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.
The average U.S. homeowners insurance premium for the second quarter of 2014 increased to about $829 annually, an increase of 2.1% from Q1. Despite the quarterly rise, however, Q2 rates remain down about 3.3% from the same period a year ago.
What caused the quarter-over-quarter increase? That’s difficult to pinpoint because multiple factors go into setting premiums, according to Jana Bell, vice president of HomeInsurance.com. “Factors such as the location, age, and size of a house; a policyholder’s claims history; and even his or her credit history play roles in determining how much a homeowner pays for coverage.”
What’s most important, Bell says, is that policyholders purchase enough coverage to completely rebuild a house should it be destroyed by a covered peril such as fire or wind. That number can differ significantly from the purchase price of the home. Here are some reasons why:
- The cost to rebuild the home doesn’t include land costs. In most cases, you’ll still own the land regardless of the peril that destroys the home.
- Local construction costs play a role. This varies according to the location and the cost of building materials.
- Any upgrades should be considered. If you’ve added a room, installed granite countertops or put in hardwood floors, your costs to rebuild could vary greatly from the price you paid originally.
If you know the ZIP code and square footage of your home, you can use a home insurance calculator to get an idea of how much coverage you need.
While the national average increased slightly, the changes weren’t uniform.
For example, premiums decreased 8.9% in New York to $570 annually – the largest percentage drop among the 10 states that saw declines. The lowest Q2 premiums were in Oregon, where policyholders paid an average of $431; that was down 3.9% from the first quarter.
The largest increase came in Mississippi, where policyholders paid $1,170 – 15.5% more than in the first quarter. Oklahoma residents paid the most – $1,597 a year – for coverage. Average premiums rose in 24 states.
|States with the greatest price increases||
Price increase from first quarter 2014
|States with the greatest price decreases||
Price decrease from first quarter 2014
One thing to remember: Premiums change, and you can change your provider, too. If the average in your state is increasing, it could be time to shop for coverage. If you do, remember to ask about two things:
- Discounts: Most home insurance providers offer price breaks. Discounts differ widely by state and carrier, but often you can lower how much you pay for coverage simply by purchasing home and car insurance from the same provider or even by letting your insurance company know you have deadbolt locks.
- Your deductible: This is the amount you agree to pay toward a claim; in general, the higher your deductible, the lower your premium. Take caution in raising your deductible, however – you should keep it at a level you can afford.
Don’t consider yourself disloyal when you look around. Consumer experts recommend that you check at least once a year to see whether you can find a better deal for your coverage. You shouldn’t pay even a small increase if it’s not necessary.