Estimated reading time: 6 minutes
- Factors That Affect the Homeowners Insurance Market
- How Much Does Home Insurance Cost?
- Find Local Homeowners Insurance
“How much is home insurance?” is a question that most homeowners ask themselves.
Your home is probably the biggest and most important purchase you will ever make.
It is the structure to protect you and your family, it is the setting of your favorite memories, and your home is the destination you can always return to. It is important, then, to protect your home in case something goes wrong.
Home insurance is a key first step after purchasing a home, protecting it against a range of accidents, disasters, and life-altering events. The problem is, the market for home insurance can get complicated.
Depending on where the home is, what kind of dwelling it is, and what local considerations must be made, it may be more or less expensive to insure.
Finding a quote for insuring a home is simple, but how do you know if you are getting the right coverage, at the right price?
Factors That Affect the Homeowners Insurance Market
The insurance market comprises multiple agencies and regulators, all working toward the goal of risk management and actuarial statistics. Once they calculate risk factors and home data, they will be able to give a quote detailing how much homeowners insurance will cost for your home.
Where you live is important, because different areas of the country have specific considerations.
Here in North Carolina, insurance companies take into account the fact that we are the third most hurricane-prone state in the country.
Those storms can do some real damage, costing insurance companies millions, if not billions of dollars. This can raise the average cost of home insurance compared to other states.
The Right Home Insurance Agency = More Choice
Finding someone to “Quote” your home insurance is not hard.
You can look online to a number of large carriers that will offer you a quote for home insurance.
You can look to a Captive Insurance carrier like State Farm, NC Farm Bureau, or Allstate if you would like to do all of the price comparisons yourself.
However, if you are looking for an advisor that can educate you on the different types of Homeowners Insurance available as well as shop multiple carriers, then you should look for an Independent Insurance Agency.
One of the largest single drivers of Home Insurance Premium is the amount of coverage needed to replace your home.
The average cost of homeowners insurance can range from $1,317 to $2,411, with the cheapest covering from $100,000 – $200,000, and the more expensive covering $500,000 or more.
Depending on the cost of your house and estimated damage costs, you will need to pay more or less in the insurance market.
Where you live matters! Are you in an area known for catastrophic losses or high crime rates?
Your Fire District Rating, also known as a Protection Class, plays a role in determining home insurance premium. The better the Protection Class (Protection Class 1 is the best, and 10 is the worst), the lower your premium.
Insurance costs will rise depending on how close you live to the coast, and it is a pretty serious consideration.
Amount of Coverage
The amount of coverage you need for your home is determined by the Replacement Cost associated with your home.
Replacement Cost is simply the amount of coverage necessary to rebuild your home should it be completely destroyed.
In order to determine replacement cost, insurance companies take into account the following attributes (this is not a exhaustive list):
- Year Built
- Square footage
- Construction Type
- Interior Trim
- Attached Structures (garage, deck, porch, etc)
Insurance actuaries have determined that there is a direct correlation between Credit Score and Claims History.
The better someone’s credit score, the less likely that person is to file claims.
Insurance Companies determine an “Insurance Score” which includes Credit History as a component!
Depending upon the pricing sophistication of the carrier, an insurance carrier may either have multiple pricing tiers based off of the insurance score, or simply disqualify individuals that have an Insurance Score below a defined metric.
Home Age and Condition
It is great to buy a new home or build one, and insurance companies feel the same way.
Home insurance will cost less the newer your home is because it is more prepared to “weather the storm,” literally and figuratively.
Insurance companies will give you a lower rate on your home insurance with more coverage if the home is in good condition and uses long-lasting materials and construction techniques.
A deductible is the amount of any loss that the homeowner will self insure. When there is a loss, the homeowner’s deductible is what you are responsible for before the insurance company will pay.
Let’s assume you experience a loss! The insurance company determines that the total amount of the loss is $25,000. Your policy contains a $1,000 Deductible. The insurance adjuster will pay you $24,000 for your loss
$25,000 – $1,000 = $24,000
Most insurance carriers have a $1,000 Deductible as their minimum deductible.
If you want to save money on your premium, simply raising your deductible to $2,500 could save you 6%-8%.
Home Insurance Discounts
Most people are familiar with the concept of Bundling Insurance.
In general, insurance carriers that offer both Home Insurance and Auto Insurance would like you to purchase all of your insurance from them.
While there are a number of reasons for this, the main reason is that the insurance companies know that the more policies you have with one carrier, the longer you will stay a customer.
In order to incentivize you, the insurance carriers will offer a Multi-Policy Discount if you have your Home, Auto, and even Umbrella Insurance with them.
The Multi-Policy discount can be up to 40% off of your home insurance rates.
Other discounts include:
- Alarm Discount
- Advance Quote Discount
- Claims Free Discount
How Much Does Home Insurance Cost?
Well, it depends.
There is no straightforward answer because each home and homebuyer is unique.
Finding an Insurance Advisor that can help you navigate multiple insurance companies to find the best deal is an important part of the process, and it is worth looking into before buying.
Still, some do it better than others. you don’t just want to buy insurance from a company that calculates your relationship with them based on a formula alone.
It is always better to find someone who cares about the personal touch.
How Much Does NC Homeowners Insurance Cost in Different Cities?
Believe it or not, the city you live in has a big impact on your home insurance costs.
The average cost of home insurance in North Carolina as of 2018 was $1,103. Below are some average home insurance costs in North Carolina by city:
Independent Agent Can Guide The Home Insurance Process
Due diligence can protect you from the kind of mishaps that leave homeowners scratching their heads wondering about what went wrong.
It might seem like something that can be put off or ignored because no one wants to plan for the worst, but it is during the worst of times that we are glad we had a plan.
Make The Call!
Getting home insurance is one of the most important decisions a homeowner can make, and a good insurance company can give their customers the peace of mind that comes with a solid policy.
Luckily, finding the right insurance is not an endeavor you must go on alone. Reach out to a Home Insurance Expert At ALLCHOICE Insurance