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Why Home Insurance is Less Expensive than Car Insurance

A man holding a rendered icon of a house to illustrate why home insurance is less expensive than car insurance.

The average American house is worth around $200,000 and a car is worth about 10 percent of that amount. It would seem reasonable for an insurance company to charge a higher premium for homeowners insurance for the worth of the house and all of the belongings inside; you would also think that auto insurance would cost that a lot less than homeowners insurance, based on the value of the car.

Unfortunately, or fortunately for some, this is not true. The average homeowners insurance premium is actually less than what the average premium is for auto insurance. This comes down to the bottom line hard numbers, in terms of potential danger and amount of damage a house and a vehicle are exposed to.

A car can go zooming down the road at speeds of up to 70 miles per hour, lawfully, and can go over 100 miles per hour, considered to be reckless driving. On the other hand, a house stays constantly fixed in one location day and has a statistically far less chance of experiencing any damage or loss to belongings in the home.

The premium that you are paying is simply based on the risks of accidental damage that your policy covers. Homeowners insurance may assess the location of the house for crime rates or possible weather damage, not including natural water damages.

Auto insurance will quote your rate based on a wide range of factors, including:

• driving history
• accident or history of collisions
• type of car
• age
• marital status
• credit score
• GPA if you’re still in school
• occupation
• how far you drive daily
• where you park your car at night
• where you live

As you can see from that list, auto insurance companies view how much riskier it is to be in a moving vehicle that can go at breakneck speeds right next to other fast-moving vehicles. The risk of damage from a vehicle is much greater than the possibility of accidental damage to a house. Homeowners insurance also recognizes the decreased risk of damage, so that reflects on the lower premium than auto insurance.

If you have a home, safer parking in a house garage, will also give you some discounts on auto insurance versus having your car parked in the open street at night where it is more vulnerable to burglary or getting stolen. Basically, about anything risking damage to your car or house is considered likely to be a factor when insurance companies determine your custom insurance quote.

For more ways to save on both car insurance and homeowners insurance, call Freeway Insurance at (800) 777-5620 to get a bundled policy for both your car and your home. 

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