How to compare homeowners insurance quotes

The average annual home insurance premium in the United States is $1,272 jhorrocks/Getty Images

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• A home insurance quote is an estimate of your home insurance premiums.
• Many insurers offer a quoting tool, but independent insurance brokers can gather multiple quotes
• Compare coverage amounts, policy types, trustworthiness, and price of each insurance provider.

Your home will probably be your biggest asset. That said, you want to ensure your investments are protected. Homeowners insurance will protect you from financial hardship if you need to rebuild or replace your home or the items in your home. Additionally, homeowners insurance protects your assets in case you're sued for injury on your property.

Before purchasing a homeowners insurance policy, you'll usually get a quote online or through an insurance agent. A home insurance quote can be quick and simple to obtain. However, you want to ensure you're not only going for the lowest price but the policy that offers the most coverage.

What is a home insurance quote?

A home insurance quote estimates your home insurance premiums based on your risk. Multiple factors can affect the cost of your homeowners insurance. Here are a few:

• Coverage amount: The amount of coverage you need will impact the overall cost of your premiums. The more an insurance company has to pay to replace your home, the more of a liability you are to the insurance company. There are four parts to a standard homeowners insurance that will need coverage: dwelling, personal property, liability, and additional living expenses if your home becomes inhabitable because of damage.
• Claims history: A good claim history is essential for lower premiums. For a single claim, you can expect a rate increase of 16% to 29%. For a second claim, you may see an increase of up to 60%, according to Insurance.com. Many providers will refuse to insure your home after the third claim.
• Location: "Insurers consider regional weather patterns and natural disasters that are common in your area," says Steve Wilson, senior underwriting manager at Hippo — a provider of home insurance focused on preventative care. Expect higher premiums if you live in an area with high theft or an area at higher risk of floods, earthquakes, and other natural disasters.
• Details on your home: Age, construction materials, and replacement cost of your home are critical factors in determining your insurance premiums. An older home constructed with materials susceptible to damage or homes with a higher replacement cost is the costliest to cover. Remodeling your home could also increase premiums as updated items will be more expensive to replace. Home security systems will usually decrease your premiums because you are less susceptible to risks such as theft.
• Home features: Pools, hot tubs, and trampolines are considered high-risk features. Therefore, can potentially increase your premiums if you have them, Wilson says.
• Deductible: A deductible is an amount you pay before your insurance company compensates for damage. A higher deductible usually means lower premiums, and a lower deductible means higher premiums. However, you must consider if you can pay a higher deductible upfront if you need to file a claim.
• Credit history: Insurance companies use credit history to determine a customer's ability to pay on time. Good credit scores usually indicate less liability for the insurance company, thus lower premiums or an increased chance of qualification for insurance during the application process.

Quick tip: Insurers will usually report their claims to the Comprehensive Loss Underwriting Exchange (CLUE) database and will use this information to assess you and your property's claim history. To get a copy of the CLUE home seller's disclosure report, visit LexisNexis, email [email protected], or call 1-888-497-0011.

How to get a quote for home insurance?

Most insurance providers offer a quoting tool to get estimates, but independent agents and third-party quoting tools are available to get multiple quotes at one time. When using third-party quoting tools, ensure that you know what is going into your policy before purchasing the cheapest policy.

Information you'll need to complete a home insurance quote

Having your personal and home's information on hand can help you expedite gathering home insurance quotes.

1. Personal information: Name, date of birth, marital status, and contact information
2. Basic information about your home: Address, how long you've lived in your there, what type of home you reside in and if it's your primary residence, if there's a mortgage on the property, the year it was built, square footage, number of bedrooms and bathrooms and number of stories
3. How your home was built: Material your building, exterior wall, and roof are made out of, heating or cooling systems, and the type of foundation and construction your home has
4. Safety: How far your home is from the nearest fire station and fire hydrant, if you have home safety systems
5. If you need extra coverage: Jewelry and high-end electronics, pets, swimming pools, or trampolines if you operate a business in your home.

Does getting a home insurance quote affect your credit score?

No, completing a home insurance quote will not affect your credit score. But home insurance companies may look at your credit score to evaluate your likelihood of filing a claim in states where permitted. Instead of a hard inquiry, which will likely lower your credit score, insurance providers will perform a soft inquiry on your account.

How to compare home insurance quotes:

Comparing the price of their policies without looking at what the policy entails is a mistake that many consumers make. Choosing the lowest price often means you're underinsured. "Shop around for insurance policies to make sure you're getting the best level of protection for your home along with proactive home services, smart devices, and great customer service if a claim occurs," says Wilson.

Here are some steps to successfully compare home insurance quotes.

Step 1: Get quotes from at least three insurance companies

The Insurance Information Institute (III) recommends obtaining at least three quotes from three different companies. You can even ask your friends or relatives for recommendations on trustworthy providers as a starting point for your search.

Another good place to start is contacting your state's insurance department to find out about enforcement action against a provider. Your state's insurance department may also be able to provide you with average rates for major insurers.

Step 2: Compare policy coverage and deductibles

When comparing quotes, make sure that each policy is on equal footing in coverage types and coverage limits. The policy with the higher coverage limit will usually cost more but might be enough to replace your property or protect your assets in case of damage or a lawsuit. Be sure to factor in floaters, endorsements, or extra coverages you might include in your policy. Here are some of the recommended policy limits from the Insurance Information Institute:

• Dwelling coverage: The cost to replace your home and other detached structures for your home. Consider purchasing an inflation guard endorsement to protect your dwelling's replacement cost from inflation.
• Personal property coverage: The advised coverage cost for personal property is 50% to 75% of the coverage on your dwelling. Consider purchasing a property floater for high-valued items that require more coverage, like expensive jewelry.
• Liability coverage: The minimum is $100,000 but experts recommend at least $300,000 to $500,000 worth. Consider purchasing excess liability coverage or an umbrella policy if you need more.
• Additional living expenses: Most policies offer 20% of the insurance on your house. However, coverage amounts vary based on your homeowners insurance company. You can also increase your additional living expenses coverage for an additional charge.

Step 3: Check if you're eligible for more discounts

Another benefit of shopping around is taking the time to research any additional benefits you might be eligible for. You can look at the company's website to see if there are any available discounts or programs your online quote may have left out. There are different discounts for every situation, and you may miss out on valuable saving opportunities if you don't check. You can also get on the phone with an agent to discuss additional discounts you may qualify for.

These are the most common home insurance discounts, according to Wilson:

• Signing up for coverage before your existing policy expires
• Being claim-free for several years
• Owning a fire extinguisher
• Living in a gated community
• Paying for your home without a mortgage
• Insuring a newly constructed home

Step 4: Compare each company's trustworthiness

An insurance company's financial strength score determines how well a company can pay out claims. If you purchase a quote from a company low in financial strength, you may not be able to compensate you when you need it most. A popular independent rating agency is AM Best. It ranks insurance companies from A+ to F. Anything lower than a B means that a company is not financially stable and may not be able to pay claims at any given moment.

Step 5: Compare customer satisfaction feedback

It's also a good idea to look into a company's customer satisfaction. J.D. Power's home insurance customer satisfaction survey ranks major insurance companies based on a 1000-point scale.

Average quotes for home insurance

The average annual home insurance premium in the United States in 2019 was $1,272, according to the most recent data from the Insurance Information Institute. Here are the rates for some of the cheapest homeowners insurance companies, according to Insurify, an insurance comparison platform.

Quick tip: Visit our homeowners insurance cost guide to find out how much the average home insurance premium is based on your state and home value

4 ways to reduce your homeowners insurance quote

As insurance costs rise, it is more important than ever to look for saving opportunities. While we do not recommend lowering your coverage to lower your premiums, there are still ways to curtail your costs.

• Shop around: Use an online broker or an independent agent to find an insurance company that works best for you. Alternatively, you can compare quotes on your own by obtaining quotes from three insurance providers and looking at cost, coverage, and insurance trustworthiness.
• Take advantage of discounts and bundles: You can get additional savings on your insurance premiums by bundling multiple products like your auto and home insurance policies. Discounts can also reduce your premiums substantially. Insurance providers usually have a list of discounts that they offer on their website. Alternatively, you can get on the phone with an insurance agent to see if you qualify for additional discounts that your online quote might not have included.
• Perform routine maintenance: As mentioned earlier, filing a claim will impact your premiums. Performing regular maintenances to ensure your home systems are operating property is critical to reducing the likelihood of a filing a claim, thus keeping your premiums low.
• Tell your agent about any changes to your property: Making your insurance agent aware of updates to your home systems and installation of a new roof can help you save more on your policy. Also, speak to your agent about any major home renovations as it may impact the value of your home, thus your coverage amount.

The bottom line

Researching home insurance quotes are an effective way to get the best value for enough coverage so you're insured when you need it most. To get started on your homeowners insurance search visit Insider's guide to the best homeowners insurance companies.

"Whether your offer just got accepted on your first home or you're looking to update your current home's policy to better fit your needs, understanding what may affect the cost of your home insurance policy is an important step to ensure you're getting the best value from your provider," says Wilson.