A budget for your home expenses will need to include the average cost of home insurance. The amount you’ll pay for homeowners insurance is based on a combination of factors concerning the insurance type, home characteristics and your personal insurance history.
To help you get a better understanding of what goes into the average cost of home insurance, here are the basics:
Home variables
Several aspects of your home can determine the cost of your homeowners insurance. Some examples of these factors include location, age and condition. Houses in certain areas prone to extreme weather or other potentially damaging conditions pose more risk to the insurer and may incur a higher premium. Similarly, older homes may be more expensive to repair if damaged.
Insurance details
Even among standard insurance policies, you often have choices that can determine your overall cost. These options include:
- Dwelling coverage amount - The portion of your policy that protects the physical structure of your home
- Personal property coverage amount - Protection for the value of your personal belongings, such as clothing, furniture and appliances
- Deductible amount - The deductible amount can determine how much you pay monthly and how much you may need to pay out of pocket for a claim. For example, a higher deductible means a lower premium cost, but a more expensive claim if your home is damaged.
Other factors to consider
There are more factors that can go into your average home insurance cost, such as your credit score and personal claims history. Other factors related to your home and location may have an impact as well. Some examples include home security systems, pools, roof type and proximity to the local fire department.
Discussing with a provider is the best way to find out the exact amount you’ll need to pay in home insurance. The more you learn about your insurance coverage, the better financial decisions you can make in budgeting for your new home.
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