The Least Expensive Places for Homeowners Insurance

by Alex ThatcherJuly 12, 2016

Finding affordable homeowners insurance is not as simple as it sounds.

Homeowners insurance is all about risk. Insurance companies create algorithms to assess the risk of each property. Once the factors are determined, they decide if the risk of insuring that property is worth the payout if something goes wrong.

Properties that present the lowest risk have the least expensive homeowners insurance. A low risk makes the prospective policy very attractive, so lots of insurance companies want it. It’s the concept of supply and demand—the companies are willing to be competitive with one another to gain your business.

How do insurance companies decide their level of risk? While the list is long, there are certain factors that make the biggest impact. The following three points will help you choose a great home and get a deal on your homeowners insurance.

  1. Location Is the Key

    Just as the real estate saying goes, homeowners insurance is all about “location, location, location.” Properties in regions with frequent extreme weather have much higher insurance rates, for instance. A beachfront cottage presents a different risk from a rural home or an apartment on the 30th floor of a building. If you have a choice of location before you move, check the highest and lowest states for homeowners insurance rates to make an informed decision. In general, the following location factors are the most common deciding points:

    • Location Close to Fire Assistance
      A fire is the number one risk for any home. According to the National Fire Protection Association, direct property damage through residential fires cost $6.8 billion in 2013. That’s a real, tangible risk for insurance companies, so they spend a lot of time and resources to research the fire risk for a property. They’ll look into things like how many ladder trucks are in the municipality, where the fire hydrants are located, what the hydrants’ water pressure is, and if the fire department is paid or volunteer.The better you score on those factors, the more affordable your homeowners insurance will be. It can be the difference between paying out $80,000 on a claim or $280,000—so choose a home that has good access to a fire response team.
    • Location’s Susceptibility to Wind/Hail and Flooding
      Insurance companies are not required to include clauses that cover certain types of weather damage. Based on your location, you might need a separate policy. For example, if you lived in Florida, some typical hurricane-related damage might not be included in a standard policy. Therefore, homeowners need to understand exactly what their policy covers and possibly factor in funds for additional coverage. State governments often provide incentives for this policy amendment, especially in areas where natural disasters present a very high risk. Remember to include these separate policies in the total cost of your homeowners insurance and look for a property in an area as low-risk as possible.
    • Location with Low Crime
      Neighborhoods ebb and flow in desirability. What was once a place to avoid after dark might be the new tony neighborhood. Your insurance provider takes this into account and periodically assesses areas on crime rates, break-ins, theft and general safety. The number of police stations, general response times and population density all play a factor. The safer your home is from crime, the safer the insurance companies will feel about writing your policy.
  2. The Structure Itself

    This is something that many homeowners overlook. However, insurance companies do take into account the age of the home, construction methods used, condition of the roof, and even how many corners a house has in order to determine the risk of repairs. Other structures on the property, such as pools, barns and detached garages, are assessed as well. Choosing a house in good condition benefits both you and the insurance company—which means a lower cost all around.

  3. Your Activities

    Finally, insurance companies will look at your personal and financial history. Do you pay your bills on time? Do you have a pool in your backyard? Do you ride an ATV on your property? Even having a trampoline for your children can affect the policy numbers.

In many ways, the insurance company is underwriting a person and property together. You can reduce the cost of your homeowners insurance by maintaining good relationships with your creditors and banks and showing you can take care of your home and the people in it.

While good scores on all of these factors will result in a good price on homeowners insurance, the following points will help you manage your expectations:

  • Policies usually only cover the structures on a property, not the land itself.
  • Your insurance company will cover the cost to rebuild the home, not its overall value. Purchasing a modest home in a high-priced neighborhood means you will be insured for much less than the original purchase price.

Keep in mind all of these factors as you choose a home. An independent agent can make the process easy to navigate and help you find the best insurance at the best price. Isn’t security and peace of mind what you want from a home in the end? is the place to dream and discover your ideal home! Are you starting to get the itch to look for your first or next home, but don’t know where to start? You’ve come to the right place! Browse our real estate and lifestyle blog for home buying tips, mortgage guides, DIY ideas, interior design, lifestyle topics, general home inspiration, or just some homes fun. We are sure you can scratch that itch and find all the information and tools you need to help in your home search. Want to start looking at available real estate right now? Head to our home page and check out homes for sale or rent listings all over the country.

Happy house hunting!

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About The Author
Alex Thatcher
Alex is a home staging guru who moonlights as a writer. She loves everything about interior design and loves working in the industry. Alex is an expert in finding what makes people light up when they walk into a room, and has made a living by creating interiors that are unique, warm and inviting. When she isn't arranging flowers or making sure she's found the right loveseat for prospective buyers, she writes about her passion — home design.