Buying a house is an exciting time, but it can also be intimidating when you start talking about homeowners insurance. Amounts you can expect to pay vary greatly from one part of the country to the next, and even within certain cities and states, one house can be much more expensive than another. As of 2012, the average cost of homeowners insurance in the US was about $1,034 annually*. The state of Massachusetts’ average was a bit higher, with an annual cost of homeowner’s insurance coming in at $1,150 and renter’s insurance premiums at $206/year*. With that said, it’s doubtful that’ll be what you end up paying. So just How Much Does Homeowners Insurance Cost? It depends on the following factors:
Every home has a dwelling cost, which will determine the amount of insurance you purchase. Calculate this figure by multiplying square footage of the house by local building costs. If you are buying a home with 3,000 square feet and local building costs are $75 per square foot, then the dwelling cost will be $225,000. How this number fluctuates will greatly influence the premium of your home insurance.
Another part of finding out how much homeowners insurance will cost is the amount of coverage provided to personal possessions (or the TV, table, chairs, furniture, movies, computer, and anything else you own or use inside the home not permanently affixed to the property). Companies calculate the amount of coverage provided by percentage, usually from 50 to 70 percent, of the dwelling cost. You can purchase additional coverages beyond that, or purchase insurance for certain items.
Most homeowners insurance policies cover about $100,000 of personal liability, meaning that if you or someone living in the house does something to cause damage, the claim will cover repairs up to that amount. An expensive claim can cause your homeowners insurance to go up, as can upping the limit to $500,000 or $1 million.
Size of Deductible
The size of the deductible will be one of the biggest influencers to the question, how much does homeowners insurance cost? A high deductible will result in a lower premium — sometimes much lower — but if a catastrophe occurs, you will have to come up with out-of-pocket expenses in the amount of the deductible before the policy’s reliefs kick in.
Most every home comes with minimum standard safety features as required by law, but those that go the extra mile or benefit from key placement can deliver cheaper homeowners insurance rates to the buyer. If the house has an alarm system, deadbolt locks, or is located close to a fire department or hydrant, then it will prove cheaper than homes without these perks.
Type of Construction
The type of construction is yet another big influencer when it comes to how much homeowners insurance will cost. Brick homes are highly favored by insurance companies for their extra durability, while wooden homes and siding don’t perform as well.
Where You Live
Every part of the country has its share of natural turmoil, but certain portions get hit worse than others. Just ask anyone in Louisiana, Florida, or states in the northeastern part of the US, and they can tell you about hurricanes, flooding, and winter storm damage. Throughout the midwestern US, many states are susceptible to high winds and tornados. Over on the west coast, there are earthquakes. If your state has a history of frequently being affected by these calamities, get ready to pay more.
So how much does homeowners insurance cost? Clearly, a single cut-and-dry answer isn’t something you will find here. But taking the factors listed above into consideration, you will have a much more precise idea of what to expect.
* Insurance Information Institute (www.iii.org)