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What Is The Average Cost Of Homeowner’s Insurance?

A family sits together in their living room that they were able to purchase after obtaining a competitive homeowner's insurance policy rate.

Homebuyers are typically required to obtain homeowner’s insurance in order to get their mortgage approved and funded. The average cost of homeowner’s insurance in California is $1,166 annually or approximately $97 per month in 2020. California boasts the second-cheapest homeowner’s insurance rates nationwide, which is a huge boon for California homebuyers. In Texas, the average annual premium for homeowner’s insurance is $3,429, or about $286 per month.

Keep in mind, though, that these quotes are based on a home valuation of $300,000 with personal liability and deductible of $1,000. Actual rates may vary based on property type and insurance provider.

In most states, homebuyers who go into contract on a home are required to have an insurance in place prior to the close of escrow. There are several variables that can affect the cost of their policy. The deductibles and types of coverages can affect your insurance cost, but there are also several other factors.

HOMEONWER’S INSURANCE DEDUCTIBLES

The homeowner’s insurance deductible is the amount the homeowner must pay toward a loss before your insurer covers the rest. The premium is the amount you pay each year for your policy.

REPLACEMENT COST VS. MARKET VALUE

This is another factor that can affect the price of your homeowner’s insurance. When it comes to the actual policy coverage, there are two types of homeowners insurance — replacement cost and market value. Market value is the price you paid for your house when you bought it. Replacement cost is how much it would take to rebuild your house.
Other factors that can affect the cost of a homeowners insurance policy include:

  • Location of the home
  • Any liability limits
  • Presence of a wood-burning stove
  • Size of your home
  • Condition
  • Electrical and plumbing systems
  • Contents of your home
  • Upgrades
  • Swimming pool

WHY DO YOU NEED HOMEOWNER’S INSURANCE?

In most cases, homebuyers are required to obtain homeowner’s insurance and will need to show their lender that the home they are buying can be insured before a mortgage is funded.

If you would like to learn more about JVM Lending’s recommendations for acquiring homeowner’s insurance or discuss your qualification for a mortgage in more detail, you can reach out to one of our expert Client Advisors. Our team is available 7 days a week by email at jvmteam@jvmlending.com or by phone at (855) 855-4491.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167