How much is home insurance

Top 10 home insurance questions about cost and coverage

There are many questions surrounding home insurance.

If you’ve never owned a home, chances are you would not be familiar with homeowners insurance.

The cost and coverage can vary greatly from what state you live, city, town and even your specific neighborhood.

We’ve composed a short list of the typical questions people have about home insurance and what it might cost insurance insure your house or a house you’re considering buying.

We’ve even provided a link to a home insurance calculator here if you want to get started checking costs right away.

So, let’s get started with some simple questions.

#1 What is homeowners insurance?

Home insurance is simply a means of transferring the risk of financial loss from the homeowner to an insurance company.  You pay a premium either monthly or annually, and the insurance company assumes the risk if the home burns down, a natural disaster, theft or if someone gets hurt on the property (liability insurance).

#2 What does homeowners insurance cover?

Pretty much the things described above.  If your home burns down the insurance company will pay to rebuild the property and replace your personal property.  If a tornado destroys the property or removes the roof or shingles, home insurance will pay to replace or rebuild.

If someone injures themselves while on your property and require medical attention, your liability or medical payments coverage will pay up to the limits of the policy.

If you have something stolen from your property like a bicycle, T.V. or other personal items will be covered by the home insurance.

There are certain limits of coverage with each policy that you’ll want to review.  Also, you’ll have a deductible whenever you have a claim. A typical deductible could be as low as $500 or higher like $2500.

Make sure you call your insurance agent or broker before filing a claim, especially if you have a small potential claim.

#3 How much is home insurance?

Probably the most common question about home insurance is how much does it cost?

The quickest way to determine home insurance cost is by the size of the home.

We recommend using a home insurance cost calculator.

Because the cost to buy a home can vary greatly depending on location, the size of the home is generally the best way to get an initial estimated cost.   A 1500 Sq. Ft. home on the West or East Coast might cost $500,000 to purchase vs. a home in the Midwest worth $200,000. Land value is the biggest factor for the purchase price, but the size of the home is what the cost to rebuild or replace the property.

Example: two homes, both 1,500 sq. ft. one located in Los Angeles and the other in St Louis.  Both homes would cost approximately $200k to rebuild even though the purchase price of the LA property is more than twice as much.

Using a home insurance cost calculator will help simplify the process and take a lot of the guesswork of the difference between insurance cost and home cost.

#4 How to shop for home insurance?

Finding affordable insurance is going to be your challenge, but we can help.

Many people will ask friend and family for referrals or simply use the same insurance company their parents have used for generations.

But, are you getting a good deal?

For the most part, home insurance companies will be offering the same type of coverage, assuming you’re getting a quote from a high-quality insurance carrier.

So, what’s the alternative to shop for home insurance?

Consider online home insurance shopping.  You’ll find every homeowners insurance on the internet that can give you quotes online.  The only drawback is you’ll need to fill out the same info over and over to receive different price quotes.

We would suggest you consider using a Home Insurance Broker.  The benefit of using an insurance broker is they will check for you, multiple home insurance companies at one time.  You provide some basic home insurance info, and they will then check the market for the coverage you need at an affordable premium (premium is the word used in the insurance industry for the cost of insurance).

#5 Who has the cheapest home insurance?

Probably the most commonly asked question is who has the cheapest or lowest home insurance cost.

The easiest answer is it depends.  Sometimes small regional insurance carriers are more competitive than large national carriers.  How many homes or concentration of homes in a city or town may increase the risk for an insurance company which causes them to increase rates.  If you are insuring a large percentage of homes in a city, it could potentially put the insurance carrier at more risk if a single natural disaster came through that area.  Home insurance companies like to spread their risk around to reduce exposure of having multiple claims in any one area.

So, who has the cheapest home insurance will greatly depend from state to state and city by city.  Also, you may see home insurance companies raise or lower rates depending on their appetite for business in an area or town.

#6 What is a homeowner’s insurance declaration page?

A declaration page is a document that will be required if you are getting a mortgage on a home you are buying or if you are looking at comparing rates and coverage’s with other home insurance company you’ll want to have.

The declarations page is a description of the coverages and deductible(s) you have on the property.  It will describe the replacement cost the insurance will pay to rebuild the property, any personal property, liability insurance and other items like coverage to pay if you are displaced while your home is under construction.

Generally, it’s a summary of the coverage and deductible(s), and the details will be spelled out in more detail with 100 plus pages attached.

#7 How much homeowners insurance do I need?

When you are getting quotes for home insurance, the insurance company will utilize a cost calculator based on the size and build quality of your home.   Insurance companies contract with third-party companies that look at the cost of material and labor in your town to determine the cost.

Most insurance companies also offer an extended dwelling limit included or available for an additional premium to increase the coverage 25%, 50% or 100% over and above the determined replacement cost.  Why would you want extended dwelling coverage? Well, it’s pretty inexpensive to add and give you the added protection or assurance that you’ll have more than enough to replace your home.

Let’s say you have a home insured for $500,000, and you have or included extended dwelling coverage of 25% you now have up to $625,000 available to replace your house.  Make sure to ask your insurance professional if you have that coverage and what it would cost to add or increase extended dwelling coverage.

#8 How to get homeowners insurance to pay for a new roof?

Now that you have home insurance and you have damage to your roof you might be asking how do I file a claim to get the home insurance to pay for a new roof.

First, unless the damage is pretty obvious, you might want to get a roofing contractor to inspect the roof for damage and assess the cost to repair if the damage is minimal and would be less than the cost of your deductible you might want to pay out of pocket.

Remember, if you have a $1,500 home insurance deductible and the roof damage is $1,000 the insurance company would not be responsible for paying anything on a claim.

Also, filing multiple small claims could make you UN-insurable to most insurance companies.

Assuming the claims is over the deductible amount you would contact your insurance claims department, and they would send out an adjuster for inspection.  They will decide and schedule a contractor to make the repairs or replacement.

Depending on the age of the roof, it may be classified as ACV (actual cash value or depreciated value) or full replacement value.  Depending on the insurance company, many have gone to an ACV after ten years of age.

If your roof is older and insured at ACV, the home insurance company will pay to fix or replace minus the depreciation and the deductible.

Example: $10,000 roof is ten years old, so the home insurance company has determined it has half a life left or remaining value of $5,000, and you have a deductible of $1,500.  The insurance company is going to write you a check for $3,500.

Make sure you have a full replacement cost policy or clearly understand if the roof will have depreciated value if you have a roof claim.  Ask your insurance professional to explain the cost, coverage, and deductibles.

#9 What is contents coverage, on a home insurance policy?

Contents coverage is your personal property, including clothes, furniture, appliances, electronics, sporting equipment, toys, etc.

Make sure you have full replacement cost coverage on your contents and not ACV or actual cash value.

If you purchased a T.V. five years ago for $1,000 and today it would be worth $50 in a garage sale you want a full replacement in today’s dollars… whatever the cost would be now.

#10 What is the average cost of home insurance in my area?

The simplest way to get a cost or premium for home insurance is to use a home insurance calculator.  Because home insurance rate varies from state to state and city by city, we such contacting an insurance broker to help quote multiple home insurance companies.

If you would like a quote for your home or a property you are looking to purchase you can click on our home insurance quote link here.  One of our licensed insurance brokers will personally quote the property with multiple insurance carriers and answer any of your questions about premium, coverage deductible options.  You can also call us directly at 314-569-1010 M-F 8:30 – 5:00 CST.

About the Author

John Espenschied is a long-time veteran of the insurance industry. He has worked in various positions within the industry for over 20 years, and for the past 15 years, he has been the owner and operator of Insurance Brokers Group, an independent insurance agency. John loves advising people on the insurance that meets their needs and goals, whether it be for personal or commercial purposes.

John is married to Melissa, and they have three children together, as well as three grandchildren. In his spare time, John enjoys golfing and playing in the golf league, biking to their local brewery along the Missouri river, and going on motorcycle rides when the weather is nice.

John Espenschied

You may also like