How to choose the right, cheap home insurance for your budget

According to current census data, homeownership rates in the United States are around 65 percent, implying that millions of households may be looking for the additional financial protection that homeowners insurance provides. According to 2021 data analyzed by Quadrant Information Services, the average cost of homeowners insurance in the United States is $1,312 per year for a policy with $250,000 in dwelling coverage. There are numerous options to consider when determining how to choose the right, cheap home insurance for your budget, whether you need high-value coverage for special items in your home or a policy with numerous discounts.

How to choose the right, cheap home insurance

When it comes to choosing a homeowners insurance policy, cost is undoubtedly an important consideration. Other factors, however, should be factored into your search for the best cheap homeowners insurance provider for your home. Customer service ratings and a carrier's financial stability may also play a role in your decision. While there are numerous carriers and policy options to consider, there are a few simple steps you can take to narrow your options and make sense of the process.

  1. Consider details about your home

Your house is as one-of-a-kind as your family. Size, location, and building materials all have an impact on homeownership rates and the coverage you require.

  • Age of the home: If you own an older home, you will most likely pay more for insurance. If there is damage, the chances are that you will need to make costly repairs.
  • Size of home: The size of a home is linked to the replacement cost portion of a homeowner's policy. Generally, the greater the square footage, the greater the cost of rebuilding a structure.
  • The materials used to build your home: The more expensive the materials used to build a home, the higher the insurance rates can be.
  • ZIP code: Whether you live near the coast, where water damage is more likely, or close to a fire station in case of an emergency, where you live and the relative common causes of loss have a significant impact on insurance rates.
  • Replacement cost: Following a covered loss, your policy will assist you in repairing your home and replacing personal items. If you choose to replace your damaged property at its current value, minus depreciation, the replacement cost value is used. This is more expensive than the actual cash value, which takes depreciation into account.
  • Personal property: This covers contents within your property and includes items outside of your home, such as in a storage shed. It is beneficial to create a personal inventory of the items you require coverage for, ensuring that your high-value items are protected. Revisiting your inventory as you get rid of certain items over time may help you reduce coverage.
  • Attractive nuisance: If you have any items on your property that could cause an accident, such as a swimming pool or trampoline, you have an attractive nuisance. Being aware of how many attractive nuisances you have on your property may help you control your home insurance costs.
  1. Consider your personal requirements.

Choosing a carrier based on your personal requirements should be taken into account. For example, if you inherited a large antique collection, you would require additional coverage for those high-value items. For this option, you could go with a carrier that provides a low-cost home insurance quote. Other carriers may provide better policy terms for other special needs, such as your dog's breed or if you have a history of filing homeownership claims. Some businesses place a higher value on these factors than others.

  1. Compare quotes on the basis of coverage.

Quotes provided by carriers can differ significantly from one another. Shopping around and obtaining multiple quotes from different providers could help you find the cheapest homeowners insurance available. You should also look into how much adding a specific endorsement, such as identity theft coverage, affects your homeowners insurance premiums. When comparing carriers, make sure to compare apples to apples to determine which company is truly offering the lowest premiums for your desired coverage.

  1. Look for any available discounts.

You may be pleasantly surprised by the number of available discounts from a home insurance provider when purchasing a policy. These discounts can save you a lot of money on your insurance policy. Discounts may include the following:

  • Multi-policy discount: Choosing the same carrier from which you purchase your auto insurance usually results in a multi-policy discount.
  • Security alarm: Installing extra security features, such as a security alarm or fire protection system, can often help lower costs.
  • New construction: If your home was recently built, you may be eligible for a new construction discount.
  • Loyalty: If you have been with a carrier for an extended period of time, you may be eligible for a loyalty discount.
  1. Look into reputable third-party ratings.

Trusted third-party ratings can provide a snapshot of a company's performance, saving you hours of research time. For example, J.D. Power's U.S. Home Insurance Study ratings show how top carriers perform in terms of overall customer satisfaction. AM Best and Standard & Poor's provide ratings to demonstrate a carrier's financial strength and ability to pay claims. These factors may be just as important as rates if you ever need to contact customer service or file a claim.

Frequently asked questions

What is the cheapest home insurance company?

Comparing multiple quotes from different providers is the best way to find the cheapest home insurance company. This allows you to determine which carrier offers the most affordable coverage while still providing the exact coverage options you require.

Is homeowners insurance a legal requirement?

Although homeowners insurance is not required in every state, it is likely to be required if you have a mortgage lender. However, insurance agents usually advise keeping a homeowners insurance policy even if your mortgage is paid off, because the cost of replacing the structure out of pocket could be a financial burden.

If I make updates to my home does it lower my homeowners insurance?

Some improvements can reduce the cost of your homeowners insurance, either through lower premiums or additional discounts. For example, if you replace your roof, you may be eligible for lower premiums. Consider making a home improvement that qualifies for an additional discount, such as installing a security system.