How much is homeowners insurance?

In many cases, purchasing homeowners insurance coverage is required before you buy a home. This requirement can leave those who plan on becoming first-time homebuyers wondering, “What is homeowners insurance?” and “How much does homeowners insurance cost?”

Homeowners insurance protects your home in the case of property damage or liability charges. The cost of this insurance varies depending on a few factors.

Learn the details of homeowners insurance so you can make an informed decision when choosing yours.

What is homeowners insurance?

Homeowners insurance is a type of insurance that covers property damage caused by natural disasters, such as fire, hail and windstorms. Insurance also will cover property damage that’s the result of theft or vandalism.

You’ll also be protected against legal costs if something happens to someone in your home or on your property.

How much does homeowners insurance cost?

The average cost of homeowners insurance in the U.S. ranges from $300 to $1,000 per year, depending on where you live and which natural disasters are more common in your area. Most homeowners can get an idea of how much their homeowners insurance policy will be by dividing the value of their home by 1,000, then multiplying the result by $3.50, according to the Federal Reserve Bureau.

Several factors can determine the cost of your policy:

■ Your deductible: A higher deductible means a lower annual fee.

■ The value of your home and personal property: Your fee is tied to how much coverage you will need. If your home is worth $300,000, and you have an additional $60,000 worth of personal property, then your annual fee is going to cost more than that of someone with half the home and personal property value.

■ Your claim history: If you have made a claim before, the insurance company considers you a higher risk and, therefore, might charge you more.

■ Age of your home: Newer homes have more reliable plumbing and electrical and can cost less to insure than older homes.

■ Other risks: Owning a swimming pool or certain dog breeds can increase your insurance rate since these items increase your risk of personal liability.

To get a more accurate estimate, you can request homeowners insurance quotes from different insurers. By getting quotes from several insurance companies, you can find out exactly how much homeowners insurance is in your area and what homeowners insurance will cover.

What does homeowners insurance cover?

The exact coverage will vary by state and provider, but most homeowners insurance covers the following:

■ Damage to the home, including the home’s structure, plumbing, electrical wiring and central air and heat systems.

■ Structures on your property, such as fences, walls and sheds.

■ Your personal possessions, which can be covered even if they’re in your car or if you’re at a hotel.

■ Alternative living arrangements, such as hotel costs if your home is being repaired.

■ Personal liability coverage so that you’re covered if someone gets hurt on your property and sues.

■ Medical payments for someone who gets hurt on your property.

Although the best homeowners insurance companies cover damage caused by fire, windstorm, hail, lightning, theft and vandalism, many policies won’t cover damage from floods and earthquakes.

However, you might be able to add on earthquake or flood insurance to your claim, depending on your area.

Even if you no longer have a mortgage payment that requires homeowners insurance, it’s still a good idea to pay for coverage to protect your investment.

To save money on your homeowners insurance, look for a company that offers discounts for bundled policies, such as both car and home insurance.