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How Much Does Homeowners Insurance Cost?

Updated: May 2017

One of the first questions to pop into your mind when you buy a new home: How much is homeowners insurance going to cost me? It's an important question, especially if you're trying to budget your living expenses. The short answer to that question is: It depends. These are some important factors that can determine how much you'll end up paying for homeowners insurance:

  • Your deductible
  • The value of your home and belongings
  • Your claim history
  • Other variables, such as the age of your home

Below, we'll explore these factors in more detail.

Video Transcript

Wondering what determines the cost of homeowners insurance? Here are some factors that may affect your homeowners insurance premium.

First, consider your types of coverage. Certain coverages, such as dwelling, personal property and liability, are standard parts of a homeowners insurance policy.

You may decide it makes sense for you to add optional coverages, as well. For instance, if you purchase water backup coverage, you'll likely pay a bit more for that added protection.

Each coverage in your policy has its own limit. A limit is the amount of coverage you purchase and the maximum amount your policy will pay for a covered claim.

The limits you select may play a role in the cost of your homeowners insurance. Next, think about your deductible. This is the amount you typically have to pay out of pocket toward a covered claim before your insurance coverage kicks in.

If you select a lower deductible, you will typically pay less out of pocket toward a covered claim. However, the overall cost of your insurance premium may be higher. On the other hand, if you choose a higher deductible, your out-of-pocket costs will typically be higher — but your premium may be less.

Homeowners insurance prices can vary because no two policies are alike. Contact a local agent to get a homeowners insurance quote for the coverages that fit your needs.

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Choosing the Deductible That's Right for You

One factor that plays a part in how much you pay for homeowners insurance is the deductible. You'll find that you can select plans that have low deductibles or higher deductibles. If you pick a plan with a high deductible, the annual fee for your insurance coverage will likely be lower. The downside? If you have to make a claim for repairs to your home, you'll be required to shell out more money before meeting that deductible. On the other hand, opting for a plan with a low deductible will probably cost you more out of pocket up front, but you will pay a smaller amount if the time comes to make a claim.

Determining the Value of Your Home and Property

Your homeowners insurance premiums are also tied directly to how much coverage you receive. If you're buying an insurance policy to cover a home that's worth $250,000, you're naturally going to pay more than someone whose home is worth half that amount. Get a good, solid assessment of what your home is worth to help you decide the right amount of coverage.

The value of your personal belongings also has a lot to do with the value of your home, as homeowners insurance often covers personal property. Say you're living in a home worth $100,000, but you've got belongings that are worth $50,000. In this case, you want to get a policy that will cover the cost of your home and your belongings. Otherwise, if disaster strikes, you could still be at a loss, even with insurance coverage.

Your Claim History

The price you pay for homeowners coverage can be greatly affected by your past insurance history. Homeowners who have had fewer claims typically pay less for insurance than those who have more claims. One of the considerations that all insurers have to bear in mind is your level of risk to the company. People who have had more claims are usually considered a higher risk, and therefore pay more up front.

Other Factors

As you might imagine, there's a lot that goes into the calculation for determining the cost of your homeowners insurance policy. Not all of those factors are limited to your home's value and your prior claims history. Here are a few factors.

The age of your home. Brand-new homes have more reliable electrical and plumbing and are built to specific codes for maximum safety. For this reason, owning a new home will likely cost you less to insure.

Other risk factors. Owning a home with a swimming pool can drive up your homeowners insurance costs significantly. Owning a dog can impact your rate, depending on the dog's breed.

There's so much that goes into determining the cost of homeowners insurance that it's a good idea to talk to an agent as you determine which coverages are right for you

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This content is for informational purposes only and may not be applicable to all situations.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2019 Allstate Insurance Company, Northbrook, IL.
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