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Given that your house is not just a roof over your head but also an investment, a source of equity and possibly savings, and a home, you want to make sure you, your money, and your family are protected if anything should happen. But the role our homes play as our protectors and main assets make them particularly vulnerable to disaster. Home insurance rates will vary based on where you live, the age of your home, and more.
Your home is one of your most valuable assets. How much would…or should…you pay to protect to it? Well that depends on a number of factors and it may not always pay to choose the cheapest policy. Let’s take a look at the price of home insurance, what types of protections you have, and what makes it cost what it does.
NOTE: Homeowners insurance is not required by law. Most lending institutions require it in order to cover their investment. There are endorsements and limits that can be added to every basic homeowner’s policy in order to cover all your assets and that can get confusing. We can help answer those questions and get you the coverage you need. Here’s a look at some of those endorsements and limits.
Types of Home Insurance:
Before we talk price, let’s talk about the different types of policies you can choose from to protect your home.
Homeowners Insurance: This policy covers specific causes of loss to the structure, attached structures (garages) and unattached structures (sheds) to the limit of the policy. Wind, hail, water, fire, theft and vandalism are the most common causes of loss to name a few.
Personal Liability: Personal Liability is part of your home owner’s plan and covers you if you are found responsible for an accident involving the home covered in the policy. This could be legal expenses and/or any cost associated if sued.
Medical Payments: This covers the medical expenses of someone outside your household who are injured on your property, no matter who is at fault.
Additional Living Expenses: This will cover some or all living expenses if you are displaced from your home and is another beneficial part of your homeowner’s policy.
Renter’s Insurance: This type of homeowner’s insurance covers your personal property and various forms of Liability. There is no coverage for the actual structure (the owner of the structure should cover that), but it should give you peace of mind in the event of theft, fire, water back up or other causes of loss. Renters insurance costs less because you are not insuring the structure.
Dwelling Fire Insurance: This is typically the type of insurance Landlords carry on rental properties. Dwelling Fire insurance covers the structure and liability but not the contents in most cases. Again, this is typically less expensive than an actual home owner’s policy because you are not covering the contents of the home(because the landlord doesn’t have contents within the structure).
Personal Property: This covers the personal belongings you keep in your home, like your clothing, furniture, and electronics.
Major Cost Factors of Home Insurance
Homeowners insurance will vary based on a number of factors and will depend what state you’re in. States with more densely populated area and a lot of major cities will likely have higher premiums due to higher home values.
Your state’s likelihood of experiencing a natural disaster also factors in to your insurance rates. For example, Louisiana has some of the highest premiums in the country due to its location on the coast and its regular occurrence of strong storms.
Before we take a look at Michigan’s rates, let’s dive into some of the other factors that will impact your home insurance rates.
Your Insurance Score: While this has nothing to do with your home itself, most insurance will check on this. Things that can affect this score include claims, late payments, and your ability to pay premiums or not paying your premiums.
The Age of Your Home: Older homes are beautiful but are more likely to have problems such as old plumbing and elements that are not up to code. Updating essential parts of the home like HVAC, electrical, the roof, or the plumbing can make a difference in your premium.
Replacement Cost: You might ask, “why do I have to carry insurance for $300,000 if I only paid $200,000?” This is where the replacement cost comes in. The cost to rebuild your $200,000 home in two, three, or ten years will be closer to $300,000 than $200,000.
Actual Cash Value (ACV): The ACV is a typical for older homes because you simply can’t replace many of the things in these homes. The ACV takes a value and then calculates depreciation to come up with a value.
More Factors:
- Consumer protection laws
- Proximity to a fire department
- Flood Risks
- Hurricane Risks
- Earthquake Risks
- Pools or Hot Tubs
Michigan Insurance Rates
Luckily, Michigan has some of the lowest insurance rates in the country, averaging just $908 per year, versus a national average of $1,173.
But you’re not in the clear just because you live in Michigan. Given what we learned about what can impact home insurance rates, Michigan residents are at risk for potential claims due to rough winters, windy lakeshores, and older homes.
What does that mean for you? It means you should talk to an agent to find out where and how to get your best insurance rates and that it may not always be advisable to choose the lowest rate Your number one priority should be covering all your risks and the Holt & Dimondale Agency can help you do that.
With nearly 60 years of experience as your local, independent insurance agency, you can trust the Holt & Dimondale Agency to find the best products to fit your insurance needs.
