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Homeowner’s Insurance Premiums in Illinois

If you’re buying a new home, you’re probably really excited about the road ahead. But as you go through the process, you may be surprised to learn that it’s more complicated than you expected. For example, homeowners insurance. Purchasing a policy, filing claims, and paying your premiums all work a little differently than they do for most insurance products. But working through these hurdles is an essential part of protecting yourself and your property from economic ruin.

The “form” (a.k.a. Insurance policy) that most homeowners end up purchasing in Illinois is called an H-03. It protects against 17 different types of home-damaging catastrophes including fire, windstorms, explosions, plumbing problems, and even volcanic eruptions. It also provides for replacement cost, liability, and medical expense coverage. For a $200,000 home in the prairie state, those limits would be:

 

Type of Coverage Coverage Amount
Replacement Cost (Dwelling) $200,000
Replacement Cost (Contents) $100,000
Personal Liability $100,000
Medical Expense $1,000
Deductible $1,000 (suggested)

Do keep in mind though that the numbers above are suggestions. The amount of coverage you actually purchase will vary based on the value of your home, your property, and the likelihood of a peril damaging your house. It will also depend on balancing out your annual premium vs. your deductible. Higher deductibles lower your premium, which can save you money over time. But they can also leave you footing the bill for lower-cost damage to your home.

Average Homeowners Insurance Rates in Illinois Legend: Average Rate Chicago Aurora Rockford Joliet Naperville 200 400 600 800 1000 1200 1400 1600 1800 2000 $2045 $1332 $1353 $1920 $1301

 

For the most part, insurance premiums are fairly even across the state – unless you live in a bigger city like Chicago, that is. In the rural areas outside of the major cities is where you’ll find the most affordable rates. But even if you live in a densely populated area of the state, you can still save money by shopping around for a better deal. In one of the most expensive cities for homeowners insurance, Mobile, you could lower your annual premium by as much as 50% just by comparing quotes from more than one provider.

Highest & Lowest Property Insurance Rates in Illinois Legend: Lowest Estimated Rate Highest Estimated Rate Chicago Aurora Rockford Joliet Naperville 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 $1800 $2699 $1172 $1758 $1191 $1786 $1690 $2534 $1145 $1717

Laws and Requirements

State and federal laws don’t require homeowners in Illinois to purchase this form of property insurance. But there is a catch to this: the bank that manages your mortgage may require you to purchase this coverage if they agree to loan you money in order to buy a home. They also make strongly suggest that you take a regular home inventory to make sure that your coverage accurately matches what you would need in order to replace or repair your property in the event of a disaster.

Taking a Home Inventory

You will most likely be required to take a home inventory before you purchase a policy; but even if your insurance company doesn’t require it, it’s a bad idea to skip this step. Overestimating your properties value could result in purchasing too much coverage, which can cost you thousands in the long run. However,  it’s also dangerous to underestimate the value of your property. Because in the event of a peril or disaster, you may not have enough money, either from your insurance company or your savings, to replace what was damaged or destroyed.

Choosing What (and How Much) Coverage

The basic HO-3 policy that many Illinois home insurance companies offer is really only the tip of the iceberg. On top of your basic policy, there are many other factors to consider. Such as:

  • Fires – Luckily, Illinois is one of the states where H-O3 policies cover for fire damage. In addition to fire damage, these policies also cover damage caused by smoke, fires caused by lightning, and any damage caused by an accidental electrical discharge.
  • Floods – Illinois is peppered with river valleys, and the city of Chicago is right on the coast of lake Michigan. So worrying about flood insurance in this state is not without merit. While it may be difficult to find an insurance company who will either add flood coverage to your policy or sell you separate flood coverage, you can always seek financial protection under the National Flood Insurance Program.
  • Damage from Winter Storms – Illinois is included on the list of states where your typical homeowner’s policy does protect against damage from winter storms. This includes damage caused by the weight of falling snow, ice, or sleep. It also includes any Plumbing damage that results from freezing pipes.
  • Mold – some parts of Illinois are particularly susceptible to problems stemming from mold growth. Mold can grow anywhere that there is a surface for it to grow on, and moisture. Some insurance policies will cover mold damage if the water source that caused it is also covered by your policy. Other insurance policies, however, specifically exclude mold as a covered catastrophe. You’ll definitely want to check with your insurance agent about how mold damage is covered under your policy, and if you need to purchase additional coverage for optimal protection.
  • Covering Your Property – As you may have guessed by now, homeowners insurance protect you from much more then getting the outside of your home damaged. It also protects against damage to any property located on the inside of your home. The basic Illinois homeowners policy allows for coverage and benefits which protect against damage  to personal belongings such as Electronics, antiques, artwork, and much more.
  • Liability Coverage – Many homeowners insurance policies in many states, Illinois included, account for liability coverage which protects you financially in the event that someone or someone else’s property is damaged while on your land.
  • Umbrella Coverage – Some homeowners insurance companies, especially if you live in a  risky area like Chicago, will only provide so much coverage for your home and belongings. If you own an expensive home, and your insurance company won’t provide you the coverage amount that you need, you can always purchase additional protection in the form of umbrella coverage.

Replacement Cost vs. Actual Cash Value

For better or worse, your home inventory is only the first step in determining your annual premium. In order to make sure you have the most adequate coverage possible, you will have to update this home inventory on a regular basis. Common wisdom suggests updating it every year, unless you have a major life-changing event that happens to or on your property. This can help protect you from financial expenses incurred as the result of an inaccurate estimate of the coverage you need.

Based on your home inventory, your insurance will determine your claim payouts based on either replacement cost, or actual cash value. Replacement cost is pretty self-explanatory – the insurance company pays out the amount that it would cost to replace or repair your damaged property up to your coverage limits. Actual cash value, however, is different. It incorporates  depreciation into the total value of your property that you are filing a claim on. Therefore, if your property has suffered a lot of devaluation, and your insurance company only pays out the actual cash value, you may have to pay the remaining balance of its replacement cost out of your own pocket. As stated above, if you are purchasing a homeowners insurance policy based on the replacement cost of your property, the best strategy is to make sure you have enough coverage to pay for at least 80% of your replacement cost. This can save you from financial ruin in the event of a disaster that seriously damages depreciated property.

How Your Credit Score May Influence Your Rate

Homeowners insurance evaluates your credit score a little bit differently than most other companies. What they do is incorporate various details, such as your home inventory, a “soft” check on your credit history, and other important attributes in order to determine how much to charge you for your annual premium. Thankfully, this “soft” check doesn’t necessarily go on your credit report. This can save you from enduring a lower credit score in the event that you get quotes from multiple companies – which is the smartest thing to do when shopping for a major expense such as homeowners insurance.

Despite the “soft” check mentioned above, your credit score still affects how much you may be charged for your homeowners insurance. In the table below you can see estimates of what an Illinois homeowner might pay with an average credit score versus what their neighbor with excellent credit with pay for their annual homeowners insurance premium.

Illinois Homeowners Insurance Rates by Credit Score Legend: Median Credit Homeowner Excellent Credit Homeowner Chicago Aurora Rockford Joliet Naperville 200 400 600 800 1000 1200 1400 1600 1800 2000 $2045 $1452 $1332 $946 $1353 $961 $1920 $1363 $1301 $924

Learn More

For more information, feel free to click any of the links you see in this article. They all lead to more detailed information about homeowner’s insurance, specifics on purchasing a policy, and how to find the best deal. You should also contact local resources in your state, such as:

Illinois Department of Insurance

The Official Illinois State Government Website

Illinois DOI Homeowners Insurance Shopping Guide

Or contact them directly through the following resources:

IDOI (Illinois Department of Insurance)
122 S. Michigan Ave., 19th Floor
Chicago, IL 60603
Phone: (312) 814-2420 | Fax: (312) 814-5416
DOI.InfoDesk@illinois.gov

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