Homeowners Insurance in Kentucky
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UPDATED: Jul 19, 2021
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Are you in the process of buying your very first home? Well, in case no one has told you yet, you’re going to need a little something called homeowners insurance. It’s a type of insurance that protects you in the event that there is serious financial damage caused to your house, your belongings inside the house, outside structures in and around your property, and much more. Unfortunately, getting the right homeowners insurance policy for a decent price as one of the hardest things about buying home. But if you do your homework and enough research, you can get the deal you deserve.
The most popular type of homeowners insurance policy in the state of Kentucky – and also the country – is called an HO-3 policy. It protects against common natural disasters, pays for the replacement cost of your home structure if it is severely damaged or destroyed, and also pays out claims for personal liability, medical expenses, and destruction to the property inside your home. Depending on how high of a deductible you choose, you can raise or lower your annual premium.
|Types of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$150,000|
|Replacement Cost (Contents)||$75,000|
The types of coverage, coverage limits, and the recommended deductible for homeowners insurance on a $150,000 home are listed in the table above. If your home is more expensive, then you will most likely need more coverage than what you see here. The estimated annual premiums you see in the chart below are based on the numbers from the table above. If you require more or less coverage for your particular domicile, you can make an educated guess as to how your annual premium would reflect the changes in price.
The premium you pay each year for your homeowners insurance policy will have much to do with how likely your particular home, given its location, is vulnerable to natural disasters or other occurrences which might cause severe property damage. Living near a wooded area, for example, might make your home more vulnerable to forest fires. Living near water might make your home more vulnerable to mold or flood damage. All of these factors will be taken into account when you sit down with an insurance company to craft your homeowners insurance policy.
Here’s an additional word of advice: don’t just take the first quote you get. There are many different insurance companies near you that are competing for your business. Shopping around for quotes from at least three or four different companies should help you find the best deal. As you can see in the chart below, the company you request a quote from could vary by hundreds of dollars compared to their competitor down the street. And purchasing the most affordable policy could save you thousands over the lifetime of your home.
Laws and Requirements
Unlike car insurance, there are neither state nor federal laws which say that it’s mandatory within the state of Kentucky. However, you may legally be required to purchase a policy in a roundabout way. If you purchased your home by way of a mortgage, the bank that manages your mortgage will likely require you to buy a policy. Until your mortgage is paid off, your house and your land are still technically the property of your bank. And your bank, just like anyone who invests in a large expense, wants to protect their investment. It’s not just good for the bank, but it’s good for you in the long run as a homeowner also.
Taking a Home Inventory
A home inventory, although a tedious and miserable process, is very important to have before you set foot in an insurance agent’s office. Your inventory should be very thorough, as honest as possible, and come with as much backup documentation as you can provide. This helps you avoid two of the most common pitfalls when purchasing a homeowners insurance policy. Some people don’t want to take the time or put in the effort to accurately as to make their home Inventory, which can lead them to underestimate their properties value. Other homeowners May exaggerate the price of their personal belongings, or their home and end up purchasing more coverage than they need. This can lead to thousands of dollars of wasted money over the course of your home ownership years.
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Choosing What (and How Much) Coverage
The basic HO-3 policy that many Kentucky home insurance companies offer is fairly basic, and designed to protect the insurance company’s financial interests. There are certain disaster situations which may or may not be covered by your policy, such as:
- Fires – Kentucky maybe a tiny state, but it is a densely populated one. Nestled in the middle of the bustling Northeast, you may not have to worry about damage from wildfires. However, living in a crowded urban area might make fire damage from other sources – such as kitchen fires or building fires – a real concern. Be sure to talk with your insurance agent about specific coverages and your insurance policy that protect against fire damage.
- Floods – The state of Kentucky has many miles of coastline, which puts it at risk or severe damage caused by flooding and severe weather. Unfortunately, because of the prevalence and high expense of repairing flood damage, most insurance companies won’t cover it. If your insurance company won’t allow you to add flood coverage to your policy, be sure to take a look at the National Flood Insurance Program. This program may help you obtain affordable flood coverage.
- Damage from Winter Storms – Snow and other winter storm habits aren’t too common in Kentucky; but that doesn’t mean you shouldn’t be prepared for them. Talk to your insurance agent about whether or not your policy protects against winter damage, and also what you can do to protect your home and reduce your need to file a claim.
- Mine Subsidence – Back in the mid 1980’s, the state of Kentucky began managing the Kentucky Mine Subsidence Insurance Fund (KMSIF). It reimburses homeowners for structural damage to their home if subsidence occurs from an old coal mine under their property. But only about half the counties in the state actually participate in the fund. Talk to your insurance provider to see if mine subsidence is a concern for you, and what recourse you may have for any damage incurred.
- Wind and Hail – due to the prevalence of severe weather in Kentucky, the deductible you pay for claims on hail and wind damage follow a different set of rules. Some insurance companies charge a percentage of your home’s total value, while others have a set (and usually much higher) mandatory deductible you must pay. Be sure you have a clear understanding of your insurance company’s terms on wind and hail deductibles before you finalize your policy.
- Covering Your Property – whether the physical structure of your home is damaged by a natural disaster, or whether the property inside your home gets damaged, are two completely different things according to your insurance company. Property replacement coverage is a standard type of coverage included on almost all homeowners insurance policies. You do not have to purchase as much coverage as you would for the structure of your home, but it’s a good idea to purchase enough to make sure that you can replace your belongings in the event of a catastrophic accident.
- Liability Coverage – What do you think would happen if a neighbor stepped on your lawn, and impaled his foot on a rake that was buried in tall grass? He would probably need to go to the emergency room, get stitches for his foot, and need expensive medications such as antibiotics or pain relievers. All of these things cost money. If they happen on your property, and you are deemed to be at fault, you won’t have to pay out of pocket if you have a sufficient amount of liability coverage. That is why this particular form of coverage is such a common addition to your garden-variety homeowners insurance policy.
- Umbrella Coverage – Maybe you don’t have a $250,000 home to ensure. Maybe you have been very fortunate in your life, and have purchased a $500,000 home. Or a two-million-dollar home. Sometimes, with more expensive property, certain insurance companies won’t sell you a high enough coverage limit to protect your investment. In cases like these, umbrella coverage can be purchased. these come with exceptionally higher coverage limits so that you can afford to protect your investment to the best of your ability.
Replacement Cost vs. Actual Cash Value
There are two different classifications which determine how much your homeowners insurance company will pay out on a claim. Those classifications are replacement cost, and actual cash value. With actual cash value, your insurance company will only pay out enough money on your claim to replace an item or make a repair to your structure according to its value minus depreciation. This may leave you with a larger financial burden if the repair or replacement is brand new. Replacement cost, on the other hand, will pay out the full value of the item or the repair work that you need. But since that leaves your insurance company with a larger financial burden, they may pass the extra expense on to you in the form of a higher annual premium.
How Your Credit Score May Influence Your Rate
Yes, unfortunately, your homeowners insurance company will utilize your credit information in order to give you what they feel is a fair premium. Luckily, however, they are not permitted to make a hard check on your credit – which protects you from getting a mark on your credit history which could lower your overall credit score.
They do this by utilizing something called a CLUE Report. CLUE reports only include your past 7 years of credit history with regard to other insurance products and companies you have dealt with. So if, over the past seven years you have paid all of your premiums on time, and in full, and have filed as he claims as possible, this will help lower your annual premium. Conversely, a history of late payments, many claims filed, or loss of insurance coverage will raise your premium significantly.
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:
Or contact them directly through the following resources:
Kentucky Department of Insurance
P.O. Box 517, Frankfort, Kentucky 40602-0517