The Average Cost of Home Insurance

We’ll get straight to the point: The cost of home insurance varies widely, but the average American homeowner pays $1,249 a year in premiums, according to the Insurance Information Institute’s 2018 figures, the most recent available.

(This is based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. It provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.)

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Home insurance premiums can vary widely in part because of:

  • Your location
  • Your history of claims
  • Your credit score
  • The age and condition of your home

However, there are ways that homeowners can save money on their insurance costs, which we’ll get into. We’ll also walk through which areas in the U.S. are the cheapest and most expensive, typical coverages and more.

[ Read: Home Insurance Quotes, Explained ]

How much does home insurance cost by state?

As you can see below, the average home insurance premium varies widely by state. As you might expect, weather events figure big in the average annual premium by state, although there are other factors, of course, such as your credit score and the age of the home. The figures in this table come from 2018 data provided by the Insurance Information Institute.

State Rank Average annual premium State Rank Average annual premium State Rank Average annual premium
Ala. 13 $1,409 Ky. 26 $1,152 N.D. 18 $1,293
Alaska 36 $984  La. 1 $1,987 Ohio 44 $874
Ariz. 46 $843 Maine 42 $905 Okla. 4 $1,944
Ark. 12 $1,419 Md. 32 $1,071 Ore. 51 $706
Calif. 31 $1,073 Mass. 10 $1,543 Pa. 40 $943
Colo. 7 $1,616 Mich. 38 $981 R.I. 5 $1,630
Conn. 11 $1,494 Minn. 14 $1,400 S.C. 19 $1,284
Del. 45 $873 Miss. 8 $1,578 S.D. 20 $1,280
D.C. 21 $1,264 Mo. 15 $1,383 Tenn. 23 $1,232
Fla. 2 $1,960 Mont. 22 $1,237 Texas 3 $1,955
Ga. 17 $1,313 Neb. 9 $1,569 Utah 50 $730
Hawaii 27 $1,140 Nev. 48 $776 Vt. 41 $935
Idaho 49 $772 N.H. 36 $984 Va. 34 $1,026
Ill. 28 $1,103 N.J. 24 $1,209 Wash. 43 $881
Ind. 33 $1,030 N.M. 30 $1,075 W.Va. 39 $970
Iowa 35 $987 N.Y. 16 $1,321 Wis. 47 $814
Kansas 6 $1,617 N.C. 28 $1,103 Wy. 25 $1,187

Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.

Most expensive states in home insurance premiums

Below are the most expensive average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within the state, and of course, there are more factors in your premium than the location of your home.

  • Louisiana: $1,987
  • Florida: $1,960
  • Texas: $1,955
  • Oklahoma: $1,944
  • Rhode Island: $1,630

Cheapest states in home insurance premiums

Below are the cheapest average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within each state, and of course, there are more factors in your premium than the location of your home.

  • Wisconsin: $814
  • Nevada: $776
  • Idaho: $772
  • Utah: $730
  • Oregon: $706

What determines the cost of homeowners insurance?

The cost of an individual homeowners insurance policy is determined by a wide range of factors. Some of those factors are within your control, and some of them are not. 

For instance, home insurance can be more expensive in areas with a high risk of flooding or fires than in places where natural disasters are uncommon. Newer homes often cost less to insure than older dwellings — especially those in need of repairs. Insurance companies also look at your personal credit history before covering your home, so people with good credit histories could receive a lower premium than those with poor credit histories.

Every insurance company calculates rates differently. Some carriers place a higher value on credit score and claims history, while others look more closely at the condition and age of the home. Below is a more comprehensive list of the considerations that might determine your homeowners insurance premium.

[ Read: The Best Homeowners Insurance Companies ]

  • State, city and neighborhood: Some states are more prone to wildfires, earthquakes, and hurricanes than others.
  • Location of home: This information is pulled for crime and claim statistics in your home’s area.
  • Construction of the home: Is the home made out of wood, brick, or vinyl siding?
  • Heating system: Is the home heated with an HVAC or wood stove?
  • Security system: Homes with security systems might be less likely to be broken into.
  • Previous claims on the home: If the home has a history of water and electrical issues, then the homeowner may be more likely to file a future claim.
  • Homeowner’s previous claims: If the homeowner has a history with other insurance companies, he or she may be more likely file a claim again in the not-so-distant future.
  • Credit score: People with low credit scores may be more likely to file a claim.
  • Nearest fire station: The distance between your home and the nearest fire station can be a factor.
  • Marital status: Married couples are statistically less likely to file claims with insurance companies.
  • Replacement cost: The cost to replace an older home and bring it up to code can be more expensive than replacing a new home.
  • Pets: Certain animals might be considered a greater risk for liability claims.
  • Outside structures: Things like pools, sheds or greenhouses can also affect your policy rate.

Aside from these factors, the cost of an individual policy can also be determined by which features you chose to include in your coverage. A few of the options that can affect the cost are:

  • Deductible amount
  • Extra coverage add-ons
  • Bundled insurance policies
  • Discounts

[ More: Complete Guide to Home Insurance ]

Types of coverage

There are many different types of homeowners insurance coverage. Some coverages, like dwelling and liability coverage, can come standard with most policies. But insurance companies also often sell add-on policies that offer protection in certain areas. Here are some of the most common home insurance coverages you might find:

  • Dwelling coverage is insurance that covers qualified damages to the home itself. If the siding of your home tore off in a major storm, dwelling insurance might cover the cost of repairs. Insurance companies might sell add-ons for roof damage, water back/sump pump overflow, flood insurance and earthquake insurance.
  • Personal property coverage pertains to the cost of replacing possessions in your home, such as furniture. If someone broke into your home and stole personal items, personal property coverage might reimburse you. If you need to protect valuables, your agent might recommend you purchase a scheduled personal property endorsement for higher coverage limits.
  • Personal liability coverage protects against lawsuits for property damage or injury. If a delivery driver slipped and fell on your icy driveway, liability coverage might pay for their medical expenses and court costs if they sued you. Some insurance companies offer add-on policies that extend your liability coverage limits.
  • Loss of use coverage might cover additional living expenses you have after your home has been damaged. This might include hotel stays, groceries and gas while your home is being repaired. If your house is under construction after a covered claim, loss of use coverage might pay for your temporary hotel and food expenses up to your policy’s limit.

Generally speaking, your agent may recommend that your home insurance coverages be based on your lifestyle, where you live and the value of your assets.

Keep in mind that your agent may recommend you add coverage as time goes on. If you adopt a puppy six months after you purchase your home insurance policy, your agent may recommend you add pet coverage when the time comes. Or, if you take on a remote job, you can contact your insurance company and see if you should add home business coverage for a small fee.

Every home insurance coverage has a policy limit. A policy limit is the highest amount of money your insurance company will give you after a covered loss. For example, if your dwelling coverage limit is $400,000, that may limit how much is paid out if your home is damaged or destroyed by a covered peril to no more than $400,000, although factors like your deductible may come into play.

When you purchase a home insurance policy, you may be able to set your own policy limits. As a rule of thumb, you may be recommended to have enough dwelling coverage to rebuild your home in its current state, enough personal property coverage to cover the full value of your personal items and enough liability coverage to protect your personal assets.  

[ Read: What is Dwelling Insurance? ]

Reimbursement coverage types

There are three different coverage options commonly provided by home insurance companies. Each option affects your premium differently.

  • Actual cash value (ACV) is based on the current market value, or how much your home and personal property is worth, with depreciation factored in. Most home insurance policies offer ACV reimbursement by default. It can be the lowest option.  
  • Replacement cost value (RCV) works in the same way as ACV, but without depreciation factored in. That means you might get a higher payout after a covered claim. RCV home insurance policies can be more expensive than ACV policies, and you may need to purchase an endorsement to get it. Your agent may recommend this if you own valuables or have an expensive home.
  • Guaranteed replacement cost (GRC) is also referred to as extended replacement cost (ERC), and this option can cover the complete cost of rebuilding the home, even if that cost exceeds the policy limit. GRC can be the most expensive replacement cost type, and not all insurance companies offer it. Your agent may recommend this if you live in areas with extreme weather, wildfires, earthquakes or any place where home destruction is more likely. 

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Discounts and ways to save on home insurance

Homeowners insurance can be costly, so before selecting a plan, shop around to find the best deal based on your needs. It can be helpful to consult an insurance agent, read consumer reviews and check online insurance quotes to find companies with the lowest rates. Here are some other ways to save money on home insurance:

  1. Ask about available discounts: Some companies offer discounted policy rates if your home is in a gated community, if you bundle with your car insurance or if you’re part of a homeowner’s association.
  2. Bundle your insurance policies: Oftentimes, companies that sell home, auto and life coverage may deduct up to 15% off your premium if you buy two or more policies from them.
  3. Make your home safer: Some providers may offer a discount if you install fixtures that make your home safer, such as smoke alarms or a security system, that reduce the likelihood that damage or theft will occur in the first place.

How do past claims impact home insurance cost?

It depends on the nature of the claim. Just how much a claim raises your premium varies in part on the provider and the nature of the claim.

There are also further complications when you make the same type of claim twice. Not only can this increase what you pay each month, but, depending on you and your home’s history, it’s possible the provider may even decide to drop you.

Though your premium may increase if you are found at fault, it’s also possible for your monthly bill to increase even if you’re not found to be liable. Your home may be considered riskier to insure than other homes.

Home insurance cost FAQs

No, states do not require homeowners to get insurance when they purchase a home. However, if you choose to get a mortgage loan, most lenders will require you to have some insurance.

To determine how much coverage you should purchase, talk to your agent about your home inventory, your overall worth, and of course, comfort level. Also discuss factoring in the location of your home, and evaluate risks based on weather, fires and other events that could potentially damage or destroy your home.

There are a few ways to potentially get home insurance discounts. Discount options include things like:

  • Bundling your home insurance policy with another policy (such as auto).
  • Going claims free for extended periods of time.
  • Making certain home improvements.
  • Living in a gated community.
  • Installing a security system.

In 2018, 34.4% of home insurance losses were wind and hail related, 32.7% were fire or lightning related and 23.8% were water damage or freezing claims. Only 1% of claims were related to theft, and less than 2% of losses were liability claims. These figures are according to the Insurance Information Institute.

In Florida the most common claims may be related to hurricanes, wind damage, water damage and flooding. In California, earthquake, flood and wildfire claims may be more common. When you purchase insurance, talk to an agent about the specific risks in your area and ask about separate insurance policies you might need, like flood or earthquake coverage.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

How to Find Your Dream Home

Ready to start searching listings and hitting open houses? Save yourself some time by first identifying exactly what you need and want in a home.

You’ve been pre-approved and know what you can afford, so it’s time to start home shopping. But the hunt for your dream home will stall rapidly if you don’t know what that “dream” looks like.

It’s easy to talk in generalities about wanting a “big” house or an “older” home. But in order to better target your real estate search, you must think specifically about your dream dwelling. Will your “big” house be 2,400 square feet or 5,000? When you say “older” home, do you mean one built pre-1900, or pre-1980?

Before you visit another open house, sit down and make a list of your needs and wants — and yes, those are two different things. You may want a pool, but you probably could live without it. (Plus, it’s worth considering that having a pool could raise your home insurance costs.)

Understand that your requirements list will likely change as you learn more about your housing options. Proximity to the beach may start as a priority, for example, but once you see the size of ocean-front homes you can get in your price range, you may decide a short drive to the water is quite bearable. Unless you have an unlimited budget, it’s likely you’ll need to make compromises along the way.

Use these questions to help make your very own list of housing requirements.

Find-Your-Dream-Home-Blog-r2

You should also take time to rank specific home features as “Must Have,” “Like to Have” or “Don’t Care” using this printable checklist. Identifying your priorities will help you find the perfect property.

Once you know what you’re looking for in a home, you’ll be ready to find the right agent to partner with for your search.

Related:

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Source: zillow.com

Solid Marks for Gabi Insurance Review

When it comes to my 401(k), daily alarm clock or, yes, even my rotisserie chicken, I’ve embraced the set-it-and-forget-it mantra. But for car insurance? You’re doing yourself a disservice if you aren’t shopping for better car insurance rates at least once a year.

That’s what makes tools like Gabi so helpful. In our Gabi insurance review, we’ll weigh the pros and cons of using an insurance comparison tool, instead of directly working with insurance agents, when shopping for new car insurance rates.

What Is Gabi Insurance?

Gabi Insurance is a newcomer to the insurance scene. The San Francisco insurance company was founded in 2016, four years after The Zebra (another car insurance comparison site that I had mixed feelings about; get the full scoop in my Zebra car insurance review). While Gabi is known primarily for its auto insurance quotes, users can also rely on Gabi to compare insurance providers for renters insurance, home insurance, condo insurance, landlord insurance and umbrella insurance. (I could not find an option for life insurance.)

Gabi is a fully licensed insurance broker in 50 states plus the District of Columbia, meaning they can underwrite, price and sell policies and handle claims. It also means that, when you generate quotes on the site, you can buy directly on the site. One of the issues with sites like The Zebra is that, after generating your auto insurance quote, you’d have to leave the site and go to the actual insurance company’s site to complete the process.

Gabi works with more than 40 top insurance agencies to help you find the best rate for your car(s), driving history and budget. Among those insurance companies are Nationwide, Travelers, Progressive, Clearcover and Safeco.

Gabi claims it saves drivers an average of $961 per year and can provide quotes in a matter of minutes. It’s time to test those promises.

How Gabi Works: A Review

Getting your Gabi insurance quotes can be relatively painless, depending on the route you take. You have three options:

  1. Don’t provide any of your current auto insurance information.
  2. Provide your car insurance login information.
  3. Upload a PDF of your current auto insurance policy.

Because I’m private by nature (and because I just had the pleasure of dealing with a fraudulent unemployment claim in my name), I was hesitant to provide any login information. I first tried to advance without providing any information, but as we’ll see, this doesn’t get you very far. Eventually, I uploaded a PDF of my policy.

To get a quote for Gabi insurance, you start here.
To get a quote, your journey to cheaper car insurance starts here.

Getting started is easy. First you’ll make your decision re: providing insurance information or not (more on that below). Then you’ll enter your name. (Like I did when reviewing The Zebra, I started the process with the very real, honest name of Joe Schmoe.)

This screenshot shows a portal where Gabi insurance asks what your email is. The reviewer typed in Joe Schmoe.
Mr. Schmoe as he signs up for car insurance quotes.

After providing your name, Gabi will ask for a handful of other contact info: birthday, address, whether you own or rent your home, email address and cell phone number. When asking for the email address, Gabi promises your information is never sold or shared. The Zebra says something similar, yet Geico conveniently sent an email to my inbox addressing me as Joe just minutes after I hit submit on The Zebra’s site.

Gabi Insurance asks for your email address in this screen shot.
Gabi says they won’t share or sell your info; thus far, they’ve held up their end of the bargain.

Contact update: As of two hours after creating my account, I have received one text and two emails from Gabi, but none from any third-party insurance providers. Could it be that Gabi is telling the truth when they say they won’t share or sell your data?

To Provide Insurance Info Or Not to Provide Insurance Info? That Is the Question

That’s what Hamlet said, right?

As I mentioned, in my first attempt at using Gabi’s car insurance comparison platform, I resisted their pleas for my personal info. “They don’t need to know anything about me to build a quote tailored to me,” I foolishly asserted.

But when I got to the magical part where Gabi was supposed to tell me I’m a schmuck who has been paying too much for auto insurance, I was instead given a list of common insurance companies, all with blue buttons that said “View My Quote.”

“Surely I must just click each and see a quote at the ready, despite the platform having no knowledge of my car, driving history or policy preferences,” I told myself. Oh, Joe Schmoe, what a fool you are.

Gabi Insurance shows various options that can help you save money in this screen shot.
When you don’t provide your current insurance policy to Gabi, this is the type of screen you can expect to see.

I quickly learned, upon clicking into Liberty Mutual, Allstate and Progressive, that giving Gabi such limited info meant the site would merely direct me to individual insurance companies to provide more detailed personal information to generate a quote.

That’s right: In that instance, Gabi serves no purpose, because you must start from scratch on every insurance company’s site to compare.

If you’re unwilling to provide either your login info for your current insurance company or a PDF of your auto insurance policy, then Gabi is not right for you.

In the name of research, I decided I was comfortable enough downloading a copy of my policy from Allstate and then uploading it into Gabi. While it does have some personal data within it, my email and password were still safe with me.

It took only a few seconds for the artificial intelligence on Gabi’s site to read my policy and tell me in intricate detail what those pages contained. (This is either really convenient for insurance shoppers or a warning sign that robots are just days away from taking over.)

From there, I was able to input more personal information about myself as a driver, my partner (who is also on my policy) and our car. I tried to remove my partner for a good five minutes just for kicks and eventually gave up. Later on, I learned if I had just waited a few more clicks, I would have had the option of toggling secondary drivers on and off. If Gabi had made that clear, it would have saved me time and frustration.

Actually generating my quotes did take about a minute, which is notably fast. However, I had just used The Zebra a few days before, and that experience was faster, so Gabi seemed slow by comparison.

The Car Insurance Quotes I Got from Gabi

I was pleasantly surprised to see a few insurance agencies whose names I recognized among my top results. And the savings were quite large.

Gabi provides more insurance companies that can help you save money.
My top auto insurance quotes from the Gabi insurance comparison platform.

My top quote came from Stillwater and would save me $622 a year. I was dubious upon seeing that, so I clicked into the “View Details” portion of the quote and did find some discrepancies. The largest: My property damage coverage dropped from $500,000 with my current policy to $100,000 with this potential new policy.

Still, the changes were so minor that it ultimately felt like a good deal. But buyer beware: You shouldn’t necessarily expect your current policy and quoted policy to be one-to-one. Go through and make sure all the coverages you want are still represented by the new policy.

Quotes two and three purported to save me $573 and $468 a year, respectively, but again, those quotes weren’t an apples-to-apples comparison with my current policy, as some of the coverages differed.

That said, all three quotes were large improvements over my current auto insurance. My current auto policy is bundled with my homeowners insurance and thus linked to my escrow, so I’ve got some calls to make, but I can safely say I will be using Gabi again soon to find a better bundled policy for auto insurance and home insurance.

What We Like About Gabi Insurance

Clearly, as someone who has just publicly stated he’ll be using Gabi to generate a real quote down the road, I’m a fan. Here’s some of what I liked about Gabi:

  • You don’t have to leave the site. If you find a quote you like, you are able to purchase the insurance on Gabi’s own platform, as long as you are in the United State, since Gabi is a fully licensed insurance broker.
  • It’s got an easy-to-read gauge during the process. It’s a small thing, but I can’t breeze past a good website UX when I see one. I found Gabi’s top-of-the-page tracker for percentage of completion to be a nice touch, especially for a site that is all about efficiency in generating a quote.
Gabi shows how far along you've made it in the process.
Gabi makes it easy to see how far along you are in the process.
  • Uploading my policy was easy. Assuming you want your new coverage at the same or similar levels you’re used to, you can get a quote in minutes by uploading your current policy.
  • You can bundle home insurance with auto insurance. I currently bundle my auto and home coverage, and I would like to continue. It’s convenient to have all my insurance policies in one app, and it earns me discounts.
  • I would legitimately save money. While I haven’t pulled the trigger yet, Gabi could deliver real savings over the course of a year from one of several different insurance companies. More than $600 for me; Gabi truly means it when they promise to find the best insurance company for your needs.

What We Don’t Like About Gabi Insurance

I may be a new Gabi fanboy, but that doesn’t mean I’m onboard with the entire experience. Here’s where I found the car insurance comparison platform fell short:

  • There isn’t an option to describe the policy you want. Gabi pushes you into a scenario where you have to hand over your current insurance account login information or uploading a copy of your policy. If you’re strict about who has access to your data, this could be problematic, as it’s the only way to get quotes to compare on the site.
  • It can sometimes take days. Though I did not provide my login information, some customers have complained that it could take up to two days (depending on the current insurance provider) for Gabi to get into the account and grab the relevant information. That takes the speed out of the process that is supposed to be a hallmark of Gabi.
  • The policies I was provided weren’t perfect matches for my current policy. And Gabi wasn’t upfront about this. I had to do some digging to realize that, by opting for the No. 1 policy choice, some of my coverages would be reduced.
  • They required my cell phone number. I understand needing my number if I decided to move forward with one of the policies, but for the general comparison purposes, I don’t think customers should have to input their numbers.

What Customers Are Saying About Gabi Insurance

Overall, I had favorable opinions of Gabi, but I wanted to see what other customers were saying about the company.

I started with Better Business Bureau and was actually shocked to see that, despite having a BBB rating of an A-, it has an average 1.77 out of 5 stars based on 22 customer reviews. Ouch.

Reviews on the Better Business Bureau website were largely around problems with the actual Gabi service, but some have said working with customer service is not a pleasant experience either, whether due to agent miscommunications or just generally slow customer service response time.

These poor customer reviews are notably absent on Gabi’s site, where it instead shows off its 4.8 out of 5 stars based on “third-party verified reviews” that are certainly not at all curated to paint a favorable picture.

Gabi does score well in terms of its mobile app. In the App Store, it currently has a 4.1 rating. I could not easily find it on Google Play.

The Bottom Line

So should you try Gabi? If you are actually ready to make the switch to a new car insurance provider and don’t mind a little leg work, absolutely. The Zebra is easier since you don’t have to relinquish your personal information, but I found The Zebra to be dishonest about its spam policy, frustrating to use and not really much of a money-saver. With Gabi, you’ll have to actually take the time to give the platform access to your current policy, but in doing so, big savings and an easy sign-up process could be on the horizon.

Timothy Moore is a market research editing and graphic design manager and a freelance writer and editor covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications like The Penny Hoarder, Debt.com, Ladders, WDW Magazine, Glassdoor and The News Wheel. 

Source: thepennyhoarder.com

How Much Homeowner’s Insurance Should You Get When Buying a House

A house purchase accounts for a sizable net worth of a person. Just like any investment, insuring your house makes economic sense. Ideally the cover should help you rebuild and replace your belongings if disaster strikes. A good policy should also shoulder the financial burden arising from injuries that a third party might suffer within the property.

So, how much homeowner’s insurance should you get? When deciding on this, the following factors will come into play.

Replacement cost of the house

Fixing Your HomeFixing Your HomeYour house is insured on replacement basis. This means you will be reimbursed the equivalent cost of rebuilding your entire house or part of it that has been damaged.

To this end you should go for a policy whose limit will cover the current cost of rebuilding the house. It should take into account the cost of buying the same type of materials as well paying the labor at current prices.

The policy should also be flexible enough to account for possible changes in building regulations. Such include building code upgrades that may require some aspects of your house to be changed; say better foundations or a different drainage design.

Beware of policies that only cover the original value of a house. The premiums might be lower but they won’t cover any increase in labor or material costs. The payout will also be less the depreciation value of your home.

Deductible Amount

This is the out-of-pocket money that a policy holder must pay before the insurer settles a claim. It’s advisable to go for policies with high deductibles since they offer low insurance premiums.

A publication by Oregon Insurance Division shows that on average homeowners make a claim once in every 9 years. With this in mind, it makes sense to foot a higher deductible when disasters strike and save on monthly instalments in the long run.

Most insurance companies will increase your premiums or refuse to cover you in the future if you get into a habit of claiming reimbursement for minor damages. The move will ensure that you only file claims when the direst of disasters hit.

Location of your Home

Your policy limits will vary depending on the location of your home. Houses built on sloppy or hilly sites are deemed problematic. Same goes for homes at far off places like a heavily wooded area that may inaccessible to emergency services e.g. fire trucks.

Some locations and states are also flagged as high disaster areas. These include flood, earthquake or hurricane prone areas. If your house is located in such an area then expect to pay high limits on your policy.

Flooding accounts for the highest percentage of insurance claims from natural disasters. You should consider having a policy that addresses it; even if your zone is not susceptible to floods. This is according to Loretta Worters, the Vice President of Communications at Insurance Information Institute

Value of your Possessions

A detailed inventory of your belongings should give you an idea of what you stand to lose as a result of burglary or damage from a disaster. Normally, policies will insure possessions up to 75% of the home value.

You can insure your belongings on their actual value or that of replacing them. Replacement coverage attracts higher premiums but it makes more financial sense. This is due to the fact that most house possessions have a high rate of depreciation.

What Else to Consider

Having factored the above in your insurance calculations, the figure that you come up with should fall within a given margin. Take it upon yourself to find out the average cost in your state and specific city.

To give you an idea of what to expect let’s consider a home coverage of $200,000 with a $1000 deductible and a liability coverage of $100,000. A study showed that:

The national average falls at $1,228 with Florida and Louisiana having annual average rates north of $2900. Hawaii and Vermont attract the minimum coverage averaging at $589 and $337 respectively.

Pro Tip: Your policy limit can vary slightly from the average figure depending on the uniqueness of your home and possessions.

Conclusion      

Although home insurance is a must-have for every homeowner it needn’t be expensive. Lack of knowledge on the subject can land you on expensive policies that are not worth your property. Similarly, you may find yourself with a cheap cover that is inadequate for your property. The above information will guide you in deciding on the amount of insurance that you should get for your home.

Source: creditabsolute.com

Understand the Type of Homeowners Insurance You Need

Home is where the heart is. Often, it is also where the heartache is when disaster strikes. Long before something goes wrong, you need to ask “How much homeowners insurance do I need?”

Homeowners insurance protects your home and possessions against a variety of perils including damage or theft, and also natural disasters such as flood, hurricanes, fires and earthquakes.

“Homeowner’s coverage provides financial protection, that’s really what it’s all about,” said Mark Friedlander, director of corporate communications at Insurance Information Institute in New York.

Mortgage companies require a certain amount of coverage, but unlike car insurance, there aren’t any state mandates requiring people to have it.

“If you don’t have a mortgage, you are not obligated to buy homeowners coverage and we think that’s a critical error that people make because unless you have a lot of money set aside, you’re going to have financial hit and you’re not going to be protected,” Friedlander explained.

Even if you do the minimum to satisfy your mortgage company, it often isn’t enough. Friedlander said most people make the mistake of not having enough insurance to adequately protect themselves and their families.

So how much homeowners insurance do you need?

Home Insurance Basics

If you’re doing the smart thing and asking yourself, how much homeowners insurance do I need, it’s best if you understand some of the basics of the policies.

Policies generally cover:

  • Damage to the interior or exterior of your house from a covered disaster. The types of disasters are listed in the policy. Usually if the specific event is not listed, it is probably not covered.
  • Contents of your home if damaged or destroyed in a covered event or if they are stolen.
  • Personal liability for damage or injuries caused by you, a family member, or pet.
  • Housing and other expenses while your home is repaired or rebuilt after a covered event.

Within each policy, there are basically three levels of coverage. This becomes important after a covered event when you begin to repair or rebuild.

  • Actual Cash Value: This covers the house (structure) plus the value of belongings inside with a deduction for depreciation. You will get paid for what the items are currently worth, not necessarily what you paid for them. This is the least expensive coverage.
  • Replacement Cost: This covers the house plus the value of belongings without depreciation. This coverage would allow you to rebuild or repair up to the original value of the home and policy coverage limits.
  • Guaranteed or Extended Replacement Value/Cost: This is the most expensive but most comprehensive of coverages and provides the best financial protection for you. It covers the cost to repair or rebuild even if more than the policy limit, usually with a ceiling of 20 to 25%. In addition to this, many policies have additional coverage you can buy that will cover the cost to comply with current building codes that may not have been around when the house was initially built.

“A lot of times, actual cash value policies are for homes that don’t qualify for replacement cost policies. They are not in as good of shape or have an older roof or something like that,” said Craig Peterson, an agency owner for American Family Insurance in Overland Park, Kansas. He usually recommends no less than replacement cost policies to his clients.

As important as it is to know what types of coverage you have and what situations are covered, it is as important to know what is not covered at all or may be covered with additional restrictions or different deductibles.

Different policies cover different perils for different types of structures like a condo, renter’s policy, etc. The policies have designinations from HO-0 to HO-8.

There are also differences when it comes to paying things like additional living expenses, hotels, meals, etc., if your home is uninhabitable.

For more information about the basics of home insurance polices and what they cover, What Home Insurance Actually Covers (and Where You’re on Your Own) can answer many of your questions.

How Much Homeowners Insurance Do I Need?

So how much home insurance coverage do you need to buy? There are many factors to consider.

Basically, you need to look at what your house would cost to rebuild, the likelihood of certain types of disasters in your area, the value of your possessions and your liability exposure.

“You are preparing for the worst case scenario, not for a minor claim. You need to be prepared for a catastrophic loss,” Friedlander said. “That’s possible whether it’s hurricanes, tornadoes, wildfires. In virtually any part of the country you are living somewhere where you could sustain a catastrophic loss and lose your entire home.”

A village is flooded from a hurricane in this aerial photo.
Getty Images

Rebuilding Cost

After a disaster, you want to make sure you can cover the costs of repairs or rebuilding.

The cost to rebuild your house is not the same as your home’s market value. In most cases, the land your house sits on will still be there after a catastrophe, so you do not need to insure that value.

“What we typically see is a majority of homeowners are underinsured,” Friedlander said. “Unfortunately, many of the homeowners purchase insurance protection to satisfy their mortgage lender but they confuse the real estate value of their home with what it would cost to rebuild it.”

So don’t focus on what you paid for the house, it’s market value, how much you owe on your mortgage or the property tax assessment.

“Most companies use a replacement cost calculator where we plug in the square footage, bedrooms, bathrooms, all the features we can about the house,” Peterson explained. “It gives us a valuation based on the cost to rebuild and we base the coverage on that.”

Consider what type of coverage you want (actual cost, replacement cost, or guaranteed replacement cost) when you are shopping for policies.

Friedlander said actual cash value saves some money on premiums, but warns you will get less in the event of a major loss. Replacement cost coverage is about 10% more in premiums but you will get about 30 to 50% more when you file a claim.

Peterson said it is important to make sure when you’re shopping for insurance that unique things that happen in your area are covered. Depending where you live, you  might need additional coverage for earthquakes, hurricanes, tornadoes, wildfires, sinkholes, etc., that are not generally part of coverage.

Value of Possessions

To know how much coverage you need, you need to know what you own. Placing a value on your possessions is important.

“The important thing is to do a home inventory and kind of assess what your valuables are and determine what the value of everything is so that you’re at the right level of protection.” Friedlander said.

Go room by room and consider taking photos or videos. Make sure to include things like:

  • Kitchenware
  • Furniture
  • Clothing
  • Electronics
  • Expensive valuables
  • Camping and sports equipment

You do not need to include your cars in this property inventory because vehicles are not covered by homeowners policies even if they are parked in the garage.

“Most of the time the personal property coverage is a straight percentage of the dwelling coverage, typically, 70 to 75%,” Peterson said, adding that is usually enough to cover contents.

On most policies, there is often a limit on pricier items like jewelry, art, furs, silver, or electronics. So if a fire destroys your house and you lose $10,000 worth of jewelry, your policy might only cover $1,000 of that.

To make sure all of your items are covered, Peterson recommended a separate personal articles policy to protect those pricey items.

Liability Coverage

The liability section of your homeowners policy covers bodily injury or damage that policyholders or their family members (including pets) cause to others.

If your dog bites your neighbor and sues you for medical care, this part of policy could cover you. If your child throws a ball and it accidentally breaks the neighbor’s window, this part of the policy could cover you. If your friend falls at your house on a chipped floor and sues you, this part of the policy could cover you.

Liability coverage will also pay for the cost of defending yourself in court and any court awards up to the limit of the policy.

“The risk of not having enough liability coverage is that you’re going to be on the hook for anything beyond your coverage,” Peterson warned.

He said dog bites are his most common liability claims and he sees people all the time who do not believe they need it because they think nobody would ever sue them.

“We find that a lot with insurance. People don’t want to pay for things until they have a problem and then they wish they had. People are nice until something happens.”

The Insurance Information Institute recommends at least $300,000 in coverage but many policies only include $100,000. The more assets you have, the more coverage you need.

If you have more in assets than you have liability coverage for in your homeowners policy, you might consider an umbrella policy which extends your coverage to an amount you decide.

To determine how much liability coverage you need, add up the value of your assets, including your home. Make sure to include the following assets when figuring liability:

  • Vehicles
  • Investments
  • Future wages
  • Personal belongings
  • Money in bank accounts
  • Real estate besides primary residence

Peterson said if you have something that could pose a risk to others like a pool or trampoline on your property, you need to be especially aware of the amount of liability coverage you have.

You don’t need to figure out everything alone. A good insurance agent should be able guide you through the process of answering the question of how much homeowners insurance do I need.

“We always recommend meeting with your insurance professional once a year. We call it an insurance checkup,” Friedlander said. “Review all your coverages and make sure you are protected.”

Not having enough coverage can be a big mistake.

“People think that things can never happen to them and then they wish after the fact that they had taken a little more time and maybe gone for some of the coverages that they decided not to take,” Peterson said. “The biggest mistake people make is they try to save money on their policy iInstead of making sure that they’re covered properly.”

Tiffani Sherman is a Florida-based freelance reporter with more than 25 years of experience writing about finance, health, travel and other topics.

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Source: thepennyhoarder.com

Cheap Car Insurance for High-Risk Drivers

  • Car Insurance

Insurance companies profit by carefully calculating probability and then accounting for it. Your insurance premiums are closely tied to your risk factors; the more at-risk you are, the higher those premiums will be. But that doesn’t mean that you can’t get affordable insurance just because you’ve had a few violations.

Find your best rate on Car Insurance!

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Compare free personalized quotes from the nation’s top providers.

What Makes you High-Risk?

You may be deemed high-risk if you have received a violation of any kind. There are minor and major violations, ranging from parking fines, moving violations and traffic violations to drunk driving and more. The most serious and destructive violations include:

Driving Under the Influence (DUI)

A DUI, also known as a DWI, can have a big impact on your car insurance premiums. It’s a citation that results in more bodily harm and property damage than any other, and it’s also connected with more death benefit payouts than any other type of driving citation, making DUIs a huge red flag for all insurance companies.

If you have a recent DUI conviction on your record, you’ll struggle to get comprehensive insurance coverage for a reasonable price, but there are a few things you can do, as discussed in our guide to Getting Car Insurance with a DUI.

Racing and Speeding

Speeding increases your risk and many insurance carriers will charge you over $100 more for every speeding ticket that you receive. If you’re charged with “Racing”, the penalties are more severe and you may be charged an additional $1,000 a year.

It only makes sense, as street racing turns you into a high-speed liability. Your car insurance premiums increase because you’re more likely to do harm to yourself, your car, your passengers, and all innocent bystanders. It doesn’t matter how good of a driver you think you are, in the eyes of an auto insurance company, you’re an expensive disaster waiting to happen.

At-Fault Accident

A car accident that was caused by you and led to significant payouts by the insurance company can have a massive impact on your auto insurance rates. 

Collision coverage and liability coverage are essential components of any insurance policy and if there is extensive property damage and motorist injuries, resulting in major repair work and liability claims, the provider will be hit with a sizable bill.

It should come as no surprise, therefore, that an at-fault accident can increase your insurance premiums by over $600 a year.

Reckless Driving

If you’re cited for reckless driving, your premiums may increase by anywhere from $300 to $1,000 a year. The risk of bodily injury and property damage increases, as reckless driving is defined as driving without care and putting yourself and others in danger.

Other High-Risk Factors

You are also considered to be a high-risk driver if you’re young and male, as young drivers are significantly more likely to claim than drivers aged 25 or older and male teen drivers are twice as likely to claim as females. That’s why young drivers pay higher car insurance rates on average.

But your demographic and driving record aren’t the only things that can prevent you from getting a cheap auto insurance policy. You’ll also be charged higher rates if you:

Have a Poor Credit History

Your credit score impacts pretty much everything that you do financially. It can reduce your chances of getting a credit card or mortgage; it can stop you from getting security clearance and securing the job of your dreams. 

Believe it or not, your credit score is also considered by your insurance provider, as studies suggest that bad credit policyholders are more likely to claim.

Live in a High Claim Area

The best safety features and the safest cars won’t matter much if the driver lives in a high claim area and drives a car that is frequently stolen. In this case, you’re paying for the mistakes of others as the insurance company tries to balance its books.

Have no Driving Experience

Your experience is key, so your driving history will always be factored into the equation when applying for car insurance quotes. If you have some experience behind you and haven’t made any claims, you can secure lower premiums. If not, you have no proof that you’re a good driver or a safe driver and will be considered a risk.

Live in Rented Accommodation

Your credit score isn’t the only surprising criteria considered by insurance carriers. They will also consider whether you are a tenant or a homeowner, with the latter offered lower premiums on average. Again, it all comes down to probability, as studies suggest that renters are more likely to claim than homeowners.

How to Get the Cheapest Car Insurance

As noted above, all insurance companies calculate risk and probability to determine how much of a liability you are. This is true for life insurance, homeowner’s insurance, and pretty much all other forms of insurance. Your goal, therefore, is to reduce that risk, keep that liability to a minimum, and make sure you look like a prime candidate in the eyes of car insurance companies.

To get cheap car insurance, therefore, just keep the following in mind and you can secure some car insurance discounts:

Choose the Right Car

A new car can reduce your premiums, especially if it comes with a high safety rating and has anti-theft features installed. SUVs have the highest safety ratings and can save you a lot of money when dealing with major insurers like Geico, State Farm, and Allstate, but there are some highly insurable sedans and smaller cars as well.

Look for the safety rating, check for an anti-theft device, and scour the rates before you buy your car.

Get Training

By completing a defensive driving course, you can prove to your insurers that you are a safe driver who knows what they are doing on the road, thus securing a lower rate than you would get if you didn’t have that all-important certificate.

Improve your Credit Score

A few points can make a big difference, netting you a policy discount and giving you more options if you ever need to apply for a new line of credit or loan. 

Multi-Policy Discount

By taking out different types of coverage with the same provider, you can benefit from bulk rates, known as “bundling”. Like a multi-car discount, you’re essentially getting wholesale rates on your insurance policies.

Providers like Progressive, Nationwide, State Farm, and Geico offer discounts when you bundle car insurance with home insurance, life insurance, and more.

Bide Your Time

Time is your friend when looking for the best car insurance rates. If you have multiple violations and you’re still a teenager, then making do without a car for a while could save you a small fortune. Not only will those violations expire, but you’ll be a little older and will therefore not be considered as much of a risk.

You’ll still be considered high risk as a new driver, but there will be significant savings to make, nonetheless.

Bottom Line: Getting the Cheapest Insurance Policy

Being high risk doesn’t mean you can’t get insured. It just means your car insurance policy will cost more than someone who has a clean driving record and ticks several other boxes with regards to the ideal policyholder. By searching, comparing, and doing what you can to decrease your liability, you can keep those insurance costs to a minimum and save hundreds of dollars a year.

Source: pocketyourdollars.com

Get Cheaper Car Insurance in 9 Simple Steps

  • Car Insurance

Buying car insurance can seem complicated and confusing; there are many factors to consider, countless elements that can impact your premiums. But in many ways, it’s just like purchasing any other product, as you want the best possible product for the lowest possible price.

Find your best rate on Car Insurance!

Attention: Still Open During the Financial Crisis…

Tip: Act now to see if you qualify for lower rates!

Compare free personalized quotes from the nation’s top providers.

To get a cheap auto insurance policy, keep the following tips in mind:

1. Always Compare

Just because you have used a specific insurer in the past doesn’t mean you should use them again. It doesn’t matter if they’ve been good to you; it doesn’t matter if they offer what seems to be a reasonable rate. You should always compare car insurance quotes to make sure you’re getting the very best deal before you sign on the dotted line.

Compare offers from multiple different car insurance companies to see which one offers the cheapest car insurance coverage for your needs. 

2. Search When Your Circumstances Changes

Every time your circumstances change significantly, you should compare insurance costs and see if you can get cheaper rates by taking your services elsewhere. Here are a few of the big changes that have the most impact on insurance costs:

  • You have purchased a new car
  • You have multiple cars to add to a single policy (multi-car discount)
  • You need to add or remove a driver (including a young driver)
  • You have gotten married or divorced
  • You have purchased a home or are moving to a new house

3. Get a Multi-Policy Discount

All major insurance companies (Geico, Allstate, Progressive, Nationwide, State Farm) offer discounts when policyholders purchase numerous different policies. This is known as “Bundling”, and essentially means you’re getting a bulk rate by combining policies such as home insurance, life insurance, car insurance, and more.

Homeowners insurance and car insurance offer the highest average discounts when they are combined, but you can save with life and renters insurance as well.

If you already have several insurance policies with the same provider, there’s a good chance the provider will offer you the best car insurance rates as well.

4. Check for Car Insurance Discounts

​Car insurance discounts are offered by insurance carriers and, occasionally, guaranteed by the state. There are many different discounts available and these will depend on your age, job, driving record, and skills. 

For instance, you can get a sizeable discount if you are in the military, live on a college campus or have good grades. You can also save big if you have completed a defensive driving course, as it proves that you’re a good driver and know how to handle yourself in difficult situations, thus reducing your liability on the road.

5. Choose Your Car Carefully

If you don’t already have a car, then choose carefully, focusing on safety features and anti-theft devices. Cars that have a high safety rating and are fitted with anti-theft devices are significantly less likely to be stolen and involved in a costly accident, so the rates drop quite significantly.

SUVs like the Honda CR-V and the Subaru Outback offer some of the best features and the cheapest car insurance premiums, but there are many smaller cars that fit into this category as well. 

Conversely, if you buy an old car that doesn’t have an anti-theft device or any safety features, your car insurance premiums may increase by over 50% when compared to a newer vehicle.

5. Raise Your Deductible

When you increase the deductible, you reduce the insurer’s potential cost and can secure a lower rate as a result. Your bank balance will take a hit if anything does happen, but if you’re a safe driver, those lower premiums could save you a small fortune over a few years.

6. Improve Your Credit Score

Car insurance is another area in which a good credit score is key. A good or excellent credit score increases your chances of getting affordable car insurance, as research suggests that bad credit drivers are more likely to claim than good credit drivers.

So, increase your credit limits, clear credit card debts, pay off loans, and stop applying for new lines of credit. With a little effort, you can boost your credit score significantly in just a few short months.

7. Drive Carefully

It goes without saying, but if you want cheap car insurance you need to keep claims to a minimum. Every time you have an accident or receive a violation, your insurance provider will hike the price of your car insurance policy, potentially adding hundreds of dollars onto the annual cost. 

A clean driving record is one of the single biggest factors in acquiring cheap car insurance, and it will also save you a lot of stress, hassle, and deductible payments.

8. Only Keep What You Need

Insurance is essential, but you may not need comprehensive coverage. If you have an old car that’s only worth a few hundred dollars, there’s very little need for collision coverage and you could save a small fortune by removing this coverage from your policy. 

Liability coverage is still key, but unless you actually plan on fixing your car when something goes wrong, you don’t need comprehensive collision coverage. Speak with an insurance agent for more information on the types of coverage you need, including bodily injury, property damage, and liability insurance.

9. Limit Your Driving

The less time you spend behind the wheel and the fewer miles you drive, the less likely you are to be involved in an accident. It goes without saying, and it’s something that insurance companies will always consider when providing you with a quote.

If you drive very little, let them know; if you drive a lot, consider some travel alternatives and you’ll save money on gas as well as insurance coverage. The best rates are available for those who drive for less than 10,000 miles a year, but the number of miles and the available discounts will depend on your state and your chosen insurer.

Bottom Line: Time Equals Money

If you don’t have a lot of free time on your hands, it’s tempting to just go for the first quote that you receive and get everything over and done with. But by devoting a little time and effort to the process, and taking just a few hours to compare, you could save yourself over $1,000 during the year!

Source: pocketyourdollars.com

Homeowners Insurance Coverage Options to Know

If you’re like many Americans, your home is the single largest purchase you’ll ever make–and one you likely can’t afford to replace if disaster strikes.

That’s why homeowners insurance can be a wise investment. This type of insurance will compensate you if an event covered under your policy damages or destroys your home or personal items.

It will also cover you in certain instances if you injure someone else or cause property damage.

Although having homeowners insurance isn’t required by law, mortgage lenders often require you to insure your home until you’ve paid the loan in full.

Choosing the right coverage for your home–and understanding exactly what is (and what isn’t) covered–can be confusing though.

Some policies cover more than others, and how much coverage you need will depend on your circumstances, as well as your risk tolerance.

Here’s what you need to know about the options available for protecting your home.

Recommended: What’s the Difference Between Homeowners Insurance and Title Insurance?

What Does Homeowners Insurance Typically Cover?

Most standard homeowners insurance policies include six different kinds of important coverage.

•  Dwelling: This covers the physical structure of the home itself, including its foundation, walls, and roof, as well as structures attached to the home such as a front porch.
•  Other structures on your property: This covers things that aren’t attached to the main home structure, like garages and fences.
•  Personal property: This includes personal items including clothing, furniture, and everything else that you put inside your home.
•  Additional living expenses: This provides funds to pay for temporary living expenses, such as hotel costs and restaurant meals, while your home is being repaired or rebuilt.
•  Liability coverage: This protects you against lawsuits and damages you or your family cause to other people or their property.
•  Medical coverage: This is offered to foot the bills incurred by somebody who is injured on your property, whether it’s your fault or theirs.

What Type of Events Does Homeowners Insurance Cover?

The most common type of homeowners insurance policy on the market is called HO-3 insurance.

This insurance includes coverage of 16 specifically named perils, but it may also offer “open peril” coverage, which means that anything that damages your dwelling that is not specifically excluded in the paperwork will be covered by the policy. (This coverage generally does not extend to your personal property, however.)

The 16 named perils typically include:

•  Fire or lightning
•  Windstorms or hail
•  Explosions
•  Riots
•  Damage caused by aircraft
•  Damage caused by vehicles
•  Smoke
•  Vandalism
•  Theft
•  Volcanic eruptions
•  Falling objects
•  Damage due to the weight of ice, snow or sleet
•  Water or steam overflow from plumbing, HVAC systems, internal sprinklers and other appliances
•  Damage due the “sudden and accidental tearing apart,cracking, burning, or bulging” of an HVAC, water-heating, or fire-protective system
•  Freezing of pipes and other household appliances
•  Damage due to a power surge

What Isn’t Covered by Homeowners Insurance?

Homeowners insurance typically covers most scenarios where a loss could occur. However, some events are generally excluded from policies. These often include:

•  Earthquakes, landslides and sinkholes
•  Infestations by birds, vermin, fungus or mold
•  Wear and tear or neglect
•  Nuclear hazard
•  Government action (including war)
•  Power failure

What if you live in a flood or hurricane area? Or an area with a history of earthquakes? You may want to consider a rider (which is supplementary coverage to an existing policy) for these or an extra policy for earthquake insurance or flood insurance.

Home insurance policies also typically set special limits on the amount of reimbursement you can receive in categories such as artwork, jewelry, appliances, tools, electronics, clothing, cash, and firearms.

If you own something particularly valuable, such as fine art painting or piece of expensive jewelry, you might want to purchase a rider that you will be reimbursed in full for it.

What Should I look for in a Homeowners Insurance Policy?

Homeowners insurance companies typically offer three different reimbursement models or levels of coverage.

Which one you choose can be an important decision. That’s because it will impact how you will be reimbursed in the event your home is damaged or burglarized, and also the cost of your premiums.

These are the most common homeowners policy options, listed from least to most costly.

Actual Cash Value

Actual cash value typically covers the cost of the house plus the value of your belongings after deducting depreciation (i.e., how much the items are currently worth, not how much you paid for them). If your five-year-old TV was stolen, for instance, you would not likely get reimbursed for the cost of a brand-new one.

Replacement Cost Value

Replacement value policies generally cover the actual cash value of your home and possessions without the deduction for depreciation, so you would likely be able to repair or rebuild your home and re-buy your possessions up to the original value.

Extended Replacement Cost Value

This coverage will typically pay out more than the original value of your home and belongings, up to a specified limit, if it actually costs more to fix your home and/or replace your possessions.

The limit can be a dollar amount or a percentage, such as 25% above your dwelling coverage amount. This gives you a cushion if rebuilding is more expensive than you expected.

Guaranteed Replacement Cost Value

Guaranteed Replacement Cost is the most comprehensive coverage. This inflation-buffer policy pays for whatever it costs to repair or rebuild your home and replace your possessions—even if it’s more than your policy limit.

This type of coverage can be ideal since you typically don’t need just enough insurance to cover the value of your home, you will likely need enough insurance to rebuild your home, preferably at current prices.

Understanding Homeowners Insurance Deductibles

Homeowners policies typically include an insurance deductible — the amount you’re required to cover before your insurer starts paying.

The deductible can be a flat dollar amount, such as $500 or $1,000. Or, it might be a percentage, such as 1 or 2 percent of the home’s insured value.

When you receive a claim check, an insurer typically subtracts your deductible amount from the total claim.

For instance, if you have a $1,000 deductible and your insurer approves a claim for $8,000 in repairs, the insurer would likely pay $7,000 and you would be responsible for the remaining $1,000.

Choosing a higher deductible will usually reduce your premium. However, you would likely have to shoulder more of the financial burden should you need to file a claim.

A lower deductible, on the other hand, means you might have a higher premium but your insurer would likely pick up a greater portion of the tab after an incident.

The Takeaway

Of the many types of insurance coverage out there on the market, homeowners insurance is one of the most important–it literally protects the roof over your head, which very well might also be your most valuable asset.

Homeowners insurance covers damage to your home and its contents. It also typically reimburses you for losses due to theft and pays out if visitors to your property are injured.

Your policy may also pay for living expenses, such as a hotel stay, if your home becomes uninhabitable.

In some cases, you can get additional policies or riders for events not covered by your regular home insurance, such as flooding, as well as extra coverage for any highly valuable possessions.

Because choosing the right homeowners insurance company and right amount of coverage can be overwhelming, SoFi has partnered with Lemonade to help bring customizable and affordable homeowners insurance to our members.

Prices start as low as $25 per month, and Lemonade gives back leftover money to charities of your choice.

Check out homeowners insurance options offered through SoFi Protect.


SoFi offers customers the opportunity to reach the following Insurance Agents:

Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOCO21022

Source: sofi.com

Bundling Insurance: Is it worth it?

  • Car Insurance

“Bundle your insurance and save!”: It’s a popular hook that you’ve probably heard over and over again in advertisements for various insurance companies, but what does it mean? Most insurance companies give you the option of bundling your insurance policies into one. For example, by bundling insurance, you would have auto insurance and homeowners insurance from the same insurance company. 

Find your best rate on Car Insurance!

Attention: Still Open During the Financial Crisis…

Tip: Act now to see if you qualify for lower rates!

Compare free personalized quotes from the nation’s top providers.

A lot of times, this offer is made with the promise of big savings for bundling. Usually, insurance premiums can be paid together in one quick and easy sweep. While bundling can be convenient, how much money does it really save in the long run? In this article, we will discuss the pros and cons to bundling insurance so you can decide if it’s the right choice for you. 

How bundling insurance can save you money

Insurance companies that have bundling as an option will usually offer a bundling discount of anywhere between 5 and 25%. Since your house is likely more expensive than your car, you will probably get the biggest discount on your home insurance. 

Now days, insurance companies are not looking to only sell homeowners insurance. Rather, they are more often than not, in the business of trying to sell you different types of insurance. Overall, insurance rates for home insurance have gone up quite a bit over the last few years, which is what makes an insurance bundle look so appealing to homeowners. 

Basically, if you get your car insurance and homeowners insurance from the same insurance carrier, you will probably receive a 10% discount on your auto policy and 15% on your home insurance policy. 

Different companies will obviously have different insurance rates and bundle discounts, but generally you will get a larger discount on home insurance than you will on renters insurance. For example, if renters insurance and auto insurance are the two types of insurance that you are planning on bundling, you might get up to a 5% discount on your insurance policies. 

Pros of bundling auto and home insurance

If you’re considering bundling your insurance but want a run-down of what’s in it for you, here are some of the reasons why bundling insurance can be a good idea:

  • You will get a bundling discount: This is probably the main reason why policyholders consider bundling in the first place. Bundling can usually save you anywhere from five to 25% on your insurance premiums. 
  • You’ll only have to deal with one insurance company: If you get both of your insurance policies with the same carrier, you’ll only have to worry about one app or website every month when it’s time to pay the bill. When you want to check up on insurance claims or anything else related to your insurance needs, you can do some all from the same place with the same login information.
  • You’ll only have one insurance agent: If you choose to bundle your insurance, you will likely only need to correspond with one insurance agent, which is cool if you have established a good relationship with them. 
  • Your chance of being dropped decreases: Sometimes, if you have too many insurance claims on your home or auto insurance, this could lead to your insurance company dropping you. However, this is a lot less likely to happen when you have more than one policy with them. 
  • You will probably have a single deductible: When you have multiple policies with the same insurance carrier, it’s highly likely that you will only need to pay one deductible for both insurance products. In most cases, this can end up being a less expensive deal than it would have been had you not bundled your insurance. 

The cons of bundling auto and home insurance

Like most things in life, if there are pros, there are also cons. Bundling insurance can be beneficial in some respects, but here are the drawbacks:

  • You will be less likely to shop for cheaper deals: Once you get comfortable in a bundled insurance deal, it’s hard to keep your options open. The problem with this is that sometimes the discount we are receiving isn’t actually as good as we might think it is. For example, you might be benefitting from a multi-policy discount with your current company but missing out on a significantly cheaper car insurance rate elsewhere. In some cases, it ends up being cheaper to hold policies from two separate companies, but you won’t know this unless you shop around.
  • Insurance premium creeps: Bundling always saves you money in the beginning, but there’s no guarantee that your insurance company will hike their rates at some point or another. This is because the appeal of bundling is designed to be convenient and comfortable. This means that if rates can increase without you even noticing. J.D. Power, a company that monitors customer service by car insurance companies, found that a little under half of all policyholders who bundled their insurance have plans to definitely renew their policy. Agreeing to definitely renew your insurance policy before even knowing if cheaper rates exist elsewhere or if your current rates will increase isn’t the best way to handle the situation. If you’re going to bundle, it’s best to stay open-minded and shop around before deciding to renew.
  • Beware of fake bundling: In some cases, you might receive insurance quotes form an agent who is pitching you a bundle, when in reality, they are setting you up with a policy from an affiliated company. While you will still get the discount, you will miss out on the convenience of having everything all in one place.

What to do before bundling

As you can see, there are a lot of things to consider if you are planning on bundling insurance. It takes patience and persistence to stay on top of changing rates and deals from other insurance companies. So, before choosing to bundle, keep these things in mind:

  • Shop around for insurance premiums before comparing bundling discounts. 
  • Ask a lot of questions and pay attention to what you are being offered. If your insurance agent mentions an affiliate company and that’s not what you want, speak up. 
  • It’s easy to stay loyal to a company who has given you convenience and a multi-policy discount, but every now and then, reevaluate your rates. Just because you have been insured by the same company for a certain amount of time doesn’t mean that the prices will stay the same. Every year before it’s time to renew, shop around for different options. It’s also a good idea to do this after a major life event like a divorce or a marriage.

Source: pocketyourdollars.com