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Best Homeowners Insurance in Missouri

Friday, Jan. 12th 2018

By: Eric Huffman

Average annual premium in Missouri

The cost of insuring your home in Missouri is slightly more than the national average, with Missouri homeowners paying an average of $1,199 compared to $1,132 for homeowners throughout the country, according to data from the Insurance Information Institute.

Insurance of any type is a reflection of insured value and the risk that a claim will be paid against that insured value. Both elements are seen in Missouri’s home insurance rates. The state’s median home price is $144,000 compared to $203,000 nationally, an indication of insured values. However, lower insured values are offset by higher risk of loss in some areas, leading to average home insurance rates in Missouri that are higher than the national average.

Finding the best premium for your home

Finding the best premium for home insurance requires an understanding of your coverage — especially in a state with unique risks, like Missouri. Without the fundamentals, you might find the lowest rate, but with coverage that doesn’t really meet your needs.

A standard home insurance policy has three main coverage areas, but may provide additional coverages related to one of the main coverages. Most policies will provide dwelling coverage, which insures the cost to rebuild the house itself, personal property coverage, which provides protection for your belongings, and personal liability coverage which insures you against certain liability claims.

The EF5 Joplin tornado had a lasting insurance effect which likely will stay with Missourians for a long time. That single event led to a dramatic spike in claims, driving claims to a record-breaking average of over $1,000 for every insured home. Many homes sustained much more damage, while others were miraculously untouched, but insurance changed in the state for nearly everyone.

If insurers have to pay out more than they collect in premiums, reserves are depleted — and there are only a few ways for insurers to rebuild reserves while still paying for expenses and claims so that their customers can rebuild their homes.

In 2010, prior to the Joplin tornado, the average home insurance rate in Missouri was $970. By 2012, the year after the Joplin Tornado, Missourians were paying 13 percent more for home insurance, with average rates of $1,091.

However, insurance-related costs also increased in another way which isn’t as easily noticed — that is, until you have a claim. Deductibles went up across the state, with many insurers replacing low deductibles with higher deductibles or percentage based deductibles. The deductible is the part of the insurance claim paid by the customer, with higher deductibles leading to lower and fewer claim payouts because many valid claims fall below the payable threshold and covered claim payouts are reduced.

Dwelling coverage

The dwelling coverage in a home insurance policy pays toward rebuilding or repairing your home if it’s damaged due to a covered claim, but it also drives the base values for other parts of your policy. Coverage for other structures which would include sheds, fences, and other structures not attached your home, is usually set at a default percentage of your total dwelling coverage. A home insured for $150,000 might come with $15,000 (10 percent) in coverage for other structures.

Percentage-based deductibles, like the wind and hail deductibles many Missouri insurers use, are also based on the dwelling coverage amount. The same $150,000 home with a three percent wind and hail deductible will leave the homeowner responsible for the first $4,500 in claims due to wind or hail.

It’s important to note that the dwelling coverage amount does not represent the purchase price or resale value of the home. Usually, your home will be insured for a bit more than the market price. Typically, insurers will use specialized software to calculate how much it will cost to rebuild your home with the same materials and features. This calculated figure is a basis used by by many insurers if you have a claim.

Some insurance companies will send inspectors to the homes of random applicants to verify the home details provided on the insurance application. While the number will be calculated by software, it’s up to the customer to change the insured value if the number looks low.

Four aspects of your coverage deserve some special attention.

    1. Roof coverage is a concern. Roofs, commonly damaged by wind and hail, are often treated as a wear item. This means that in a covered claim, many insurers won’t pay enough for your roof claim to install a new roof. Based on age, and then subtracting your deductible, the claim might only pay a small fraction of the amount needed for the repair. If your deductible is high and the roof is old, there may not be any claim payment at all. Be sure to ask about your roof coverage. Some policies have better roof coverage than others.
    2. Water backup and sump pump overflow coverage, usually combined as one peril, is not covered on a standard home insurance policy — but some insurers will allow you to add the coverage as an option at an additional cost. This risk is a common source of claims and without coverage can leave you with massive expenses for repair and remediation, and possibly with no easy way to pay for the damage.
    3. Floods aren’t covered. Discussed later in more detail, this common cause of damage to homes is not covered by a standard home insurance policy.
    4. Land movement isn’t covered. Shifting or settling soil, sinkholes, and earthquakes can all wreak havoc on a home’s foundation and walls. Repairs for these damaging conditions can be extremely costly — and they’re not covered by a standard home insurance policy. However, many companies provide coverage if you purchase an endorsement for your policy that adds the coverage (at an additional cost). You also have the option of purchasing a separate policy to cover land movement.

Personal property coverage

All the creature comforts, doodads, gizmos, furnishings, appliances, and other belongings that collectively help to make a house a home are known as personal property in the insurance world. It’s your stuff — things you own that aren’t attached to the home. This coverage amount is usually based on the dwelling coverage amount, typically about 75 percent of the dwelling coverage of the home, but you can usually change the coverage to be a higher or lower amount, depending on your needs.

In addition to ensuring that your personal property coverage limit is sufficient, there are two other considerations.

    1. High-value items may have coverage limits. Jewelry, for example, might be limited to $1,500 in coverage, even if your personal property coverage is much higher. Similar limits on coverage will apply to other valuables such as firearms, coins, etc. If you have particularly valuable items you’d like to insure, you can purchase a rider or a personal articles policy to insure your valuables properly. Your insurer will need a recent receipt or an appraisal for these items.
    2. Replacement cost coverage and actual cash value coverage are the two ways in which your personal property can be insured. Replacement cost coverage, sometimes available as an add-on or with select policies, pays enough to replace the item in a covered claim. The alternative, which is the standard coverage provided with many policies, is called actual cash value coverage. Items covered for actual cash value pay a depreciated value based on wear and tear due to age. Because deductibles effectively eliminate many small claims, the real risk is in a big claim. If a significant amount of your personal property is damaged in a covered claim, actual cash value coverage can leave a gap of thousands of dollars between the claim payout and the cost to replace the damaged items.

Personal liability coverage

We often think of lawsuits as things that happen to other people. In reality, we all have risk in our homes, and even away from home. Personal liability coverage pays for the defense and damages, subject to policy limits, in covered claims for bodily injury to others and damage to the property of others.

Dog bites, trampoline or pool mishaps and falls are among the common personal liability claims related to bodily injury, but this coverage will also come to the rescue if your oak tree falls on the neighbor’s Buick.

A standard homeowners insurance policy will come with $100,000 in personal liability coverage, but can be increased to $300,000 or $500,000. If you want a higher amount of coverage (recommended if you have a pool) consider an umbrella policy, which provides higher liability coverage limits to both your home and your auto policy.

Deductibles

Deductibles are used to manage costs, both for insurers and for the insured. The deductible is the part of the claim that you pay, and is subtracted from your claim payment. This happens before the claim is paid, and is per occurrence, so smaller claims that fall below the deductible amount won’t be paid at all.

Your deductibles affect your overall premium because they determine how much of the financial risk you assume in a covered claim. A higher deductible, meaning you assume more of the risk, will lower your premium.

When choosing a deductible amount, just remember, deductibles are real money that has to be paid to repair your home or replace your belongings if you do have a claim.

You’ll usually have at least two separate deductibles for your homeowners insurance policy. One will be for wind and hail damage and the second deductible will apply to all other covered perils. Your options for deductible amounts might be a fixed dollar amount, like $2,000 — or your insurer might require deductibles that are a fixed percentage of your dwelling coverage amount.

Discounts

Insurers often look for ways to reward customers who give them more business or who pose a smaller risk of claims. To this end, discounts often align with goals for the insurer. Claims-free discounts are a perfect example.

By giving a discount to a customer who hasn’t had a claim, that customer has an incentive to remain claims-free and is less likely to place smaller claims because they will lose the discount if they place a claim — and possibly even get a surcharge.

Common home insurance discounts

  • Bundling home and auto insurance with the same insurer
  • Claims-free history
  • Home safety features
  • Seniors
  • New home buyers
  • Welcome or new customer discounts
  • Home safety features

Inclement weather in Missouri

In most years, Missouri gets a slightly higher average rainfall total of 33 inches per year when compared the national average of 30 inches. But Missouri residents know that unexpected weather severity should be expected, such as the 1-in-1,000-year rainfall event in early 2017 that dumped over a foot of rain in areas of the state within a few hours. The massive amount of rain in such a short period of time caused catastrophic flooding as waterways overflowed their banks, carrying away the floating debris of homes and cars.

Parts of Missouri are also plagued by sinkholes, often appearing after heavy rains as surging rainwater cuts new paths through the land, both above ground and below. Neither floods nor the sinkholes and land movement they often create are covered by a standard homeowners insurance policy.

Tornadoes are a serious cause for concern in Missouri and nearby states. However, snow is less of a challenge in Missouri than for some of Missouri’s northern neighbors. The Show-Me State shovels about a foot of the white stuff annually in the snowiest parts of the state and freezing pipes can still be a risk.

Flood insurance

Flooding seems like a thing that should be covered by homeowners insurance, but it isn’t covered, along with land movement — which also isn’t covered. While some insurers offer a rider for land movement, insurance for floods requires a separate policy.

Most insurance agents can bind flood insurance coverage and rates will vary between a few hundred dollars per year up to a few thousand dollars per year. Higher deductibles common to flood insurance keep smaller claims out of reach, but if you are in a high risk area, flood insurance can help cover larger claims for flood damage. Flood coverage is often mandated by lenders for properties in the riskiest flood zones.

Most affordable cities

Home insurance rates are affected by where you live, but not to be confused with redlining (which is illegal). Differences in average rates are due to risks in a given area as well as by the insured value of homes in that area.

The types of homes that are common to an area also play a role in average rates for that area. Factors such as crime rates and distance from a fire station will affect home insurance premiums as well.

Among the most affordable areas for home insurance in Missouri are:

  • Elsberry
  • Springfield
  • Ellisville
  • Cape Girardeau
  • Hannibal

Most expensive cities

Among some of the more expensive cities in Missouri for home insurance are:

  • Kirksville
  • Monett
  • Park Hills
  • Nevada
  • Mound City

Top picks for Missouri

Shelter

As an insurer with roots in Missouri, Shelter understands the needs of Missouri residents and offers a vast selection of home insurance products. With policies for renters, condo owners, single family homes, and even farms and apartment buildings, Shelter can meet your needs even if you own multiple properties.

As a money-saving option, Shelter also has a dwelling policy, which is a simplified home insurance policy that covers the major risks of fire and wind/hail, but makes many other coverages optional so you can design your own policy.  Discounts are available for purchasing multiple policies and Shelter gives a discount to customers who are claims-free for six years.

State Farm

While many insurers move to online service and phone-based service, State Farm maintains one of the largest agent networks in the business. With about 18,000 agents throughout its network, State Farm embraces the importance of doing business face-to-face and having local agents who can explain coverage, handle service needs, and bind the right policy to protect your home.

If you own multiple properties, be sure to get quotes from State Farm. The company often offers attractive rates on landlord policies as well as homeowners insurance policies. Bundling home and auto will earn a discount on both policies and discounts are available for home safety features.

American Family

American Family Insurance provides a range of insurance products in 19 states including Missouri and also sells its products through broker arrangements with some large insurers.

In addition to its standard home insurance policy, which covers most risks, American Family also offers optional coverage of home-based-businesses as well as water backup and sump pump overflow coverage. Homes with Smart Home devices, such as alarms and thermostats can earn an extra discount. The company also offers discounts for new home buyers, for bundling home and auto, and a loyalty discount for staying with American Family.

Farmers

Farmers Insurance is actually a group of companies, with Farmers Insurance being the most well-known among its companies. Within the Farmers Insurance group of companies are several other insurers which gives the company some of the advantages of an independent agent and the ability to find a solution to nearly any insurance need.

Options for Farmers’ home insurance policies include replacement cost coverage, which protects your personal belongings for the full cost of replacing the item(s) in a covered claim. Discounts are available for bundling home and auto, home safety features, and for certain home renovations.

Missouri Farm Bureau

Originally started by a group of Missouri farmers who wanted a simpler approach to insurance, Missouri Farm Bureau Insurance now has 140 offices throughout the state of Missouri and remains committed to the same service for rural areas where it has its roots.

As a rare exception in the industry and demonstrating its commitment to being a full insurer, Missouri Farm Bureau Insurance even provides a policy for vacant homes, a frequent situation and a need not easily answered by other insurers.

Replacement cost coverage is available as an option for dwelling coverage and for personal property. To help make comprehensive coverage for your home affordable, Missouri Farm Bureau Insurance provides a discount for bundling auto with home, farm, ranch or commercial property.

Take action

Missourians have special considerations and unique needs when it comes to insuring their homes. Specifically, the details of wind and hail coverage are important to understand due to potential damage from tornadoes and other wind events. Flood coverage and coverage for land movement are equally as important to understand. Neither risk is covered by a standard home insurance policy and both risks have the potential to severely damage or even destroy a home.


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