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Massachusetts Home Buyer Guide


How Much Does Homeowners Insurance in Massachusetts Cost?

Apr 7, 2023 7:29:44 AM

The cost of homeowners insurance in Massachusetts varies depending on several factors, including the value of your home, the coverage, the deductible, and the insurance company you choose. The average cost of homeowners insurance in Massachusetts is $1,320 per year, according to NerdWallet. That's 27 percent less than the national average of $1,820.

Massachusetts insurance agent making a presentation to a young couple showing them a document which they are viewing with serious expressionsWhat is Homeowners Insurance?

Do you know what's worse than a burglar breaking into your home or a fire burning it down? Paying for all the damage out of your own pocket afterward! That's where homeowner's insurance swoops in to save the day. Homeowners insurance, sometimes called hazard insurance, covers losses and damages to your property caused by unexpected events like natural disasters or criminal activity.

If you have a mortgage, your lender wants to make sure you're covered too. After all, your home is also their investment (collateral for your home loan). That's why lenders require proof of homeowner's insurance. While standard coverage doesn't include damages from earthquakes or floods, you can usually add this protection to your policy.

Many homeowners pay for the cost of their homeowners insurance through an escrow account as part of their monthly mortgage payment. You pay your lender, who holds the insurance portion in an escrow account. Then the lender pays the annual premium on your behalf.

Prospective homebuyers should know that their lender will expect them to pay the first year (starting on the closing date) of the homeowners insurance premium before closing.

Related: 7 Tips for Massachusetts Home Buyers Purchasing Homeowners Insurance

The following are some of the factors that can affect the cost of your homeowner's insurance in Massachusetts:

1. The value of your home: The higher the value of your home, the more expensive your homeowners insurance. This is because the insurance company will need enough money to cover the cost of rebuilding your home if it is damaged or destroyed. To determine value, an insurance company may consider the size of your home, the type of construction, the age of your home, the condition of your home, the location of your home, and the value of similar homes in the area. 

2. Insurance coverage: The amount of coverage you choose for your homeowners insurance policy will directly affect the cost of your premium. The more coverage you have, the higher your premium. Insurance companies use the amount of coverage you have to measure the financial risk they are taking by insuring your property. The more coverage in place, the more money the insurance company may have to pay out in the event of a claim; therefore, the insurance company will charge you a higher premium to cover that potential financial exposure. 

When choosing how much coverage to purchase, it is crucial to consider the value of your home and your belongings. A homeowner's belongings might include expensive jewelry, art, or a sports card collection. Consider potential risks, such as the likelihood of a fire or theft. You should purchase enough coverage to replace your home and belongings if damaged or destroyed.

3. Policy deductible: The amount of the deductible you choose for your homeowners insurance policy will directly affect the cost of your premium. A higher deductible will result in a lower premium, while a lower deductible will result in a higher premium.

Insurance companies use the deductible to measure the financial risk they are taking by insuring your home. The higher the deductible, the less risk the insurance company takes on; therefore, the lower the premium they will charge you. Conversely, the lower the deductible, the more financial exposure the insurance company takes, and the higher the premium they will charge you.

When choosing a deductible, it is essential to consider how much you can afford to pay out of pocket in case of a covered claim. If you choose a deductible that is too high, you may not be able to afford to pay for repairs or replacement if your home is damaged. On the other hand, if you choose a deductible that is too low, you may end up paying more in premiums over time.

The best way to choose a deductible is to consider your financial situation and risk tolerance. If you have a lot of savings and are comfortable paying a higher deductible, you may choose a higher deductible. If you have little savings or are uncomfortable paying a higher deductible, you may choose a lower deductible.

4. The insurance company you choose: Different insurance companies have different rates, affecting what homeowners insurance in Massachusetts costs. It makes a lot of sense to speak with an insurance agent first. An agent can help to compare rates from multiple companies before choosing an insurance policy.

An experienced agent also will help you choose the appropriate coverage and discover discount opportunities. For example, you can get an affiliation discount for insurance by being a member of a specific group or an employee of an affiliated company.

By bundling homeowners and car insurance, homeowners can secure additional savings. In addition, insurance companies offer discounts to homeowners who take certain precautions to reduce their risk of loss. For example, some companies offer discounts for homeowners with burglar alarms or fire sprinklers.

Finally, prospective homebuyers may have heard or learned that insurance companies use your credit score to assess your risk of filing a claim. A higher credit score will usually result in lower premiums. That's true in most states, but not Massachusetts. Using a consumer's credit score to set homeowners insurance rates is prohibited in Massachusetts.

A Handy Homebuyer Wants v. Needs Worksheet. Download Now. 

Topics: Home-buying Tips, Real Estate Misc.


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