If you own a house, you cannot afford to live without home insurance (often called homeowners insurance). Homeowners insurance covers losses related to fires, theft and weather and can help repair your house and personal property. Homeowners insurance can also provide you limited-liability coverage amounts and medical payments of someone becomes injured while at your house. Homeowners insurance typically costs between 0.3 percent and 1 percent of your mortgage or home value annually. This number varies based on a variety of factors.
Step 1
Gather all the information related to your house, including its age, the type of construction used as well as construction materials (including insulation, wiring, etc.), heating and cooling sources, security systems, square footage and fire- or smoke-detection systems. Be aware that older houses, outdated wiring, lead paint, asbestos insulation and other factors that are no longer thought of as safe to have within your living quarters can significantly increase your insurance rate.
Step 2
Figure out if your house is located in earthquake or flood zones, as well its "Public Protection Class" rating, which rates the fire protection level close to your house from a scale of one to 10, with one being the best ranking. Know that your insurance rate will be higher if your home is located in a natural disaster area.
Step 3
Gather your credit and loss reports. Increase the amount of anticipated homeowner insurance you will pay if you have bad credit history, as an insurance company will evaluate this as part of the determination of your home insurance rate.
Step 4
Set your property limits by determining current replacement costs you have multiplied by 100 percent.
Step 5
Calculate your liability coverage by evaluating possible risks around you or in your home that normally cause injury to people who visit your house (such as dogs, sidewalks, floors and entryways that can cause injury and falls).
Step 6
Determine if you are eligible for any discounts. Most insurers provide discounts if you get multiple lines of insurance with them, such as auto, home, etc. Some insurers might also provide discounts for seniors or members of certain groups, such as veterans.
Tips and Warnings
- Insurers may not offer you 100 percent replacement cost for older houses due to the scarce availability of similar materials and the cost of remaking certain details that are in older structures. Adding guaranteed replacement cost coverage or an inflation guard coverage expense rids you of the possibility of being under-insured when you do incur a loss. The personal property limit (for the contents of your house) is usually set at half of the property limit and is calculated depending on whether you select replacement cost or actual cash value. You can reduce your premium amount by choosing a higher deductible.
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