The average cost of home insurance varies significantly by state, type of property, coverage level and insurance company. Three basic components go into the typically purchase of a home insurance policy. These three components are building protection, contents insurance for personal valuables and liability coverage. Insurance providers offer quotes based on estimated levels of protection for each category of protection.
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The 2007 national average for annual home insurance premiums were £534, according to National Association of Insurance Commissioners data. While the NAIC is usually a few years behind in its ability to aggregate data and provide updated statistics, it is generally believed that average home insurance prices trended downward from 2007 through 2010. A July 2009 HomeInsurance.com article indicates that new homebuyers purchasing lower priced homes during the recession likely lead to less expensive dwelling costs on home insurance. More homeowners are also combining home and auto policies to save on insurance premiums.
Home insurance prices are very different from state-to-state. Insurance providers consider the higher or lower risks of payout for areas based on the potential for natural disasters and crime rates for each area. Also, home values are significantly higher in certain parts of the country. The NAIC showed Florida as the most expensive state for home insurance in 2007 with an average cost of £997 per year. By comparison, homeowners in Pennsylvania only paid an average of £447 in premiums that year. Florida is known for its hurricane seasons that contribute to its higher average costs for homeowners.
The amount of coverage you elect on your home insurance policy also impacts prices. Total replacement cost is a major consideration on dwelling insurance. Typically, insurance agents advise homeowners to cover for rebuilding the property at current labour and materials costs. This means you usually pay for a replacement cost that is higher than the cost of the home. Keeping expensive valuables in your home adds to your contents coverage costs. Otherwise, agents typically estimate a certain amount of contents protection by number of rooms and size. Liability coverage is important in protecting yourself from legal liability if someone is injured or suffers property damage on your property. According to Find Law, £65,000 of liability protection is common. For a modest increase in premiums, you can get up to £0.6 million in liability protection with some insurers.
You can lower your average house insurance costs by doing a number of things to minimise risks for your insurer. Setting deductibles as high as possible is one way to significantly lower home insurance premiums. Combining auto and home policies can save up to 15 per cent with some companies. Enhanced security devices also lower premiums as do home improvements that reduce risks of property damage. You should also review your policy and eliminate any unnecessary waste in coverage, or redundancy with other insurance plans.
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- CompuQuotes; Average Costs of Insurance; Doresa Banning, April 2010
- HomeInsurance.com; Average 12-Month Home Insurance Rates; December 2010
- Insure Me: Protect Your Investment with Homeowners Insurance
- Find Law: Liability Insurance
- HomeInsurance.com; Rates by State Offers a Bird-Eye View of Home Insurance Trends Across the Country; July 2009