an ACV policy would award you to replace it probably wouldn’t be enough to buy a brand-new one. Rather, you could theoretically afford a used TV that was around the same age as your old one.
However, court decisions on the subject sometimes vary, so there is no hard and fast rule about what constitutes the actual cash value of an item.
Replacement cost means you can replace what sustains damage at market cost. While this type of coverage doesn’t quantify any one item, it has limits to the payout amount. With the television example, you would be able to purchase a new TV that is the same brand and size as the old one.
Replacement cost does not reflect the depreciation of the item, although limits do apply depending on your policy.
Guaranteed Replacement Cost
The most expensive level is guaranteed replacement, which doesn’t factor in depreciation and lets you replace items at the outer limits of the policy. However, you may face difficulty obtaining a policy, and you will likely pay more than you would on other coverage levels.
The benefit of this type of coverage is that even if your property sustains damage that costs more than your policy is worth, the company still replaces it. That means depreciation is not a factor, and you can replace all damaged items like new.
Finding cheap homeowners insurance isn’t always easy, especially if you live in a state with higher than average costs. However, it’s important to find the right coverage for both your property and budget, which is what we’re here to help with.
While the cheapest homeowner’s insurance is the most appealing, a high premium is sometimes necessary depending on your property and its risk factors. Rather than signing on with the first provider you come across, do your research and find the right fit for your home.