August 4, 2021 Cody Marchant

What to Look for When Shopping for Homeowner’s Insurance

From your personal belongings and attached structures to other buildings on the property, homeowner’s insurance protects much more than your physical home.

What is Homeowner’s Insurance and How Does it Work? 

Homeowner’s insurance provides compensation for damages that are covered under your policy. For instance, it covers damages to the home and attached structures such as decks or porches. It also covers stand-alone structures like fences or sheds. Other coverage includes personal property, additional living expenses, liability, and medical payments.

There are three levels of coverage:

  1. Actual cash value 
  2. Replacement cost 
  3. Guaranteed replacement cost/value 

Each level covers certain things. For example, actual cash value will cover your home plus the value of personal belongings, replacement policies cover enough for repairs to the original value, and guaranteed replacement includes inflation costs, so that you can rebuild or repair even if it’s more than your policy limit.

How Much Does Homeowners Insurance cost?

Factors that Affect the Cost of Your Homeowner’s Insurance 

Many people are shocked when we inform them that homeowner’s insurance rates are not directly related to the home’s price. However, there are several factors that affect the cost of your homeowner’s insurance.

Factors that affect the Cost of homeowner’s Insurance 

  • Location
  • Cost to rebuild
  • Amount of coverage
  • Home’s condition and age
  • Credit history
  • Deductible
  • Safety features for the home
  • Additional coverage
  • Bundling with other insurance
  • Insurance provider

By going through the homeowner’s insurance process with a company, you can get an accurate quote on the cost of coverage. 

How Much Coverage Do You Need? 

If you have a mortgage, your lender will require a minimum of dwelling and liability insurance. Dwelling coverage provides compensation to rebuild your home and attached structures if a natural event, such as a house fire, occurs.

Your coverage should equal the amount needed to rebuild your home. You can get this information by multiplying the square footage of your home with the local construction costs in your area. Insurance agents can also help with this process.

Standard insurance policies do not cover everything, so you may want to add additional coverage that protects your home and assets. Most homeowner’s insurance policies don’t cover incidents like sewer backup, floods, and maintenance damage.

To calculate how much coverage you need, consider how much it would cost to rebuild your home, replace your personal belongings, cover injuries that occur on your property, and reimbursement for living expenses.

How to Get an Affordable Rate on Homeowner’s Insurance 

The average cost for homeowner’s insurance is $109 a month, or $1,312 a year. However, depending on your local area and individual situation, shopping around with various insurance companies can result in a much lower payment.

It’s important to know that having a higher deductible can lower premium payments. A deductible is how much you’ll pay out-of-pocket when filing a claim before the insurer pays the remaining balance. The average deductible for homeowner’s insurance is $500.

Aside from shopping around and raising your deductible, you can also see if you qualify for discounts for safeguarding your home against theft and fire. Additionally, there are often discounts for homeowner’s who upgrade details like their shutters and roof.

You can save up to 25% on homeowner’s insurance by filling out this form for a free quote

Common Mistakes Made When Shopping for Homeowner’s Insurance

Knowing how to get the most affordable rates on homeowner’s insurance is one thing. But there are a few common mistakes you also want to avoid. For example:

  • Not shopping for the best rate.
  • Not getting enough coverage.
  • Lying on the application.
  • Not understanding the policy and what it protects.
  • Not working with professionals.  

Get a Free Quote on Homeowner’s Insurance 

With your dream home under contract, Loan Compass can help walk you through how to protect what is likely your most valuable asset!

We have partnered with Hippo, a company that provides personalized concierge service with rates that are 25% below market!  Simply fill out this form for a free instant no-obligation quote

You will also have the option to bind it online in just minutes if you choose!