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Homeowners Insurance Premiums in Tennessee

Life is all about balance, and that is especially true for Tennessee homeowners. Property values are much lower in The Volunteer State, but homeowners insurance premiums are generally much higher than they are in other parts of the country. Since purchasing a home insurance policy isn’t exactly optional, you’ll need to do your due diligence and make sure you shop around for the most affordable rate in your area.

There are many perils in Tennessee that can strike your home at any time. Because of this, you’ll see some higher than average insurance rates in the state. But if you purchase a special form HO-3 policy, which is the most popular type of policy for private homeowners, you’ll effectively protect yourself from most of the perils that threaten your home and property.

 

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 (suggested)

Average home prices in Tennessee are generally below $200k, but we decided to round up for simplicity. The chart above clearly outlines what types of coverage you can expect to purchase, and how much coverage you will likely need, based on the estimated value of a $200,000 home. Among coverage options that typically come with an HO-3 are liability coverage, medical payments (for injuries deemed “no fault” that happen on your property), and personal property coverage.

Average Homeowners Insurance Rates in Tennessee Legend: Average Rate Chattanooga Clarksville Knoxville Memphis Nashville 150 300 450 600 750 900 1050 1200 1350 1500 1650 1800 1950 2100 2250 $1641 $1641 $1509 $2302 $1739

 

While the estimates above may seem high, the truth is that there is a significant margin of variability from one company to another. In some extreme cases, you could end up paying twice as much per year to one insurance company compared to their competitor down the street. So make sure you take advantage and shop around for the best home insurance deals in Tennessee.

High & Low Property Insurance Rates in Tennessee Legend: Lowest Estimated Rate Highest Estimated Rate Chattanooga Clarksville Knoxville Memphis Nashville 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 $1444 $2166 $1444 $2166 $1328 $1992 $2026 $3039 $1530 $2295

Laws and Requirements

Homeowners insurance is so universal that you may think there is some sort of legal requirement behind it. The truth, however, is that there is no such law or mandate. The closest thing to it would be the requirement your lender puts on you to protect your investment (and, until you pay off your mortgage, the bank’s). But since your home and its contents are so expensive, it’s smart to purchase a policy even if you aren’t still paying off a mortgage. Otherwise, the wear and tear on your property will be 100% your financial responsibility.

Taking a Home Inventory

Yes, we know that taking a thorough and accurate home inventory is a big hassle. But it can have some pretty significant consequences on your homeowners insurance rates if you don’t take it seriously. Taking a superficial inventory may lead you to underestimate your coverage needs; that mistake can get expensive when you have to file a claim. And while overestimating your coverage needs can help you when you get a claim paid out, your annual premiums will be higher as a result of purchasing the extra, unnecessary coverage.

Choosing What (and How Much) Coverage

The basic HO-3 policy that many Tennessee home insurance companies offer does not necessarily cover every potential disaster that your home or your property may face. Before you sign the paperwork on your policy, make sure to talk to your insurance agent about:

  • Wind/Hail – Tennessee is no stranger to severe weather. But don’t worry, your homeowners insurance will help you in the event of a disaster – both for your outer structure as well as your belongings.
  • Tornadoes – Tornadoes are one of many perils which are covered on your homeowners insurance policy for both your dwelling and your personal property. This is good news for Tennessee residents, since the state gets about 29 tornadoes per year on average.
  • Earthquakes – Earthquakes have traditionally not been covered by homeowners insurance companies. But in certain parts of the country, especially along the New Madrid Fault Line that runs under the northwest corner of the state, earthquakes are becoming an increasing problem – and an expensive one, too. Some private insurers are willing to add earthquake coverage to your policy, for a price. In other areas, you may need to purchase a completely separate policy in order to get covered. Generally speaking, your typical HO-3 special form policy won’t pay out claims on damages caused by earthquakes.
  • Floods and Water Damage – Tennessee is blessed with a number of waterways and bodies of water that wind through the state. But this also increases the likelihood of flooding. The National Flood Insurance Program is one of the most reliable ways to purchase flood insurance for your home, since most private companies refuse to. But you may be able to find a private option if you look around hard enough.
  • Covering Your Property – It isn’t just the outer structure of your home that needs protection. Your personal property inside will need protection from perils, too. But the named perils that cover the contents of your home are limited when compared to the open perils list that protects your dwelling. Be sure to talk to your agent about what the named perils are, and what riders you can add to extend your coverage.
  • Liability Coverage – If an accident happens on your property, there is a chance that you might get sued. While you may try to settle things peacefully out of court, it doesn’t always turn out that way. And if the justice system finds you liable, you’ll have to rely on your liability coverage to help resolve court costs and other expenses.
  • Umbrella Coverage – If the value of your home, dwelling, or both are higher than the coverage limits your insurance company is willing to sell you, then you may need to look into umbrella coverage. This special extra coverage, which can extend up into the millions, will adequately cover any high-value property that you need to protect.

Replacement Cost vs. Actual Cash Value

When you are crafting a policy with your agent, you may be given the choice as to whether you want to protect certain items with a replacement cost benefit, or an actual cash value benefit. Choosing replacement cost will raise your premiums, because you will receive higher payouts on claims. Actual cash value means that your insurance company will subtract the cost of depreciation (wear & tear) from the replacement cost of your damaged property. While this means your claim payout will be smaller and you will have a greater financial responsibility to fix your home/property, it can lower your annual premiums somewhat.

How Your Credit Score May Influence Your Rate

CLUE reports are commonly used to calculate the potential financial risk you pose to your insurance company. The less risky you are, the lower your premiums will be. And CLUE reports are beneficial in that they don’t evaluate your entire credit history; they only examine your claims history from other insurance providers (like your car insurance claim history, for example). You can also request your CLUE report before you start shopping around – having that knowledge can help you negotiate a better rate.

Tennessee Homeowners Insurance Rates by Credit Score Legend: Median Credit Homeowner Excellent Credit Homeowner Chattanooga Clarksville Knoxville Memphis Nashville 150 300 450 600 750 900 1050 1200 1350 1500 1650 1800 1950 2100 2250 $1641 $1165 $1641 $1165 $1509 $1071 $2302 $1634 $1739 $1235

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:

Tennessee Department of Commerce & Insurance – Homeowners Insurance Information

The Official Tennessee State Government Website

National Flood Insurance Program

Request a Free Copy of Your CLUE Report

Or contact them directly through the following resources:

Department of Commerce & Insurance

500 James Robertson Parkway

Davy Crockett Tower

Nashville, Tennessee 37243-0565
(615) 741-2241
Ask.TDCI@TN.Gov

 

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