Homeowner’s Insurance Premiums in Massachusetts

Purchasing your first home is an exciting process…most of the time. But it is also a challenging one, too. There are tons of papers you need to read, sign, get notarized; dozens of meetings you have to attend; inspections to be made; and that’s all before you can walk in the door of your bank to ask for a mortgage!

But, all joking aside, another hurdle you might not be prepared for is the purchase of your first homeowners insurance policy – or, rather, your homeowners insurance form, as they are referred to in Massachusetts. The best policy for the most affordable premium is called the HO-3 form. Below, you can see the types of coverage it offers, as well as the recommended amounts of coverage for a $200,000 home:

Types 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
Wind Deductible	$10,000

Unlike many other homeowners insurance forms, the Massachusetts HO-3 includes a special deductible for wind damage. This mandatory deductible was added in recent years due to unprecedented damage from hurricanes moving farther and farther up the Atlantic coast. Of course, you may want to talk to your insurance company about raising this deductible if you don’t think you’re in danger of any severe weather damage related to wind. It might help raise your insurance premiums (if you’re willing to take that gamble, that is).

Massachusetts homeowners insurance rates are a little high in some of the major cities, but notably more affordable in places like Cambridge. But the more important thing to remember is that the chart above only gives a rough estimate of what to expect when you start getting quotes. In reality, there can be significant fluctuations from one company to another. The following trait demonstrates this phenomenon quite vividly:

Laws and Requirements

You’d think that with so many other types of insurance that are mandatory these days, that homeowners insurance would be one of them. The truth is that, not unlike schrodinger’s cat, homeowners insurance both is and isn’t legally mandatory in most states across the US. Legally, there is nothing on the books that your federal or state government can use to make you purchase this form of coverage. However, since most homes are paid for using a mortgage loan from a bank, your bank can absolutely make it a mandatory part of the loan process. And, in general, it’s just a good idea. Even if you own your home outright, you’d end up being 100% financially responsible if anything ever happened to it.

Taking a Home Inventory

Have you ever worked a job where taking inventory was one of your required duties? Well, as bad as that may have been, it can be as tedious or worse to take a personal inventory of your home and personal property. But it is as necessary as it is grueling – if you want to get the best deal on your insurance premiums, that is. Some people guess as to the true value of their home and it’s contents. In the long run, it can either cost them over time in the form of higher premiums (from overestimating the home value), or create a situation where their insurance company doesn’t pay out enough money on a filed claim.

Choosing What (and How Much) Coverage

The basic HO-3 form that many Massachusetts 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, Massachusetts 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 – A large percentage of Massachusetts’ edges are made up of coastal land. This makes homeowners that much more vulnerable to flood damage. Sadly, you’ll have a difficult time finding a private company willing to sell you coverage for flood damage. But the National Flood Insurance Program was set up by the federal government to help you with that exact problem.
Damage from Winter Storms – Massachusetts sees an average of 44″ of snow fall upon the Bay State during the winter months. While some years may see those inches spread across the entire winter, heavy snowstorms can happen at any time. And with this type of protection on your homeowners form, you can rest easy knowing you’ll be covered (not just in snow).
Wind – Hurricanes Irene and Sandy have had a significant role in both creating mandatory wind coverage deductibles and raising overall homeowners insurance premiums in recent years. And climate experts predict that such wind forces will only be increasing as time goes by. Therefore, it’s important to carefully understand how wind coverage works on your form, and how your wind deductible can raise or lower your annual rate.
Covering Your Property – The contents inside your home are as important – or sometimes more important – than the house that contains them. The second section of coverage on your form, after the structural coverage to your home, is related to your property. This is why taking a home inventory is so important, because this coverage is extremely important, but guessing wrong on how much coverage you need can have serious consequences.
Liability Coverage – Many homeowners insurance policies in many states, Massachusetts 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 the Cape Cod bay, 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

When you file a claim, the amount you receive will depend on whether the damaged property is designated as “replacement cost” or “actual cash value”. More often than not, the structure of your home and certain other external fixtures will be paid out with 100% of the total replacement cost, which means that there is no money owed by you (minus your deductible). Personal property, especially those objects in the interior of the house, will be paid for using actual cash value – their original value minus depreciation. So after you file your claim and pay your deductible, you will receive enough money to replace your damaged property as-is – not enough to replace it with something brand new.

How Your Credit Score May Influence Your Rate

Typically, in the other 48 states, homeowners insurance companies run a “soft” check on their potential customer’s credit before they give them a final quote. This is good because such soft checks don’t appear on a person’s total credit history, which can keep your credit score high. And the amount of credit history the company can look at is very limited, which might put you in a better economic standing.

Things work very differently in Massachusetts, though. Legally, as of this writing, Homeowners insurance companies are prohibited from checking your credit at all in order to determine your premiums. On the one hand, that can help people with imperfect credit get better rates. On the other, people with a perfect credit history might end up paying slightly more than they would if their insurer could include their credit as part of the premium evaluation.

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:

Massachusetts Office of Consumer Affairs & Business Regulation – Homeowners Insurance

The Official Massachusetts State Government Website

OCABR Homeowners Insurance Guide

Or contact them directly through the following resources:

Commonwealth of Massachusetts
Division of Insurance
1000 Washington St, Suite 810
Boston, MA 02118-6200

Phone: (617) 521-7794 | Fax: (617) 753-6830

doicss.mailbox@state.ma.us