Homeowner’s Insurance: How Much Can You Save By Comparison Shopping?

In an ideal world, you would always comparison shop every product or service. But in the real world, that takes time and effort. Is is worth the bother? To estimate the potential benefit of shopping around, Priceonomics analyzed homeowner’s insurance premiums across 12 states (for a similar level of coverage).

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They ranked each state by taking the difference between quotes in the 25th and 75th percentiles.

We found that the difference between the premiums was substantial, and shopping around can lead to dramatic changes in pricing. Of all the states we looked at, Texas had the biggest discrepancy in prices — there was a $2,182 range in insurance prices between a 25th and 75th percentile quote. Even at the low end, in New Hampshire the price ranges between quotes at these percentiles was $363 per year.

The article does a deeper analysis for California and Texas:

It’s night and day between California and Texas. Texas is one of the most expensive states to get home insurance in the country, owing partly to the frequency of catastrophic weather events and partly due to higher insurer expenses. Not only does zip code 78521 in Brownsville have a 25th percentile of premium greater than San Francisco’s 75th percentile, but it’s 75th percentile is more than double that!

Basically, you should shop around everywhere as you could save hundreds per year at a minimum. But you should really shop around in Texas. You know, unless you don’t want to save potentially $2,000 a year.

Comments

  1. I just did this in Georgia. It was hard to compare apples to apples sometimes because different insurers have different deductible levels, but there was a $500-600 difference between quotes I got. The best was from Travelers, and its coverage was better than the more expensive companies. I know it is one of the, if not the, biggest providers of homeowners insurance, which made the lower price make sense, but I was actually a little skeptical because of how cheap it was. About $1,040 a year for a house worth $350,000.

    • Thanks Steve. What kind of coverage is absolutely necessary? How does one estimate the right amount of home owners insurance coverage? For a house worth $350K, did you get a coverage of $350K or more than that? What is the criteria for coverage amount? Cost to rebuild the house per sq. foot? Any insight would be much appreciated.

  2. The policy I got was for $400,000 that also included a 25% additional replacement cost protection, so I have $500,000 to rebuild the house if I suffer a total loss. You are supposed to get replacement cost coverage because it could cost a lot more to rebuild your house than you paid for it. There are some websites out there that will give you an estimate of how much it will cost to rebuild your house, but I don’t know how reliable they are.

  3. Robert Barker says:

    Although this sounds Great, it is not that easy at all. I have had Amica for over 20 years. I have a $250 deductible which you can’t get anymore and after I pay my premium i get a refund back depending on the amt of claims they have had the past year. I do wish they would just adjust the premium though.

    • If you don’t get a comparison quote, how do you know your current rate is worth the low deductible and rebates? I have a pretty high deductible, as I can’t imagine making a $500 claim and having it on my insurance record with all the stories of insurance companies just dropping you completely if you make too many claims.

  4. This choice of states that were analyzed seems questionable, as it avoided many of the large population centers in the US. Here are there respective rankings by population:

    1 – California
    2 – Texas
    4 – Florida
    19 – Maryland
    22 – Colorado
    25 – Louisiana
    34 – Kansas
    40 – Hawaii
    42 – New Hampshire
    44 – Montana
    45 – Delaware
    47 – Alaska

    I will also advocate again to visit an independent insurance agent near you and get them to do the shopping around for you. Otherwise, you’re mostly stuck paying premiums to the big corporate giants to cover their Super Bowl ad spots.

    • From what I can tell, the data was just limited to the states that require this level of public transparency from insurance companies. I could be wrong. I like the idea of independent insurance agents as well.

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