When you own a car, you’re legally obligated to obtain some level of insurance for it. It protects both you and other drivers in the event of an accident.
But when you own a home, the same rules don’t apply. There aren’t any laws that make homeowners insurance mandatory.
That being said, most mortgage companies require people to get homeowners insurance when they lend them money to buy a house. So you’ll have to ask yourself, “How much does homeowners insurance cost?”, as part of the home-buying process and make sure you can afford it.
At the present time, homeowners insurance costs right around $1,200 per year on average. But your specific homeowners insurance rate may be higher or lower than that based on a number of factors.
Here are a few of the factors that can affect the price you pay every year for homeowners insurance.
How Much Your Home Is Worth
One of the first things you’ll have to disclose to your homeowners insurance company when trying to obtain homeowners insurance is the value of your home. The more valuable your house is, the more expensive it’ll be to insure it.
If you’re trying to get homeowners insurance for a home you’re buying at the moment, it’ll be simple enough to let an insurance company know how much it’s worth. But if you’re looking to get homeowners insurance for a home you’ve lived in for some time now, it might be worth hiring an appraiser to get an updated value for your house.
Whatever you do, you shouldn’t ever try to save money by telling your insurance company your home is worth less than it is. It might save you money on the front end, but it could cost you dearly if something ever happens to your home and you have to replace it.
How Much Everything Inside Your Home Is Worth
When you obtain a homeowners insurance policy, it’ll cover more than just your house. It’ll also cover everything inside of your house as long as you pick the right plan.
Therefore, you’ll need to let your insurance company know what you have inside your house and how much it’s all worth. This will allow you to get coverage for your personal possessions so that you can have them replaced in the aftermath of a fire, flood, etc.
Where Your Home Is Located
Outside of the value of your home and the value of your personal possessions, the location of your home is probably the most important factor when it comes to homeowners insurance. When you approach an insurance company and ask, “How much does homeowners insurance cost for my home?”, they’re going to take a good long look at your home’s location before responding.
Is your home located near a body of water that could potentially cause it to flood at some point in the near future? That could make your homeowners insurance a lot more expensive than it would be otherwise.
Is your home situated in a place that’s miles and miles from the nearest fire station? That could also make your homeowners insurance costs skyrocket.
It’s why you should carefully consider the location of a home before buying it. It could take a toll on your homeowners insurance rates.
How Old Your Home Is
In theory, you might think that an older home would be less expensive to insure than a newer home. But many insurance companies don’t see things that way.
Most older homes include materials that are more costly than the materials used in newer homes. As a result, it’s not uncommon at all for those with older homes to pay more for homeowners insurance than those with homes that were just built within the last few years.
What Kind of Condition Your Home’s Roof Is In
The roof on a home is the most important part of it. If there are any major issues with a roof, everything underneath of it will be at risk.
With this in mind, it shouldn’t come as a huge surprise to hear that homes with older roofs on them cost more to insure than homes with newer roofs. Some insurance companies will even drop those who refuse to replace a roof that’s very old.
Before you go to find home insurance, you may want to think about putting a new roof on your house. Doing this will require an investment on your part, but that investment could pay off in the end by saving you money every month.
Whether or Not You Have a Dog, Pool, Trampoline, Etc.
Every year, about 5 million people are bitten by dogs, about 5,000 people drown in swimming pools, and about 100,000 people are injured on trampolines.
Because of this, insurance companies are understandably concerned about offering homeowners insurance to those with dogs, pools, trampolines, and anything else that could be considered a risk.
If you have one or more of these things, it’ll often increase your homeowners insurance costs. You should think twice about getting them if you’re worried about your homeowners insurance rates going up.
What Your Credit Score Is
Most people know that their credit score can affect their ability to buy a home, purchase a car, or even get a job. But what they don’t always realize is that their credit score can also impact their homeowners insurance rates.
If you have low credit, most insurance companies will see some risk in extending homeowners insurance to you. You may have to pay more for it than your neighbor with good credit who has the same exact house at you.
So, How Much Does Homeowners Insurance Cost? These Factors Will Help Decide
As you can see, it’s difficult to provide a definitive answer to the question, “How much does homeowners insurance cost?” The cost depends on so many different factors.
Keep these factors in the back of your mind when you’re looking around for homeowners insurance. They’ll help explain why your homeowners insurance is higher or lower than you may have expected it to be.
Check out our blog to find more articles that’ll help you make the most of homeownership.