Your home will probably be one of the most expensive purchases that you make in your whole life. If you are considering buying or recently bought a $300,000 home, congratulations! While a $300,000 home looks a bit different in each state, you’re still spending a pretty penny, regardless of whether you call New York or New Mexico home. Such a costly investment requires a good amount of protection, and the best way to keep your home covered is with a home insurance policy.
While you don’t legally need a homeowners insurance policy, many mortgage lenders will require homeowners to purchase a policy. Not to mention home insurance will keep your home and belongings protected after a natural disaster or theft.
There’s a lot to consider when shopping around for the best homeowners insurance for your $300,000 home. Sorting through home insurance companies, comparing policies, and figuring out how much liability coverage you need is no easy task on your own.
That’s where Insurify comes in. Use Insurify’s comparison tools to see insurers, insurance coverages, and home insurance premiums side by side so you can find the best homeowners insurance policy for your home in minutes.
Keep reading for Insurify’s full guide on home insurance for $300,000 homes to learn more about what coverage you need and how to find savings before you commit to your new home insurance policy.
Protect Your Investment
Finding the Right Amount of Coverage
There are many types of home insurance policies, and each offers various amounts of coverage for your home’s replacement costs, personal property damage, and personal liability. The first step in making sure a home insurance policy has enough coverage for your individual needs is to determine how much dwelling coverage you need.
Dwelling coverage is the portion of your home insurance policy covering your physical home and the cost of repairing any damages to your home or other connected structures. To find out what dwelling coverage limit is best for your home, you will need to calculate your home’s replacement cost. Generally, if you multiply your home’s square footage by the cost per square foot to build in your neighborhood, you’ll end up with the amount of dwelling coverage your home insurance should include.
Let’s say you just purchased a home in Raleigh, North Carolina. On average, $300,000 will buy you a roughly 2,000 sq. ft. home in Raleigh, and the average cost to build a home in the city is $120 per square foot. This means that a homeowners insurance policy for your $300,000 home in Raleigh should have at least $240,000 in dwelling coverage.
The specific dwelling coverage limit you need also depends on home-specific factors, like your home’s foundation type and any additions you make to your home. But this equation gives you a general idea of the amount of coverage your home insurance policy should include.
The amount of other structures coverage you receive––for things like garages or fences that aren’t attached to your home but are on your property––is affected by your dwelling coverage limit since this amount is usually a percentage of your dwelling coverage. It’s important to make sure you have enough coverage for your home and any other buildings or structures on your personal property. So, if you are worried about having enough coverage for your other structures, you can always increase your dwelling coverage or other structures coverage amount.
Next comes your personal property limit. This protects personal belongings inside your home and is usually automatically set at 50 to 70 percent of your dwelling coverage limit. Using the same Raleigh, North Carolina, example from before, the personal property limit for this home would be about $120,000 to $168,000. The best way to make sure this is enough coverage to replace your damaged or stolen personal belongings is by making an inventory and adding up the value of your most expensive and important possessions. If your inventory value is higher than your homeowners insurance covers, you can ask your insurance agent about raising your personal property coverage limit.
You can also opt for a replacement cost policy rather than an actual cash value policy. Actual cash value policies ensure that homeowners receive coverage for the cost of their damaged items at the condition they were in prior to being damaged or stolen. This means your insurer will give you less money for older items than what you initially paid for them. Replacement cost comes at a higher price but covers the entire cost of replacing any damaged or lost items regardless of their prior condition, so you won’t need to worry about paying to restore or replace your belongings.
The last two coverages to calculate before you get quotes on homeowners insurance rates are your additional living expenses (ALE) and the amount of personal liability insurance you need.
ALE coverage, also known as loss of use coverage, makes sure that your homeowners insurance covers the cost of your living expenses if your home becomes uninhabitable due to a natural disaster. This can help you pay for a stay in a hotel while your home is repaired, for example. According to the Insurance Information Institute, average homeowners insurance policies offer ALE coverage at a standard 20 percent of the insurance on your home.
Personal liability insurance coverage helps protect members of your household in case someone is hurt on your property. If your dog bites a neighbor or a delivery driver trips over your broken front porch steps, liability insurance covers any medical payments and legal fees in the event of a lawsuit. It can be difficult to determine just how much liability insurance you will need, which is why most home insurance policies automatically provide $100,000 in liability coverage. Medical expenses are costly, and so are legal fees, so if you want more coverage, you can raise your personal liability limit as high as $500,000.
Depending on where you live, you may need additional policies like flood insurance or sewage backup coverage. The best way to know what additional policies you will need is to do your research, know what perils affect your area, and ask a local insurance agent what your best options are.
If you find yourself seeking more protection from most of these coverages, you should consider purchasing an umbrella policy. This will ensure that you have the most coverage from your homeowners policy, and you won’t have to worry about facing higher deductibles after a natural disaster or theft.
Average Cost of Homeowners Insurance Policies
To best protect your $300,000 home, you will most likely need nearly $300,000 in dwelling coverage and $300,000 in personal liability insurance. The national average home insurance cost for policies with this amount of coverage with a $1,000 deductible is $2,305 annually.
But home insurance costs, just like the perfect home, are different for every homeowner. This is because your annual premium is based on individual factors like your credit score and your desired amount of coverage. The more coverage you want, the higher the cost of homeowners insurance will be.
Your home insurance quotes will also depend on the age of your home, the state where you live, and even the specific neighborhood your home is in. It’s more expensive to insure an older home than a newer home since older homes typically require more costly maintenance and repairs at higher rates. You could also face higher premiums if there are a lot of home insurance claims filed in your ZIP code since you are likely to experience similar perils as your neighbors.
Here are the top 10 most and least expensive states to insure a $300,000 home.
- South Dakota
- New Hampshire
How to Save on Home Insurance Rates
Homeowners insurance policies can get expensive, and as much as the cost you pay reflects the coverage you receive, there are still ways to save on annual premiums without skimping on insurance coverage.
One of the easiest ways to secure savings is by using home and auto insurance bundles. If you are looking for multiple insurance products (like home insurance, auto insurance, or even life insurance), you may be able to bundle your policies to secure savings. Homeowners who bundle their homeowners policies with their car insurance can save upwards of 20 percent on the cost of homeowners insurance annually.
If you aren’t looking for additional insurance policies, you still have plenty of options to save on your homeowners insurance policy.
Simple home additions, such as installing a security system, fixing up your window latches, and installing deadbolt locks on external doors, can all make your home more secure and, in turn, lower your annual premium.
If you’ve only ever been a renter and this is your first time purchasing a home, you may want to look at how your credit affects your home insurance rates. Taking out a large home loan can put a damper on your credit score. But keeping up with regular payments and minimizing your debt can improve your credit and help you qualify for cheaper home insurance rates in the future.
Some insurance companies offer discounts for new homeowners, for homes without smokers, and even for simply setting up automatic monthly payments. Once you decide on a home insurance policy, you can ask your insurer if you qualify for any special offers or savings.
The best way to make sure you get the insurance coverage you need at the cheapest home insurance rates is by using our home insurance comparison. Whether it’s your first time shopping for homeowners insurance or you’re looking for savings on your current policy, you’re in the right place.
It can seem impossible to know everything you need in a home insurance policy. That’s why Insurify compiled some of homeowners’ most frequently asked questions about finding enough coverage for $300,000 homes.
Frequently Asked Questions - Home i
Should I add flood insurance to my homeowners insurance on my $300k home?
Depending on the location of your home, you may not need a flood insurance policy. But since flood insurance coverage is not included in standard home insurance policies, homeowners in states like Alabama, New Jersey, and Ohio, where flooding, heavy rain, or snowstorms are common, will likely need flood insurance policies. If you live in a state prone to flooding or snowstorms, purchasing a flood insurance policy through the National Flood Insurance Program will help make sure your home is protected in case of water damage.
How much homeowners insurance should you have on a $300k home?
The specific amount of home insurance you need depends on the coverage you’re looking for. It’s easy to say you should cover the amount of your mortgage and the belongings inside. But homeowners insurance covers more than just the physical structure of your home and your personal belongings. It includes liability coverage and coverage for your living expenses. Your home’s location may also lead you to seek flood insurance or more coverage in case of earthquakes or other natural disasters. The best way to decide the right amount of coverage for your home is to analyze your unique needs and comparing insurance companies and policies with Insurify before you get quotes.
Why does home insurance on my $300k home have a $1,000 deductible?
The deductible on your home insurance policy is the amount you need to pay out of pocket for repairs when you file an insurance claim before your home insurance coverage kicks in. Your insurer will automatically set your policy’s deductible at whatever the standard rate is. Most insurance companies will allow homeowners to choose their deductible amount, though. So if you’re unhappy with your current rate, you can probably choose a different amount that works better for you (usually $500 to $1,000). But keep in mind that your deductible will affect your annual premium. If you opt for a lower deductible––meaning you will pay less for repairs or replacement costs––your insurance premium will be more expensive.
There’s a lot to consider when searching for the perfect home insurance for your $300,000 home. While the best policy for you will depend on individual factors like the neighborhood you live in and your preferred amount of coverage, you don’t have to go into a home insurance policy unprepared. Insurify helps you prepare for your insurance search and compare policies all in one place so you can secure savings and start enjoying your home in no time.
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