Count home insurance premiums among the few necessities declining in price as 2014 begins. It’s true: The average 12-month premium in the U.S. at the end of 2013 fell to $822, according to the HomeInsurance.com Rate Report. That average was about $900 at the close of 2012, about 9.5% higher.
The annual average also was down about $26 from the third quarter. The average now has fallen every month since March 2013. Experts such as Jana Bell, Vice President of HomeInsurance.com, are reluctant to speculate on the reason for the lower costs of coverage, with good reason. “Too many factors go into setting premiums for our policyholders,” she said. “It’s difficult to find one reason that costs have fallen, but we’re happy that policyholders have gotten more educated about finding good prices for coverage.”
What makes it even more interesting is that the cost of houses continues to rise. The Standard & Poor’s/Case-Shiller home price index, a well-respected measure of home prices in 20 key U.S. markets, increased 13.6% in October compared with the same month the previous year.
Among the factors that determine how much you’ll pay for coverage are the following:
- The size, age and price of your home. Larger, fancier houses naturally often cost more to rebuild, and premiums will reflect that. Older homes, especially those in which the roof, plumbing, and electrical systems haven’t been replaced, also can cost more to insure.
- Your claims history. Insurance providers consider people who have filed a number of claims to be more likely to file other claims. Therefore, a clean history will result in lower premiums.
- Your insurance score. Providers use information in your credit report to determine an insurance score. In general, the better your credit score is, the better your insurance score will be. Providers use this score to determine your likelihood of filing a claim.
- Location. One of the first things an insurer will ask is the location of your home. That location is used to determine the probability of a natural disaster that will result in a claim. If you live along the East Coast or in Tornado Alley, you’ll probably pay more for coverage.
Providers weigh these factors differently, so premiums can differ significantly among insurers.
States that Pay the Most- and the Least.
Because of the location factor, premiums vary greatly by state. Oklahoma homeowners paid the most for coverage – an average of about $1,490 in December. Oregon homeowners paid the least – about $454.
Premiums fell year over year in 28 states, while rising in 10.
|States with the greatest price increases||
Price increase from 4th quarter 2012
|States with the greatest price decreases||
Price decrease from 4th quarter 2012
Consumer experts recommend that you shop your insurance coverage once a year. The beginning of the year presents a perfect opportunity to do so.
Have any questions? Let us know in the comments below!
This article was contributed by Arthur Murray, HomeInsurance.com Editor. HomeInsurance.com, LLC is an insurance marketplace offering homeowners in 44 states comparative rates on home and auto insurance. The HomeInsurance.com Rate Report generates average premiums based on policies sold over the past 12 months with HomeInsurance.com carrier partners including Safeco Insurance, The Hartford, MetLife, Travelers, Liberty Mutual, Progressive, ASI and Foremost. They may not be typical for all customers.