This article was contributed by Arthur Murray, Home Insurance.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.
Where do U.S. homeowners insurance premiums stand after the first quarter of 2014? That depends on your perspective. If you take the short-term view, the average cost of a year’s worth of coverage increased to $810 in the first quarter – up a whopping .6% from the from the previous quarter. But if you prefer a longer view, the average fell 6.5% from the first quarter of 2013, when it was $864.
Compare the price of home insurance with the cost of another of life’s necessities – bacon. According to the American Farm Bureau Federation, bacon costs $4.80 per pound right now, up 12% from a year ago. There’s no confusion on that.
But while most people have a taste for bacon, some don’t understand everything that’s included in a home insurance policy. Many believe they’re only protecting the structure of their home from fire, wind and other covered events.
That’s only one component of coverage, says Jana Bell, Vice President of HomeInsurance.com. “A standard home insurance policy typically also protects a policyholder’s possessions in case of theft, fire or other covered problems, and it offers liability coverage in case a visitor sues the homeowners for an injury or property damage,” Bell says. “Policies offer much more than protection for the house itself.”
A standard policy typically includes the following protections:
- Dwelling. This is what homeowners typically think of as home insurance. It should be set high enough to rebuild the home in case it is destroyed by fire or another covered peril.
- Other structures. This can help if a shed, detached garage, or fence on a policyholder’s property is damaged by covered perils.
- Personal property/contents. This can replace the possessions in your house if they’re stolen or damaged by a covered peril. Among the items that could be replaced are furniture, electronics, clothing, and appliances.
- Loss of use. If your home becomes uninhabitable because of a covered peril, this feature can help with living expenses such as hotel and restaurant bills.
- Personal liability. If a visitor is injured on your property and files a lawsuit, this coverage can help with legal expenses, including any award made in the case.
- Medical payments. This coverage helps with the medical expenses of someone who is injured on your property and doesn’t sue.
One thing to note: Each type of coverage has limits – and exclusions. Your agent can explain these. In some cases, you may need to supplement your policy’s protection. For example, personal property/contents coverage often limits protection for high-value items such as jewelry and artwork. To cover these items fully, you may need to schedule an endorsement to your policy.
While the average U.S. premium moved only slightly from Q4 2013 to Q1 2014, the changes were more extreme in some states.
Oklahoma homeowners paid the most, on average, for coverage – $1,564. That was about .7% more than in the fourth quarter of 2013. Oregon homeowners paid the least – $419, down 4.3% from the fourth quarter.
Premiums fell year over year in 20 states, but rose in 19.
|States with the greatest price increases||
Price increase from 4th quarter 2013
|States with the greatest price decreases||
Price decrease from 4th quarter 2013
What can you do if you live in one of the states where premiums are going up? Consumer experts recommend shopping your coverage at least once a year to make sure you’re getting the best price for your policy.
You can always use any savings on homeowners insurance to splurge on that other necessity – more bacon.