Is homeowners insurance worth it?

Is homeowners insurance worth it?


You have just bought your new home: a mixed feeling of enthusiasm and concerns, but you feel unsure if your savings should be aimed to insure it. After all, it seems that nothing can occur, and you have many bucks available to enjoy with fresh things. However, at some point, you might meet some kind of troubles, and repent you didn’t the choice. Besides, home insurance today is an almost obliged requirement: nearly all mortgage lenders will impose it, in order to consider closing, because they want to protect their own investment.

Probably, you want some real facts to support your crucial decision, meanwhile, there are also a few considerations to be made.

First of all, again, don’t think serious damage or a loss couldn’t happen to you. Theft, fire, and storms of every kind are not so unlikely: according to Insurance Information Institute, as of 2019 about one in 20 insured homes makes a claim each year across the nation, most frequently because of a windstorm or hail.

The second fundamental point is: reimbursements for claims are by far exceeding the amount of premium. The average annual cost of a homeowners policy, in 2020, is roughly $1,300, according to our research findings. Indeed, that is on a relatively wide spectrum, depending on where you live: you can go from as low as $380 in Vermont up to rates exceeding the threshold of $8,000 in Florida and Louisiana, which are for covering high worth houses. In New York, you can expect your premium to be very close to the national average.

Although premiums might be quite high for your budget, there are some ways you can lower your policy rates:


  • bundling home with car insurance
  • choosing a cheaper company
  • selecting only necessary coverages, with the right limits
  • making home improvements aimed at safety over time.

Then, you have to look at damages possible extent. The most costly and severe damages are related to fire and lightning: a weighted average of $68,000+ has been paid yearly between 2013 and 2017. Compare this amount with the annual premium: do you notice the difference? Without insurance, you would have paid tens of thousands dollars out of your pocket. To follow, see where they were spent:


  • $26,085 for bodily injury and property damage
  • $10,234 for water damage and freezing
  • $10,182 for wind and hail
  • $4,264 for thefts.

Only in 2017, for every 100 policies, an average of 6.26 claims was made, with a paid amount of $15,532 per claim.

In the four years period analyzed, causes of loss have been increasingly almost total from property damage, while 1,9% of cases from a liability claim related to the cost of lawsuits for bodily injury that the policyholder or family members have caused to others. Liability is still important as regards severity, contributing to a $19,531 average cost. Only factoring medical expenses, these overweigh the double of annual insurance premium.

So, you may perceive all these percentages as small, but if you turn them in numbers, you will see they are actually big.

Besides the structure of your house, here are listed a few things that are covered under home insurance:

  • roof
  • nearly everything is inside your house can be insured: laptops, televisions, carpets, clothes, furniture, cash, jewels, etc. Just think about how much you can lose
  • again, if an accident occurred to strangers who are guests in your house, you would be most of the time responsible, and liable. You will have to pay medical expenses to them, perhaps lost wages, and you are indemnified for potential legal expenses if some of them decided to sue you
  • should a natural hazard hit your home structure, or destroyed it, you would still have to support yourself for living outside, pay temporary lodgings, eating, properly storing personal effects and to keep your clothing clean.

Consider how much you would have to spend by yourself if one or more of these circumstances occur.

Having home insurance catches two birds with one stone: give you peace of mind, and save your money, thus it should be quite an obvious choice.