How to Find Cheap Homeowners Insurance in 2021

You may be tempted to buy home insurance simply because it is the cheapest available, but price should be only one factor in your decision. You should also consider customer service, available discounts, and other factors. We do the legwork for you and recommend four excellent options for low-cost home insurance.

According to the most recent data from the National Association of Insurance Commissioners, the average annual premium for home insurance in 2017 was $1,211. Your rate will vary depending on where you live and other personal factors. Many of these factors may be beyond your control, but you can still find the coverage you require without breaking the bank.

Though many of the factors that influence your home insurance rates are beyond your control, there are strategies that will assist you in finding low-cost home insurance.

The 4 best cheap home insurance companies of 2021

Great for first-time purchasing – Allstate

Allstate is an excellent choice for your first home purchase because of its excellent service and options.

Allstate did not become one of the largest insurance companies by chance. Customers turn to the insurer for personalized service from local agents across the country, a wide range of insurance options, and competitive pricing. They may not be the cheapest right away, but if you take advantage of the discounts, such as newly built homes, first-time homebuyer or senior discounts, you'll be able to save a lot of money.

The company website includes an online library of insurance resources and tools, as well as definitions of insurance types and policies. It will be useful when determining exactly what you require. Because Allstate is available in all 50 states, it is a good choice for home insurance no matter where you live.

Great for tiered coverage – Farmers

Farmers keep the process of selecting home insurance simple. You can select one of three packages based on the level of service you require: standard, enhanced, or premier. Coverage for each policy ranges from the most basic, which emphasizes affordability, to the most comprehensive, which has the highest coverage limits available. Except for premier coverage, which is not available in California, coverage is available nationwide.

Although the company does not provide as many discounts as other providers, the bundled quality of its policies makes homeowners insurance affordable. Farmers also offer discounts to homeowners who have anti-theft and fire systems, don't smoke, and bundle their policies. You may also be eligible for savings if you are a teacher, police officer, firefighter, military member, doctor, nurse, dentist, or engineer.

Great for à la carte options – Geico

Nobody is the same, and neither are their homeowners insurance policies. Rather than settling for prepackaged tiers like some other companies, Geico has made a name for itself as the king of options to choose from. As a result, you will only pay for the coverage you require. This can help you save a substantial amount of money.

The best way to save money with Geico is to combine your home and auto insurance policies — you'll save on both. Military personnel, federal employees, students, and retired homeowners are all eligible for a discount. Geico also collaborates with hundreds of organizations and businesses to provide member and employee discounts. Geico can help keep your home safe no matter where you live or what you enjoy.

Great for discounts – Liberty Mutual

As with most insurers, the key to saving is to take advantage of discounts. Liberty Mutual provides discounts for having fire and theft devices, being a first-time home buyer, bundling policies, being claims-free, having a new roof, and getting a quote before your current policy expires.

Liberty Mutual is beneficial to homeowners who want to save money on their insurance policy. The company does not have the cheapest rates, but you will be satisfied knowing that you are getting quality coverage at a reasonable price.

Saving money does not imply foregoing coverage. Liberty Mutual also provides comprehensive coverage options as well as useful add-on policies, such as coverage for water backup issues. Optional coverages add up — the online quote tool is also simple to use and will provide you with an estimate of how much the extras will cost you.

9 tips to find cheap homeowners insurance

One of the most frequently asked questions among homeowners looking to save money on their insurance is, "How can I get cheap home insurance?" However, your home insurance rates are influenced by a number of factors. The most obvious are the location, age, and type of construction of your home. Newer homes in low-risk areas for natural disasters or crime are the least expensive to insure. Unfortunately, these things are frequently out of your control. However, there are several strategies you can use to lower your home insurance bill. Use the nine tips below to find low-cost homeowners insurance.

Shop around

To find the cheapest home insurance, you'll need to shop around. Online quote tools can save you a lot of time compared to calling individual insurers, and some even allow you to compare quotes from multiple companies at the same time. Don't assume a particular provider will be the cheapest home insurance company just because it was recommended by family or friends. Your house and circumstances are unique, so your bill will be as well.

Don’t over-insure

Insure for the cost of rebuilding your home rather than rebuying it. This is an important distinction to make because market value considers the location of your home as well as the value of your land. Your homeowners policy does not cover damage to your property.

Experts emphasize the importance of taking a home inventory to determine the value of your belongings when it comes to personal property. You can do this online using the free Know Your Stuff inventory tool provided by the Insurance Information Institute. You should think twice about choosing actual cash value over replacement cost policies. While choosing actual cost value will save you money on your premium, it may cost you much more in the event of a claim. Consider how quickly your new television depreciates. If you cover it for its actual cash value, you may only receive a few hundred dollars, if that, to replace it, when comparable models cost well over $1,000 in stores.

Bundle your policies

Your insurer would love to have your entire business. Check to see if you can get a discount for having multiple policies with the same company, such as home, auto, and life. Compare whether you will actually pay less overall with the same company than you would with policies from other companies.

Consider a higher deductible

The higher your deductible, as with most types of insurance, the lower your monthly bill. When you file a claim, your deductible is the amount you agree to pay to your insurance company before your coverage takes effect. In the event of a claim, going as high as you can comfortably afford can result in significant savings. Homeowners who increase their deductible from $500 to $2,500 save $260 on average each year. Remember that raising your deductible only makes sense if you have enough money set aside to cover the higher amount in the event of a claim. If you save money by increasing your deductible, put the extra money into a savings account so you'll be ready for emergencies.

Rethink certain risky choices

You can't move your house out of tornado alley or a crime-ridden city, but you can reconsider some practices that insurance companies frown upon:

Swimming pools: Adding a swimming pool will almost certainly increase your bill due to the risk of injury and drowning.
Certain breeds of dogs: Insurance companies will charge you more if you own certain breeds that they believe pose a risk to others, such as pit bulls and rottweilers.
Trampolines: Your children may adore their trampoline, but your insurance company does not — they will raise your premium to cover your liability if a neighbor's child falls off and is injured.

Add safety features

The lower your claim risk, the more money you'll save. With a few simple changes, you can protect your home from fire and theft. Standard security features like deadbolts, smoke detectors, carbon monoxide detectors, and fire extinguishers may qualify you for a small discount. Depending on your insurer, a security system can help you save even more money. Fortunately, the majority of these upgrades are simple do-it-yourself projects.

If you live in a disaster-prone area, see if there are any special modifications you can make to lower your premiums even further. Storm shutters, storm-resistant garage doors, stronger roofs, and shatter-proof windows can all help you save money.

Maintain good credit

Unless you live in one of the few states that forbid it (California, Maryland, or Massachusetts), most insurers take your credit score into account when calculating your premium. According to the Federal Trade Commission, your credit score can have a significant impact on your home insurance rates.

The reasoning is as follows: if you have excellent credit, you are less likely to file a claim and are therefore rewarded with lower premiums.

If you have bad credit, you are viewed as a higher risk, which can cause your bills to rise.

Unfortunately, building good credit takes time and will not be something you can do right before you buy insurance. However, given the variety of financial transactions that your credit can affect, it's worth it in the long run. If you notice a positive change in your credit score, don't wait for your policy to renew in a year. Request that your insurer re-evaluate your policy to reflect the improvement in your credit score.

Review your coverage every year

Don't buy home insurance and then forget about it. Once a year, spend a few minutes getting a couple of online quotes to compare the cost of your current policy to what other insurers are offering. If you make any major purchases or additions that require coverage, you'll need to make changes, and you'll need to streamline your coverage if your home or possessions lose value. If you make improvements, you should also check for applicable discounts. This will also allow you to keep track of how much your insurance company raises your limits due to inflation each year.

Take advantage of other discounts

Home insurance companies frequently offer a variety of discounts. You may not be eligible for all of them, but it never hurts to inquire. Seniors, nonsmokers, long-term customers, and members of specific alumni or professional associations may be eligible for lower premiums. Choosing electronic statements and autopay could save you at least 5% off your bill. If you don't see a discount, ask for one. It is possible that the insurer will extend it to you.

How much should I be paying for homeowners insurance?

Your home insurance premium is influenced by a variety of individual factors. Your rate will be determined in part by the policy you select and in part by factors such as:

Your credit history as well as your insurance score
Your claims history
The age and construction of your home
Your location
Your marital status
Your pets
Home features such as wood-burning fireplaces and swimming pools

If you have a high home insurance premium because of factors beyond your control, you can reduce the cost by raising your deductible, lowering your policy limits, or eliminating unnecessary coverage. However, you should not forego essential coverage in order to get a lower rate.

If you live in certain states, you may be more inclined to take steps to reduce your rate because homeowner premiums vary greatly by location. According to the Insurance Information Institute, the average cost of homeowners insurance in Louisiana is $1,968, while a typical policy in Oregon costs only $677. The differences are mostly due to the likelihood of natural disasters in the area.

While you can save money by removing coverage, this is not recommended for most homeowners. An HO-1 policy, for example, will be significantly less expensive, but it will not cover liability claims, which cost an average of $20,371. Adding extra coverage, on the other hand, isn't always worth the cost. There is no need to cover all of your personal belongings. Furthermore, if you have a second home or family nearby, you may not require additional living expense coverage. When deciding on the type of coverage that is best for you, keep your personal needs in mind.

Cheap vs. general coverage

Obtaining the cheapest policy will necessitate some time and effort on your part. You must create an inventory of all your belongings if you have low-cost insurance coverage. It is well worth the effort to obtain a lower rate. On the other hand, if you're looking for a simple process, any general home insurance policy will suffice. Just make sure you're not paying for coverage you don't require.

The more coverage you add to your policy, the more expensive it becomes. You'll need to decide how much coverage to add without going over your coverage budget. It's nice to have an extra rider to protect your valuable sneaker collection, but is the extra annual cost worth it? Calculate and prioritize the amount of optional coverage you can afford. A standard policy should cover the most critical emergencies without the need for additional riders.

What does homeowners insurance cover?

Many of the common situations that a homeowner may face are covered by homeowners insurance. This includes both exterior and interior damage to your home. It also includes some liability coverage. The following are the major perils that are covered by a basic home insurance policy:

Fire or lightning
Windstorm or hail
Explosion
Riot or civil commotion
Damage caused by aircraft
Damage caused by vehicles
Smoke
Vandalism or malicious mischief
Theft
Volcanic eruption
Falling objects
Weight of ice, snow or sleet that causes damage to a building
Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protection sprinkler system or from a household appliance
Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system
Freezing of a plumbing, heating, air conditioning or automatic fire-protective system or of a household appliance
Sudden and accidental damage from an artificially generated electrical current

One of the reasons insurance companies limit their coverage is to keep insurance premiums as low as possible. In the United States, homeowners insurance costs an average of $1,211 per year. The amount you will pay, however, varies by state.

For example, because Louisiana is prone to hurricanes and coastal storms, homeowners in that state will pay significantly more for insurance. A homeowner in Nevada will pay less for their policy because the state does not experience extreme weather.

There are various types of homeowners insurance, but they all protect your home from perils, which is a fancy way of saying something bad happens to your property. Numbers are assigned to homeowners insurance policies, such as HO-1, HO-2, HO-3, and so on.

Most insurance companies no longer sell HO-1 policies because they are so basic. The best option is to obtain a policy that provides more protection.

The difference between HO-2, also known as broad form policies, and HO-3, also known as special form policies, is that HO-2 policies specify everything they cover, whereas HO-3 policies do not. In other words, if you have a HO-2 policy and something goes wrong with your house that isn't on the list above, you're out of luck. HO-3 policies, on the other hand, cover everything except what is specifically excluded from your home. Earthquakes, floods, war, nuclear disasters, neglect, and pests are all standard exclusions. The most common policies are HO-3 policies.

HO-5 policies are similar to HO-3 policies, but they also protect your personal belongings. Other types of homeowners insurance are available in the event of a calamity:

HO-4 policies protect renters.
HO-6 policies protect condo owners.
HO-7 policies are for mobile or manufactured homes.
HO-8 policies are specifically for older homes.

Knowing these distinctions will assist you in determining what to look for.

What to look for in cheap homeowners insurance

Cost and budget to replace your home

To begin, estimate the cost of replacing your home in the event of a total loss. This is the cost of rebuilding your home in the same location with similar materials to what you currently have at current labor costs. This figure may be significantly different from the market value of your home. If you're unsure, a professional estimate can help.

Second, you'll need enough to cover your belongings. A good rule of thumb is to set aside money equal to 50 to 75 percent of the cost of replacing your home's structure. So, if you estimate a $250,000 rebuilding cost, you'll need at least $125,000 to cover your belongings. A home inventory, which includes a list of important items and their values, can help you arrive at a more precise figure. Expensive items, such as jewelry and fine art, may necessitate additional coverage.

Liability coverage

You'll need to consider liability, or what you'll be responsible for if someone is injured on your property. A standard policy typically includes $100,000 in coverage, but experts often recommend $300,000 to $500,000.

Special situations

Consider unusual circumstances, such as where you would live if your home was destroyed by a natural disaster. In this situation, a standard policy may provide you with 20% of the cost to rebuild, but you may have the option to add coverage. Consider whether your home is vulnerable to disasters that aren't covered by standard homeowners insurance, such as floods or earthquakes. Separate policies will be required in these cases to protect your home.

Coverage level

Even after you've decided on a monetary amount for coverage, you'll need to choose between three standard levels of coverage for your home insurance policy:

Actual cash value: This is the most affordable level of home insurance because it considers the depreciation of your home and belongings, paying only for what these items are worth today.
Replacement cost: This type of home insurance does not take depreciation into account, but payouts are limited by policy limits.
Guaranteed replacement cost: Like replacement-cost insurance, guaranteed replacement cost does not take depreciation into account. It does, however, allow you to go above and beyond your policy limits, paying whatever it takes to replace your home and belongings. These are the most expensive policies and may be difficult to find. Instead, some insurers offer extended replacement cost policies. These typically pay up to 120 to 125 percent of the amount of your coverage.

Actual cash value is usually the cheapest option, while guaranteed replacement is usually the most expensive.

Cheap vs. general coverage

There are some critical factors to consider regardless of the type of homeowners insurance policy you purchase. Finding general home insurance is a lot easier than finding the cheapest home insurance provider. You must also create an inventory of all your belongings if you have low-cost insurance coverage. This will undoubtedly take time, but it will be worthwhile.

By purchasing a low-cost plan and taking the time to itemize, you can ensure that you are not overpaying for your coverage. Finding cheap homeowners insurance coverage is usually the best option, despite the extra effort.

Starting your search

Now that you know what types of home insurance providers are available, how much coverage you require, and how to save money, it's time to find a low-cost home insurance company. Start your search online to save time. Our simplified quote tool can help you quickly and easily obtain multiple low-cost home insurance quotes.

How much does homeowners insurance cost?

There are numerous factors that influence the cost of your homeowners insurance. They include previous claims, the age and condition of your home, policy limits, and the state in which you live. The same basic homeowners insurance policy can differ significantly from one state to the next. There's a reason for this: some states are more vulnerable to natural disasters like earthquakes, flooding, tornadoes, and hurricanes. Other states may have a greater number of claims for theft or other types of losses.

According to the Insurance Information Institute (III), Louisiana is the most expensive state for homeowners insurance, followed by Florida. The average annual premium in these states is $1,968 and $1,951, respectively. Given the recent flooding and hurricanes that caused widespread damage, it stands to reason that homes in the two states are the most expensive to insure.

Utah and Idaho have the lowest annual premiums for home insurance, at $692 and $730, respectively. The cost of living varies greatly depending on where you live. Between the cheapest and most expensive states, you could save nearly $1,300 per year. If you live on the Florida-Georgia state line, your home insurance costs could vary by nearly $700 depending on which side of the border your home is on — Georgia's average home insurance cost is $1,267 per year.

How to budget for home insurance

Our mission at CompareInsurance is to help readers achieve financial stability through frugal living. As a result, we consider budgeting to be an essential component of living a financially healthy life. Set aside the amount you'll need monthly into a savings account to ensure you have enough money to cover your annual premium. You can even set up automatic payments from that account to ensure that you never miss your renewal date.

You must also ensure that you have enough savings to cover your deductible and any costs not covered by your policy. If you are a first-time homeowner, you may need to cut other areas of your budget to account for the new expense. It is possible to financially prepare for the unexpected with proper planning.