If you’re a current property owner or you’re looking to buy your first home, then you’ve probably found yourself wondering if a homeowners insurance policy is really worth the investment. Most homeowners opt to purchase a policy with the hopes that they never have to use it, but if incidents arise where damage occurs, having the proper coverage can protect your wallet and assets significantly.
While homeowners insurance is not legally required in Minnesota, there are many benefits to purchasing a coverage plan for your property that can pay to repair or replace the damage and help protect you from unexpected expenses later down the line.
Before you start shopping around for homeowners insurance rates, there are a few important factors you’ll need to consider that affect how much homeowners insurance will cost you and to ensure that you get the best value for your money.
What is homeowners insurance?
In general, homeowners insurance offers dwelling coverage, and personal property coverage, and can even cover additional living expenses if your home becomes inhabitable due to damage caused by events such as storms, fire, and theft.
Many policies also provide liability protection in the event that you or a family member are responsible for any damage to your property or the property of someone else.
To put it simply, homeowners insurance is the easiest way to protect your financial interests when life throws your property a curveball.
Why do you need it?
As we’ve noted, homeowners insurance is not required by law.
But with that being said, it can be difficult to purchase a home without it. Most mortgage lenders will require you to have homeowners insurance in order to protect their investment and with good reason. So unless you are buying your home outright with cash, you will likely need a home insurance policy.
From theft to natural disasters and everything in between, homeowners insurance helps ensure that you can afford to cover any necessary repairs to your property without missing your mortgage payments or digging too deep into your pockets. When you have a home insurance policy that covers the cost of damage, you can focus on paying off your loan without worrying about financial setbacks.
Homeowners Insurance Rates
Many factors affect the average cost of homeowners insurance. To help determine the rate you will pay for your homeowners insurance coverage, here’s an explanation of a few of those factors.
The state or even neighborhood that you live in can determine your home insurance costs. Comparing local rates can be a good indicator of what you might expect to pay in premiums.
The national average for home insurance costs varies widely. For example, states like Arizona, Nevada, and Utah tend to be the cheapest states for home insurance with very low premiums, whereas states like Florida, Oklahoma, and Louisiana tend to have higher rates. This is due to the weather conditions in these areas, as well as the overall cost of living.
To determine what is the average cost of homeowners insurance in Minnesota, you can compare homeowners insurance rates by searching for your zip code and noting what premiums generally cost for similar properties in your area.
This one is rather self-explanatory, but the bigger your home is the more it will usually cost to insure. The more materials used to build your home means more materials will be necessary to repair or replace your home when damage occurs. More materials mean more expense.
If you’re shopping for your first home, you’ll want to consider the size of your lot when deciding how much you can afford to spend on a homeowners insurance policy, and a qualified real estate agent will be able to help you find a great home that meets your needs and budget.
Risk of Catastrophe
Disasters can happen anywhere.
But if you live in an area that is prone to extreme weather like hurricanes, tornados, or earthquakes, you can expect to pay more for your homeowners insurance premiums than someone living in a climate with mild weather.
Risk of catastrophe can not only factor into your overall rates but may also require you to obtain additional insurance products, like flood insurance, to ensure that your property is adequately covered. It is important to note that flood insurance is not included in a basic home insurance policy.
In general, older homes are more expensive to repair and build than new homes. This can make them more costly to insure and maintain over the long haul.
In contrast, newer buildings often come with enhanced safety features that can reduce the risk of serious damage, which brings down the cost of your homeowners insurance premiums.
Having a good roof over your head doesn’t just benefit the well-being of your family, but it can also drive down your homeowners insurance rates.
Newer roofs made from ultra-durable materials are less likely to be damaged by extreme weather, making them less expensive to insure than roofs that are outdated or have already seen significant wear and tear.
When home shopping, you should be sure to investigate the age and quality of the roof on any property you may be interested in.
How to save on your homeowners insurance premium?
No matter what homeowners insurance rates look like in your area, there are a few simple steps you can take to lower your premium without compromising on great coverage.
There are dozens of home insurance companies with competitive pricing designed to meet any home size and budget. Companies may offer lower rates and discounts for those who have good credit and a clear history. By working with a licensed insurance agent, you can find and compare industry-leading rates, so you can make an informed decision about your home.
Bundle Home & Auto
In many cases, insurance providers may offer discounts for your policies when you bundle your home and auto insurance policies within their company.
This gives you the freedom to save money across the board and keep your policies organized in one place.
Put Safety First
The safer your home, the less you’ll end up paying for insurance premiums.
Installing things like security systems, smoke alarms, and sprinkler systems can lower your rates, while home improvements like a new roof or new windows can also help you save money in the long term.
Raise Your Deductible
If you feel confident that your home won’t be subject to any claims in the near future, or if you have a savings account built up, then choosing a policy with a higher deductible may help you save money on your monthly premium. A deductible is the amount you pay out of pocket before your policy kicks in. Increasing a $500 deductible to a $1,000 deductible can provide significant monthly savings.
Of course, you should consult with your trusted insurance agent to ensure that a higher deductible won’t prevent you from getting the assistance you need if an accident happens.
Don’t File Small Claims
When it comes to filing a claim, less is more.
If you have small repairs that are needed on your property, and you can afford to cover the costs yourself, then you may be able to save money on your premium by receiving discounts from not filing excessive claims. The more claims you tend to file, the higher risk you are to insure, therefore your average home insurance cost may increase with each claim.
Finally, most Insurance companies encourage AutoPay, which allows you to pay your bills online and even usually comes with a small discount for scheduling your regular payments.
This not only cuts back on paper waste but reduces costs for the insurance provider, which will often be rewarded with a monthly premium discount.
When to file a claim?
Filing a claim is never fun for anybody, but in the unfortunate event that you need to, it is best to understand how they work.
You should consider filing a claim if…
- The cost of the repairs significantly exceeds your deductible
- There is significant damage or total loss to your property
- You haven’t filed a claim in several years, and you’re in need of assistance
- Damage was the result of a weather event
What are liability coverage limits?
It is especially important to make sure that your home has enough coverage in case of an extreme disaster.
That’s why your homeowners insurance has a liability limit set when you purchase the policy. This number represents the maximum amount of coverage you can receive for each aspect of your policy and can be increased with a more expensive premium.
For example, a standard liability coverage limit for many providers is $250,000, meaning that this is the maximum amount that your policy will cover when you file a claim.
What is an umbrella liability policy?
When your liability coverage limits have been exceeded, an umbrella liability policy provides an extra blanket of coverage for legal claims.
Umbrella policies are issued in increments of $1 million, starting at $1 million and going all the way to $10 million plus, and are relatively affordable to add on to your existing policy.
What are homeowners policies?
Policies can vary based on the provider, deductible, and liability limit.
Most companies offer fairly standard deductibles and liability coverage limits, while the premiums can vary much more drastically.
For instance, common deductibles for homeowners insurance usually included $500, $1000, and $2000. Home insurance deductibles apply for every single claim you make, no matter how many you make.
However, liability coverage limits are often based on the estimated value of the home. You want to make sure you have enough coverage to rebuild or repair your home, which is where adding additional coverage through an umbrella policy can be a great way to keep your home fully covered.
Finding the Right Agent
Finding the right policy for your home can seem tricky and expensive.
Patriot Insurance Brokers is here to help! With access to the top Minnesota homeowners insurance companies, we can find a policy that is right for you, your family, and your home. Our goal is to ensure that your homeowners insurance covers all of your needs and belongings for an affordable price.
No matter your budget, we can help find the right policy for you. Connect with our team to find your ideal insurance product today.