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|
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.
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.
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.
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.
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:
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.
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.
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:
Department of Commerce & Insurance
500 James Robertson Parkway
Davy Crockett Tower
Nashville, Tennessee 37243-0565