Home Insurance in Tennessee


UPDATED: DEC 2020 | 2 MIN READ

Home insurance is one of the most important purchases you can make in your lifetime. It protects your home and belongings from damages that are near-inevitable when you live somewhere for many years. Tennessee is a good place to buy home insurance in – large swathes of uninhabited land protect homes from wildfires. Furthermore, both endorsements and separate insurance is available for all of Tennessee’s major property-damaging natural hazards. But what exactly can you expect from Tennessee home insurance?

·        Fun fact: 80% of the land in Tennessee is used for agriculture and forestry.

Average Rates in Tennessee

Home insurance in Tennessee is neither very costly nor very cheap – its $1,196 average annual premiums are a mere $15 below the national average, as found by the Insurance Information Institute. Alongside Tennessee, other states with middling insurance premiums include New Jersey (average premiums of $1,192) and South Dakota (average premiums of $1,202).

By contrast, renters’ insurance in Tennessee is on the more expensive end. It is the 8th most expensive state for renters’ insurance, with average premiums of $199. It keeps company with states like New York and Arkansas, with premiums of $194 and $212, respectively.

Tennessee Legal Insurance Requirements

As a homeowner, there are no laws mandating you purchase home insurance. That said, buying home insurance is a condition of almost any contract between a mortgage lender and a homeowner. Mortgage companies can even place you onto their own preferred home insurance should you neglect to buy your own – which often increases the price you pay for premiums.

Tennessee insurance is regulated in part by The National Association of Insurance Commissioners, who act to maintain consistent standards and uniformity in home insurance between states. Because of their work, you can expect Tennessee home insurance to cover the following:

  • Dwellings – insuring you for damage to your home, as well as plumbing and electrical wiring. 80% of your home’s replacement value is the standard coverage limit.
  • Other structures – provides some of the same protection as dwelling coverage, though with a reduced limit of 10% of your dwelling coverage. This can go towards repairing and replacing structures not attached to the home, like tool sheds, guest homes, garages, or fencing.
  • Personal Property. This insurance – usually set at 50% of the amount of your dwelling coverage – will replace lost or damaged items in the home. This includes furniture, clothing, and appliances, but typically doesn’t extend to cover expensive nonessential items, like jewelry, art, or antiques.
  • Loss of Use – Limited at 20% of your dwelling coverage, this assists in paying for cost of living if damage your insurance covers forces you to live outside of your home for a time during repairs.
  • Personal Liability and Medical Payments – You may need this insurance if someone is injured on your property, or if you, a family member, or pet damage another person’s property. In cases where you’re held legally liable due to negligence, personal liability insurance will assist in paying for legal fees. Medical payments can be made to guests who are injured by accident on your property, helping to pay for things like hospital and urgent care.

In Tennessee, insurance is offered in different forms, that cover a range of “perils,” or damaging events. Generally, the more coverage you want, the more expensive your policy will be. Some of the general home insurance forms are described below:

  • The Dwelling Fire Form is the cheapest form, which also covers the fewest perils: fire, smoke, windstorm, hail, lightning, explosions, vehicles, and civil unrest.
  • The Basic Form covers the same perils as the Dwelling Fire Form, plus theft and vandalism. The Modified Coverage Form provides the same coverage as the Basic Form, but insures based on actual cash value rather than replacement cost.
  • The Broad Form covers the same perils as the Basic Form, along with: falling trees, the weight of ice or snow, and insurance for the sudden accidental rupturing, overflow, or freezing of plumbing, heating, air conditioning, and fire sprinkler systems.
  • The Special Form, the most popular type of home insurance, insures for every peril, save for exceptions that are listed on your insurance policy. Common exclusions include flood, earthquake, war, and nuclear accidents.
  • The Tenant’s Form and Condominium Unit Owners Form give Broad Form coverage to personal property, but NOT the complete external structure of the property. That insurance is the responsibility of your landlord! Condominium owners, in addition to personal property coverage, can insure the walls and floors that they personally own (rather than insuring the entire condominium complex).

Common Risk Factors in Tennessee

The most recent Tennessee Hazard Mitigation Plan published by the Tennessee Emergency Management Agency lists “hazards of prime concern” for the welfare of the people and properties of Tennessee. Among those natural hazards that damage homes are:

  • Earthquakes: Property structural damage usually occurs with earthquakes of 5.5 magnitude or higher. Earthquakes can happen anywhere in Tennessee, but they are concentrated along the eastern and western borders of the state, where the New Madrid Seismic Zone and Southern Appalachian Seismic Zone lie. Earthquake insurance is not offered by standard home insurance in Tennessee. You can purchase earthquake insurance as an endorsement to your policy. Generally, earthquake insurance protects your home from catastrophic damage and building collapse, but not more minor structural or property damages.  
  • Floods: The most costly and common hazard throughout the United States is flooding, and Tennessee is no exception. Though severe flooding in the mountainous and elevated areas within Tennessee is less frequent due to fast drainage, heavy storms and spring flooding always pose a risk to properties. Flood insurance is not part of home insurance, but must be purchased separately from the National Flood Insurance Program. There is at least one plan available in each county in Tennessee, though the areas with the greatest average payouts from flood insurance claims are located in the upper central portion of the state.
  • Tornadoes: Tornadoes can touch down anywhere in Tennessee, causing structural damage from debris impacting buildings, tearing off roofs, or at worst picking up entire homes from their foundations and flinging them several hundred feet. On average, the damage caused by a tornado in Tennessee will total around $1,250,584 in expenses. Fortunately, tornado damage is covered by even the most basic forms of Tennessee home insurance.
  • Wildfires: The risk of damage to property from wildfire in Tennessee is mild to moderate across the state, according to assessments of the wildland-urban interface (WUI) across the state. Because wildfires are most likely to affect homes in proximity to burning forest or wildland, a high WUI translates to a higher risk of wildfire property damage. Damage from wildfires is covered by even the most basic home insurance plans in Tennessee.

Insurance Demographics/Statistics in Tennessee

Many things can affect the final price of your home insurance premiums – not only your home’s value, but also things like local crime rates, or even your credit standing. But how – and why – do these things matter to insurance companies? Let’s dive a little deeper and find out.

Your Home’s Value

The value of your home will likely have the greatest impact on the price of your home insurance. After all, the vast majority of your coverage limits and expenses will be based off of a percentage of your home’s value. Home value is calculated in one of two ways. First, there’s replacement cost, which is the amount of money you would need to rebuild your home from scratch, using similar materials and with current labor costs. Second, there’s actual cash value, or replacement cost minus any loss to value caused by depreciation, wear and tear, age, or existing damage.

When you’re finding your home’s value, it’s essential to keep in mind that home value is NOT the same thing as the sale price of your home. Sale price includes not only the home, but also the value the land is on – insurance companies aren’t interested in the cost of land, but rather the materials that make up the physical structure of your home.

Tennessee average home values are quite cheap when compared to the national average – $196,125 compared to the national $248,857. This can lower the overall costs for home insurance.

Local Crime Rates

Insurance companies are motivated to increase costs for “high risk” customers – those that are more likely to file an insurance claim. Because basic home insurance in Tennessee protects homeowners from property crimes like theft and vandalism, insurance rates may be higher if you live in an area where property crime is commonplace. In Tennessee, the property crime rate is much higher than average. According to the FBI Crime Reporting Program’s 2018 report, Tennessee has a property crime rate of 2.52% after excluding car theft – exceeding the national property crime rate of 1.97%, and potentially raising overall costs for home insurance.

Your Income and Education

What your home is made of and where it’s located is important to insurance companies – but some of your personal characteristics can also influence the price of your home insurance. In many cases, customers with good credit scores are considered “lower risk” for filing insurance claims and can be offered lower insurance premiums or special discounts. Groups associated with having high credit are people with high incomes, and people with a college education. In Tennessee, average household incomes fall more than ten thousand below the national average of $64,179 – $52,375 household incomes are the average in the Volunteer State. College educational attainment is somewhat lower in Tennessee than in the nation at large – while nationally, 32.06% of people above the age of 25 have earned a bachelor’s degree or more, in Tennessee only 26.6% of people in the same age bracket have done so.

Where to Purchase Home Insurance in Tennessee

The average Tennessee home insurance policy won’t necessarily match your unique situation and the price of the insurance you will be quoted. To find the right home insurance for you, it’s best to compare the prices and coverage of many different insurance companies. AgileRates.com can make that easier, by offering accurate quotes from all the top insurers of your area. Already own home insurance? Company comparisons can still be useful for finding better deals on home insurance at your annual renewal time. According to the Pulse Whitepaper from iii.org, only 44% of homeowners compare prices of different insurers at renewal time, and only 17% do so online. That means more than half of all homeowners are leaving money on the table at renewal time. Use Agilerates.com online form to get matched with a local agent, get free quotes, and shop around!

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