How Much is Homeowners Insurance on a $400,000 House?

Whether you’re at the start of your career or you’re older but have rented all your life, you may get to the point where you’re ready to buy a home. Going that route, however, means considering things like homeowners insurance. There are so many possibilities, though, so you must do your homework to know which to select.

The last thing you want is to select a Home Insurance policy that won’t cover everything from slab to roof. Over the course of my experience as a licensed insurance agent, I’ve discovered that people looking for homeowners insurance want more than one or two options. They want to see a handful of options, understand what each policy affords, and see the costs.

That’s where this guide comes into the picture. In this review, we’ll help you understand the ins and outs of homeowners insurance on a $400,000 house and give you a list of the best insurance companies to consider.

Insurers will comb over vital factors when putting together your premium:

Where you reside: Your address will be a major factor, too. If your region faces higher risks for fires or crime, this will be reflected in your monthly premium. The good news is there are ways to reduce your costs – more on that later.

Your deductible: After experiencing an incident, you will pay a deductible after which the insurance company will pay the balance. A higher deductible translates into a lower premium. A lower deductible translates into a higher premium.

Claims history: Have you previously filed a claim? Like any other insurance product, your rates might be higher if you have a string of damage claims.

Cost Of Homeowners Insurance by State

One might pay around $261 every month for a $400,000 home in Hawaii and $304 for the same policy in Oklahoma. It really is about location when discussing real estate.

For a $400,000 home, here’s a look at the premiums you’d pay in some other U.S. states:

Most costly states

In order to bring out the right point, let’s stick with the example of a 250K home. Oklahoma heads the list with Homeowners Insurance policies available for $304 a month. From there, here are the other most costly states in order:

Cheapest states

Let’s now look at the cheapest states for Homeowners Insurance. You’ll see the lowest-cost state for Homeowners Insurance for a $250,000 home is Hawaii at $32 per month. From there, the other cheapest states are as follows:

Cost Of Homeowners Insurance – by Policy Limit

When buying a residence, you must insure it for its full value. The reality is that a decision as to whether to do that or not will likely not be left up to you. Why? Many lenders insist on it. Insurers will quote based on amounts of $100,000 or $50,000.

Remember this – your house’s sticker value is not always the sum you want for your coverage. The sticker value only accounts for your dwelling. Meanwhile, Homeowners Insurance safeguards your personal possessions in the event you encounter losses covered under the policy.

If you ever face a total loss, the payment should equal the value of your residence and possessions. Do you have costly items? If so, consider getting extra coverage. That way, you’ll have some protection for high-dollar items like artwork, jewelry, or heirlooms.

Cost Of Homeowners Insurance On A $400,000 Home – By Insurance Carrier

No two Homeowners Insurance providers are the same. That’s why you must get quotes from several different insurance companies before choosing a policy. As you learned previously, some insurance providers formulate their policies based on where you reside. Insurance companies rate such factors differently.

When comparing insurers, make sure you’re comparing apples to apples rather than apples to oranges. You also need to consider there are various kinds of policies.

The three basic homeowner policies are:

• HO1: Basic Form – This type of policy is also regarded as ‘named peril.’ It means there are various perils the tenant can encounter on your policy. No coverage will be offered if your incident isn’t included on the list.
• HO2: Broad Form – If covers more than is covered under the basic form. It covers not only the named perils, but also other issues like damage caused by the weight of ice and snow, falling objects, and water or stream overflow.
• HO3: Special Form – Most homeowners opt for this type. It merges HO1 and HO2, and it adds Medical Payments, Liability insurance, and Additional Living Expenses. The HO3 also includes personal property coverage, and it’s an ‘open peril’ policy since it covers all perils save for any perils specifically excluded via your policy.

Each of these will carry a different cost, so when pricing your policy, ensure you receive the correct HO form policy quote.

Read More: HO-4 Policy

Cost Of Homeowners Insurance On A $400,000 Home – By Deductible

Depending on the deductible that you choose, your premiums will likely change. Take a look at some average costs for home insurance on a $400,000 home for different deductible amounts.

Homeowners Insurance Cost On A $400,000 Home – By Credit Score

Credit scores have an impact on the cost of your home insurance premiums. Here’s a quick look at the average costs of home insurance on a $400,000 home for different credit ratings.

How Do You Calculate Your Home Insurance Needs For a $400,000 House?

It is vital to understand your home. That’s the case whether you have resided there for one year or several years. A homeowners policy is a big decision – one that you can’t make lightly.

Remember that it’s something to have in place in the event you suffer loss, so you need to ensure you have the right coverage for your needs before signing on the dotted line. Consider the following:

1. The home itself –  This coverage is available should your residence be lost due to an incident covered by the policy.
2. Other buildings surrounding your home – These include structures like garages, sheds, and even doghouses.
3. What you own – Your personal possessions if they’re stolen or lost.
4. What if I can’t live in my home? – This component of your Homeowners Insurance will cover living costs for the time you’re unable to live in your home. You’ll have funds to live elsewhere while your home is being rebuilt.
5. What if someone gets hurt at my house? – This portion can foot the bill for costs should someone be hurt on your property. It will cover liability and medical expenses.

Looking at the various factors above will help you figure out the type of policy you need and if $400,000 is a sufficient amount of coverage for your home.

What Do You Need to Cover in A $400,000 Home?

While it was brought up earlier, it’s time to dig a little deeper. What coverage does homeowners insurance provide in your $400,000 home? A HO3 policy has various coverage levels, but it also has a lot of exclusions. Among these are the following:

• Power failure
• Intentional damage
• Flood damage
• Neglect
• Mold damage
• Rodent infestation
• Pet damage
• Earthquake
• Foundation issues
• Defective construction

You can also add more coverage to make up for excluded items. Consider the following:

Flood Damage

Flood damage is a homeowner’s nightmare. Consider rainwater. A Homeowners Insurance policy will cover water damage caused by rain. The chances are good that it’ll also cover most damage stemming from hurricanes without a wind rider or an add-on deductible. You won’t be covered if the water rises damage stems from water rising from the earth, however. You’ll require Flood Insurance for proper coverage.

Earthquake Damage

Earthquake damage is another type of natural disaster that isn’t usually covered by a standard HO3 policy. But you can get Earthquake Insurance coverage as an add-on option. It’ll protect your residence and possessions.

Does a $400,000 Home Need Replacement Cost Coverage?

You’ve probably heard it said that a car loses some of its worth the moment someone drives it off the dealership lot. You can say the same thing, more or less, about a house. The moment the seller hands the keys to the buyer, the house aging process takes place. While the devaluation isn’t as substantial as it is for a car, the passage of time takes a toll.

When looking at home insurance options, replacement cost vs. actual cash value is a vital consideration. Here is a look at the difference:

Actual Cash Value (ACV): When you buy a home, you pay $400,000. As your house gets older, its valuation dips. If you file a claim in a decade, your home might be worth $370,000. That’s its ACV.

Replacement Cost Value (RCV): If you buy the same residence for $400,000, your home will lose value as it gets older. That said, you’ll get the full $400,000 if you file a claim since no money is lost simply because of depreciation. You’ll get the RCV.

There are some add-ons for replacement cost value – namely, Guaranteed and Extended Replacement Cost. One the one hand, Guaranteed will rebuild your house to the exact specifications of your original house. On the other hand, Extended will factor into the equation house value inflation.

A home that cost $400K to build may cost $500K to build now. It’s intended for people residing in areas susceptible to disasters such as Tornado Alley.

How to Save On Homeowners Insurance

There are ways to save on your homeowners insurance coverage. But your chances of doing so will go up if you work with an agent rather than do it yourself online. An agent can look for discounts and help you reduce what you pay for insurance. We earlier mentioned bundling coverage and going paperless. Here are some other ways you can save money:

Where you reside

If your home is in a low-crime location, your home insurance rates will be lower.

Install security cameras

Installing security cameras will keep an eye on things, deter criminal activity on your property, and qualify you for a discount on your Homeowners Insurance.

Deductible and coverage limits

Reducing your policy limits can reduce your premium.

Your credit score

Insurance companies look at your credit score when determining your premiums. So, you can get a good discount if you achieve a good credit score.

Construction code

If your house is up to code or you’ve had work done so that it’s retrofitted for storms, you can get discounts.

Factors That Affect the Cost of Homeowners Insurance

We mentioned that where your home is located is a big factor in determining your homeowners insurance cost. But let’s look further at things that impact Homeowners Insurance.

Age of the home

How old is your residence? A newer home will cost less to insure than an older home. It’s more likely that a newer home is more current on codes. A newer home will also likely have a tile roof rather than composite shingles.

Building materials

The materials used to build your home will impact your Homeowners Insurance costs. So, whether your home is constructed out of brick, wood, sheetrock, or some other material, you’ll either pay more or less than average for coverage.

Proximity to fire hydrant

How close is your home to a fire hydrant? Being close to one will lower your Homeowners Insurance.

Weather

Living in an area prone to floods, earthquakes, tornados, or other adverse weather systems can increase the amount you pay for insurance. You also must keep in mind that a rider in addition to your Homeowners Insurance is needed to cover some issues.

Other things that can factor into your insurance costs include your age, the population of your region, the state you live in, state regulations, and even marital  status.