What is a homeowners insurance premium?

The amount of money you pay to your home insurance company in exchange for a homeowners insurance policy is referred to as a homeowners insurance premium. Payment options will vary by insurer, but home insurance premiums are typically paid annually or monthly. Homeowners that choose to escrow will have their home insurance premium included in their monthly mortgage payment, but may have the option to pay their premium separately.

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What’s the difference between a homeowners insurance quote and a homeowners insurance premium?

A homeowners insurance quote is the estimated cost of a home insurance policy before you decide to buy it. Assuming you like the quote and want to purchase the policy, the home insurance premium is the amount you agree to pay for the coverage.

How are home insurance premiums determined?

When you quote homeowners insurance, the insurance company will determine your premium (or “rate”) based on several factors, such as:

  • Location

    The location of your home can have a significant impact on your homeowners insurance premium, especially if you reside in a state prone to severe weather. Learn how home insurance covers storm damage.

  • Type of home and roof

    Construction materials may influence your rate for home insurance, as well as the type of siding and number of stories. Your roof’s age and materials may also be a pricing determinant.

  • Coverage selection

    Adding optional homeowners insurance coverages and lowering deductibles, when possible, will affect your rate for home insurance.

  • Insurance score

    Depending on your insurer and state, your insurance score may be used in calculating your home insurance premium.

  • Home insurance premiums and escrow

    If the down payment on your home is less than 20%, lenders typically require your homeowners insurance premium to be paid through an escrow account. The total amount you pay to your lender monthly typically covers your mortgage payment, real estate taxes, and home insurance premium.

    Learn more about homeowners insurance and escrow and how home insurance is paid.

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