Many consumers don't realize how home insurance quotes can change from quarter to quarter. Among the factors that influence quotes are a home's location, its age, and its size. Another key ingredient of the quote process that can be volatile is the homeowner's credit score, which can radically affect how much she or he pays for a policy.
During the third quarter of 2015, consumers who contacted HomeInsurance.com and its sister online insurance marketplace HomeownersInsurance.com saw increases in some key states.
Following are five states in which the average quote increased the most during the third quarter:
- The average quote in Alabama jumped the most of any state, about 6.1%, to $1,125.
- Virginia quotes escalated the second most – 5.0%, to $773.
- Missouri quotes went up 4.5% to $1,170.
- Oregon quotes took a 4.4% hike to $475.
- Colorado quotes increased to 3.7% to $1,130
While quotes climbed in those states, they didn't everywhere. Following are states in which the average quarterly quote decreased during the period:
- Tennessee averages fell the most – 3.3% - to $1,570.
- Arizona quotes dropped 0.3% to $674.
- Washington's went down 0.1% to $670.
The average premium across the U.S. is $1,034 for a year's worth of coverage, according to the National Association of Insurance Carriers. For more about average quotes, including which states have recorded the greatest disparity from the national premium average during the third quarter, see the HomeownersInsurance.com insurance rates page.
The reason for the disparity among the states? One major factor is a house's location, which influences its amount of risk and the cost to replace it.
How risk changes with location
The amount of risk assigned to a particular home is a prime factor that goes into a home insurance quote. Homes in Tornado Alley are much more expensive to insure because of the heightened threat from those storms.
The other way a homeowner's location affects the quotes he or she will receive for coverage is in calculating the amount of dwelling coverage needed for the home. Dwelling coverage is that portion of a home insurance policy that protects the structure of your home from fire, hail, wind, and other specified perils. The largest portion of your premium is dedicated to this coverage.
Homeowners should buy the amount of dwelling coverage it would take to rebuild their homes if they are destroyed by a covered peril. That amount can be much different than the price you pay for a home.
One way to get a rough estimate of how much dwelling coverage you should buy is to multiply the square footage of your house by local building costs per square foot; you should also account for upgrades you might have made to the home. Online dwelling coverage calculators can help give you a rough idea of the coverage you need; a licensed agent can help you settle on the right amount.
The big takeaway: Quotes can vary even within a state. That's because of the sheer volume of rating factors that determine a quote – the age of the electrical and plumbing systems and the roof, for example. Understanding some of the factors used in quoting coverage can give you a framework for lowering your quotes.
Arthur Murray writes for HomeInsurance.com, an online resource for homeowners and drivers across the country, and SafecoInsurance.com. Offering comparative automobile and home insurance quotes, consumers rely on HomeInsurance.com for the most competitive rates from the top-rated insurance carriers in the country. The HomeInsurance.com blog provides fresh tips and advice on a range of financial topics to help homeowners and homebuyers make educated decisions about their insurance purchases.
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