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Homeowner’s Insurance Premiums in New Jersey

Getting a good deal on homeowners insurance is a delicate dance performed by several different entities. First, there’s your bank, then there’s the insurance company itself, then there’s you. Both of those first to will put a lot of demands on you and, unfortunately, you will be the one doing most of the hard work. But if you do it right, it’ll be worth it in the long run.

HO-3 policies, like in most other states in the US, are the typical standard as far as home insurance goes. They cover everything from your structure and your property to liability and medical payments. And although you wouldn’t think they’d cover hurricanes, they actually do. But one of the few things they don’t cover is damage caused by floods.
 

Types of Coverage Coverage Amount
Replacement Cost (Dwelling) $300,000
Replacement Cost (Contents) $150,000
Personal Liability $100,000
Medical Expense $1,000
Deductible $500

HO-3 Policies cover a wide range of scenarios and disasters that may do damage to your home. There are even provisions for hurricane damage – albeit expensive ones. With the recent devastation caused by Hurricane Sandy, many homeowners insurance companies are enforcing a “hurricane duration” deductible on the policies they sell. This deductible is different from your regular deductible. If you file a claim based on damage caused by a hurricane, or damage your insurance company believes was caused by a hurricane, your deductible will be 5% of your home’s total value. In the example above, that deductible would be at least $15,000.

Average Homeowners Insurance Rates in New Jersey Legend: Average Rate Newark Jersey City Paterson Elizabeth Edison 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 $1452 $1315 $1332 $1097 $819

 

Despite everything going on in Jersey – from floods to hurricanes to lead poisoning from contaminated supplies of liquid spray tan (just kidding), New Jersey homeowner’s insurance rates are still some of the most affordable around. As you can see, smaller towns and cities that are more inland have some of the lowest rates. Meanwhile, coastal cities and densely populated areas see annual premiums that far exceed the state average.

But you aren’t locked into the rates seen in the chart above – unless you refuse to shop around, that is. Just take a look at the bar graph below. Shopping around for the best price could save around $200 – $400 per year on average. Over the lifetime of your home, that can add up to thousands of dollars in savings (or more).

High & Low Property Insurance Rates in New Jersey Legend: Lowest Estimated Rate Highest Estimated Rate Newark Jersey City Paterson Elizabeth Edison 150 300 450 600 750 900 1050 1200 1350 1500 1650 1800 $1278 $1917 $1157 $1736 $1172 $1758 $965 $1448 $721 $1081

Laws and Requirements

If you own your own home and aren’t paying mortgage payments to a bank, then purchasing homeowners insurance is entirely up to you. There aren’t any laws or regulations that specifically mandate it. Your bank can strongly compel you to make the purchase if you do indeed have a mortgage, but that’s about it. Considering the heightened threat of damage from natural disasters in recent years, however, most homeowners would be better off safe than sorry.

Taking a Home Inventory

Knowing how much the actual structure of your home is worth is pretty much a no-brainer. Knowing the value of your home’s interior contents, on the other hand, is a different story. In order to know how much your personal property is worth, you’re going to have to take a home inventory. If you don’t, you’ll be selling yourself short. You’ll either end up overestimating your property’s value, which leads to purchasing too much coverage and unnecessarily high premiums. And lowball estimates can leave you in a pickle later if your insurance company doesn’t pay out enough on a claim you file.

Choosing What (and How Much) Coverage

Your basic HO-3 policy that many New Jersey home insurance companies offer is fairly comprehensive, but it doesn’t cover everything. On top of your basic policy, there are many other factors to consider. Such as:

  • Fires – While forest fires may not be much of a problem for the majority of New Jersey, there are many old buildings which may not be up to code. This makes housefires, especially in densely populated areas of the northeast, a concern. Thankfully, almost all homeowners policies cover this.
  • Floods – For the most part, the National Flood Insurance Program, through FEMA, is responsible for selling and managing flood insurance policies to homeowners. But you can check with the New Jersey Department of Banking & Insurance to see if there are private companies in your area that also offer it.
  • Wind, Hail, and Hurricanes – Depending on your policy, some, all, or none of these damages may be covered. You will have to sit down and have a long, detailed talk with your insurance agent to figure out if and how your policy will cover you for such perils.
  • Damage from Winter Storms – Despite its northern latitude, New Jersey doesn’t see as much snowfall as some of its neighboring states. Regardless, HO-3 policies still have provisions for winter damage coverage.
  • Covering Your Property – Covering the property inside your home is just as important as the outer structure itself. The “Personal Property – Coverage C” coverage on your policy will help pay for replacing things like damaged furniture, appliances, clothes, and more.
  • Liability Coverage – This type of coverage isn’t just for auto insurance. There may be special circumstances in which an accident that happens on your property is deemed your fault. This coverage protects you from lawsuits and damages that may result.
  • Umbrella Coverage – Typical HO-3 policies will only provide you so much coverage. If you need higher coverage limits than what your vanilla policy is willing to give you, then umbrella insurance may be necessary. For the truly affluent, umbrella coverage can expand your limits into the millions.

Replacement Cost vs. Actual Cash Value

You’d think these two terms would be self-explanatory, but in a way, they actually mean the opposite of how they sound. Actual cash value doesn’t necessarily mean the full value of the item you are filing a claim on; it’s that item’s total value minus depreciation. And the older the item is, the more depreciation it has occurred, which means you will be paid less money on your claim. Replacement cost, however, pays out 100% of what it will take to replace or repair the damaged part of your home that is pertinent to your claim.

How Your Credit Score May Influence Your Rate

Typically, homeowners insurance companies don’t run your average credit check before they rate your annual premium. Usually, they are limited to a finite number of years of your most recent credit history, and they only get to look at certain aspects, like how reliable you are with your other insurance payments, to determine your total risk. Before you sign anything, ask the companies who are providing you with quotes about how their credit check process works. It can mean the difference between a good rate, and a really affordable premium.

New Jersey Homeowners Insurance Rates by Credit Score Legend: Median Credit Homeowner Excellent Credit Homeowner Newark Jersey City Paterson Elizabeth Edison 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 $1452 $1031 $1315 $934 $1332 $946 $1097 $779 $819 $581

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:

New Jersey DOBI – Homeowners Insurance

The Official New Jersey State Government Website

FEMA National Flood Insurance Program (NFIP)

Or contact them directly through the following resources:

NJ Department of
Banking and Insurance
20 West State Street
PO Box 325
Trenton, NJ 08625
Phone: 609-292-7272 | Fax: 609-777-0019

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