How to Budget for Home Insurance

When shopping for a home in Dallas, TX, you need to consider more than the asking price of the property. By not budgeting for extra costs like home insurance, you could end up making an offer on a property you can’t afford. Keep the following in mind as part of budgeting for home insurance expenses.

Make the Calculations

According to the Federal Reserve Board, the average amount of money you should spend on home insurance is 2.24 percent of your total annual income. Although this calculation can be useful, this may not be a realistic figure for all homeowners. For instance, city real estate buyers will likely spend more of their budget on home insurance than rural investors.

Consider the Deductible

When budgeting for home insurance, a major decision will be to choose whether to have a higher or lower deductible for the selected policy. A higher deductible plan will have lower premium payments, but could be risky if you need to file a claim. A lower deductible home insurance policy has higher out of pocket costs initially, but offers more protection when filing a claim.

Get a Professional Assessment

Don’t guess when it comes to deciding how much home insurance coverage you need. A professional assessment will not only determine the cost to replace the home, but how much your valuables are worth inside the property. This prevents you from getting too much or too little coverage.

Safety First

Lower your home insurance rates by having the proper safety equipment on hand in your home. Install smoke detectors, carbon monoxide detectors, sprinklers, and a burglar alarm. Add storm windows and reinforce roofs. Although there are installation costs associated with these safety measures, your home insurance costs are likely to decrease.

Home Insurance Rates Fluctuate

Each year, home insurance rates may increase. The rates could also fluctuate if you need supplemental insurance such as flood and earthquake coverage. Although you may be stretching your budget, don’t skimp out on adequate coverage. Not having the right amount could be financial devastating.

Home insurance doesn’t have to risk your financial security. Contact one of the independent insurance agents at DFW Insurance to discuss quotes from local carriers. DFW Insurance serves clients in Dallas, TX and surrounding areas.