Home Insurance. Everybody’s favorite topic, right?
Probably not, but the fact of the matter is: it’s part of adulting. So stop crying about it.
The weird thing, though, is it’s one of those things that everybody has but nobody knows anything about. The only thing people do know is: when I get a house, I should get insurance.
The people that probably know the most about it are the ones that had to make a claim.
Home insurance is an everyday part of our lives, and we pay the premium every month. But how is homeowners insurance calculated?
Let’s find out, shall we?
What Affects Your Rate
Most people know enough about homeowners insurance to know that it depends on the state you live in. But what you didn’t know is that more than that goes into it.
The state you live in is just the beginning. In addition to location, insurance actuaries(the people that calculate insurance premiums) look at the location within your state, the condition of the house, and personal factors like marital status, credit score.
On top of evaluating the person obtaining the insurance, actuaries also take into account any discounts or deductibles, and the type of coverage plan you’re looking to purchase.
Types of Plans
There are a number of different types of plans to choose from when you’re shopping for home insurance:
Dwelling Coverage: This covers the home itself and any additional structures like garages, sheds, workshops, etc
Personal Property Coverage: This covers any of your belongings inside the house like clothes, furniture, beds, baseball trophies, and cat scratching posts
Personal Liability Coverage: This is used in the event someone tries to take you to court over an injury they received in your house/on your property
Medical Payments Coverage: This is used in the event you have to pay for the medical expenses of someone who has sustained an injury on your property.
Rates Around The Country
With home insurance being such an individual purchase, it’s hard to say exactly what you can expect to pay. However, here are some rates from around the country to give you an idea of what it may cost you to insure your home.
The cheapest neighborhood in the U.S. to obtain home insurance is Honolulu, Hawaii. Honolulu’s annual premium rates come in at a modest $490 per year.
The most expensive location in the U.S. to obtain home insurance is Islamorada Village of Islands, Florida. The annual home insurance premium for this area comes in at a staggering…wait for it…$6,295 per year. Wow! Does that come with a butler?
Factoring in the cheapest rate, and most expensive rate, the national average for annual home insurance premium is $2,305 per year.
Bringing It Home
How homeowners insurance is calculated differs from state to state, city to city, and even neighborhood to neighborhood. Although we couldn’t give you an exact price you could expect to pay, we hope that giving you an idea of the lowest, highest, and average rates helps you to budget the cost of your insurance.
What else can we help you with when planning to buy a home? Let us know in the comments! For more articles visit our website.