Homeowners Insurance in Illinois

Located in the Midwest, Illinois is prone to tornadoes, earthquakes, wildfires, extreme heat waves, cold, and flooding, all of which can damage property and result in costly insurance claims. The most prevalent disasters in Illinois are wildfires, which are also the most expensive. Since 1953, Illinois has seen 60 federally declared natural disasters, and the rate of disasters per million residents is 4.79.

Along with property damage due to weather, Illinois residents also file claims for damage from trees, windstorms, frozen pipes and ice dams, and heavy wet snow on roofs. They also file claims for theft, vandalism, and liability issues when someone gets hurt and sues them.

Like all other U.S. states, Illinois does not require homeowners to have insurance. But if you take out a mortgage to buy the property in Illinois, your lender will require you to have some, and they will dictate the coverage limits. You must keep your homeowners insurance policy active for the life of the loan.

The national average for homeowners insurance is $2,601/year for $300,000 of dwelling coverage. Illinois residents pay more than that, $3,209/year, because of the frequent disasters within the state.

Each state has specific homeowners insurance providers, offering various coverages depending on the weather conditions and other perils present. The available coverages in Illinois include:

Additionally, in areas where floods occur, you may be able to purchase flood insurance. FEMA (Federal Emergency Management Agency) manages the National Flood Insurance Program (NFIP) through a network of 50 providers across the U.S.

Since most homeowners insurance does not cover floods, this supplemental coverage can repair damage and replace items after a flood. Depending on the options you choose, it can cover the building and/or your personal belongings. This program is available to homeowners, renters, and businesses. Learn more about the program on FEMA's website.

You can also purchase umbrella coverage to fill in where your other policies lack. Umbrella insurance comes in specific dollar values, such as $1 million in coverage.

Severe weather events hit most areas of the county and are on the news daily. Natural disasters are becoming more prevalent as they destroy property and result in abundant claims. Climate change is the number one reason that the home insurance industry is under duress. Experts agree that 44.8% of homes in the U.S. valued at $22 trillion will face extreme weather events and damage. As a result of the increased risk of weather damage, insurance providers have increased rates by an average of 34% over the last five years. Home insurance in Illinois has increased by 45.8%, more than in most areas.

Wind, fire, and winter storms cause a lot of damage, and Illinois has seen much of that over the past few years, causing millions of dollars in claims. From 2015 to 2019, Illinois saw $2,431,011,000 in homeowner insurance losses. The most expensive damage is fire, and each claim costs insurers $77,340. Winter storm damage costs $11,650 per incident. Illinois had a whopping 122 billion-dollar disasters from 1980 to 2024, higher than any other state except for Texas. In 2023, Illinois suffered 136 tornadoes with four fatalities and millions in property damage. In 2022, Illinois had only 32 wildfires that damaged 298 acres of land.

A few things affect the cost of homeowners insurance. The most prominent is location. If you live in a safe area with low crime, your rates will be lower. If your area suffers a lot of damaging weather, your rates will be higher. Some other factors that affect home insurance premiums are:

Due to the likelihood of severe weather in Illinois, rates may be higher than in other parts of the country. Some ways to save on your homeowners insurance if you live in Illinois include:

• Make Your Home Disaster-Resistant: Illinois can experience some pretty bad storms that destroy property. If you install a wind- and fire-resistant roof, storm shutters, shatterproof windows, and earthquake reinforcements, you could save big on your home insurance.
• Avoid High Risks: Do not add risky items to your property. Items like a playground set, trampoline, pool, hot tub, or fireplace will increase your rates. Insurers call these things "attractive nuisances".
• Improve Your Credit: Boost your credit score and ask your agent to reduce your rates as a benefit.

Bundling your insurance, opting for paperless statements, and making automatic payments are other ways to save. Ask your agent what other discounts you may qualify for.

Home insurance protects your home and belongings from covered perils. It pays to replace or repair your home after a disaster like a fire, lightning damage, windstorm, theft, or vandalism. The insurance usually also includes liability, medical payments, other structures coverage, and ALE insurance. Most policies have limits and expensive items like jewelry, art, or furs may not be covered. A typical policy may not cover damage or flood damage. You may have to purchase special insurance for that.

You can buy a policy easily by going online and using insurance calculators to see how much you need. Some carriers allow you to apply using their website or by calling an 800 number. You can also find a local agent to help you decide on coverage and set you up. Once you determine your coverage limits, you must pay for the first year in full. After that, your payment will be tied in with your monthly escrow payment, or you can choose to pay it in a lump sum each year.

Because home insurance can be expensive, you will want to find ways to reduce your bill. Some of the most common home insurance discounts offered by providers include:

• Customer Discounts: Many providers will discount your fees for being loyal if you have been a long-time customer. If you are a retiree, senior citizen, firefighter, teacher, or veteran, you may also qualify for a discount with reputable insurance firms.
• Policy Discounts: If you bundle your insurance, most providers will cut you a deal on your premiums. If you remain claims-free and have good credit, you also qualify for lower rates.
• Auto Payment/Paperless: Some insurers will discount your rates if you sign up for automatic withdrawal payments and paperless statements.
• Home Security & Safety: Installing a home security system or safety equipment like fire extinguishers, smoke alarms, and sprinkler systems could save you money on your home insurance.

Common Rates Offer by Homeowners Insurance Firms

New construction homes cost up to 40% less to insure than older homes. They are constructed using modern materials that are up to code and more resilient to natural disasters. Therefore, it costs less to rebuild them in the event of a tragedy. The average home insurance rate for new construction homes in Illinois is $2,060. However, your rates will vary based on your customer profile (credit score, age, location, and risk factors). Homes five years old or less could earn you 26% savings on insurance.

Top 10 Home Insurance Firms and Average New Home Savings

Upgrades and home renovations create warm and inviting spaces in your home, but they can also raise your insurance premiums considerably. Some home improvements add value but also increase your rates. Others may lower your risk and your premiums. Depending on the situation, a few home renovation projects may raise and lower your rates.

Home Renovations that Increase Your Rates

Some home renovations that increase your rates include:

• Building a Home Office: Working from home is the best, but if you spend money to build a dedicated home office, it may not be covered under your normal policy, and you might need special coverage to ensure its replacement after a disaster.
• Luxury Upgrades: Enhancing your kitchen with granite countertops, bronze fixtures, and expensive lighting can add a lot of value to your home, but those things will cost more to replace, and your insurance will increase.
• Swimming Pool or Hot Tub: Installing a pool or hot tub will surely increase the fun, but it will also increase your home insurance premiums.

Home Renovations that Decrease Your Rates

Some home renovations that decrease your rates include:

• Adding a Sump Pump: Sump pumps pull water out of your basement and pump it back outside where it belongs, hopefully avoiding water damage.
• Replacing Your Roof: Even if your roof isn't that old, replacing it with weather-resistant materials could save you a good amount of money on your insurance, especially if it reduces claims.
• Security System or Sprinklers: Installing a high-end security system that monitors your home for break-ins could save you money. Installing a sprinkler system to avoid damage from a fire could also cut your rates.

Home insurance does not pay for replacing your roof, upgrading your kitchens and baths, or replacing your wiring or plumbing unless a covered event damages those things. If you choose to upgrade, you must pay for those things yourself. During the renovation, if someone is hurt or damages your property, those would be covered.

Talk to your insurance agent before starting any home renovations. Ask them how the work will impact your coverage and rates. You will need them to inspect the work after completion to increase your coverage.

Renters insurance is a policy that protects people who rent rather than own their own homes. As a tenant, do not think that your landlord's policy will replace your belongings if the place burns down; it won't. Renters insurance does not cover any damage to the structure itself; it only covers your personal belongings, liability coverage, medical payments, and ALE coverage.

There are two types of renters insurance for personal belongings: actual cash value and replacement value. Be careful; cash value factors in depreciation and may not be enough to replace your lost items. It covers things like clothing, furniture, and electronics. It does not cover any appliances, fixtures, or expensive items. Average policyholders keep roughly $25,000 of personal property coverage.

Renters insurance is priced based on a few factors, and they are:

Typical Illinois renters pay an average of $13.80/month or $166/year, which is relatively low compared with other states. The national average renter insurance is $171/year.

Anyone who owns a condo should also purchase homeowners insurance. Condo insurance is labeled HO-6, which is different from homeowners insurance. The most significant difference is that condo associations have a master policy that covers the dwelling and will restore the structure of the building in the event of a disaster. It will restore the condo to its original condition (when first built), which may be outdated. Most condo owners have upgraded flooring, cabinets, countertops, appliances, and fixtures. HO-6 insurance picks up where the master policy leaves off and covers these upgrades, essentially restoring the condo to its most recent condition. Condo insurance also includes personal property coverage, liability, medical payments, loss of use, and loss assessment coverage.

Unlike renters insurance, which does not include any dwelling coverage, condo insurance covers the dwelling but only the structure's interior, such as walls, appliances, cabinets, fixtures, wiring, plumbing, and flooring. Another way it differs from renters insurance is that if someone is hurt on the property, liability coverage only covers you if they are hurt within the condo. Condo insurance kicks in after a fire, theft, vandalism, or storm damage.

Some things that are not covered by condo insurance are:

• Mold
• Flood Damage
• Expensive Items (jewelry, furs, art)

Condo insurance has limits; if something goes over those limits, it will not be replaced.

The average condo owner in Illinois pays $33/month for insurance. The cost may be higher in urban areas but slightly lower in suburban areas.

You can save on condo insurance by doing the following:

• Increase Your Deductible
• Reduce Risks
• Bundle Your Insurances
• Keep Your Credit Score High
• Sign Up for Auto Payment and Paperless Billing
• Ask Your Agent About Other Discounts

Despite nine billion-dollar disasters in 2023 and many severe storms, Illinois home insurers have remained profitable for the past three out of seven years. However, 18 U.S. states were not so lucky. From 2013 until 2023 (the Midwest and Southeast states) experienced abundant wildfires and crazy storms, incurring record losses. Insurance carriers have raised rates, narrowed coverage, and even dropped some customers to combat the siege. Some providers have stopped offering coverage in high-risk states.

Illinois must contend with tornadoes, wildfires, and other damaging storms, which have affected insurance providers and customer rates.

No federal agency regulates insurance providers; it is handled at the state level. These state agencies monitor providers, take customer complaints, and investigate them, sanctioning the guilty carriers. In Illinois, that agency is the Illinois Department of Insurance, located at 320 West Washington Street, Springfield, IL 62767.