How To Compare Homeowners Insurance – Your home is one of the most valuable assets you’ll ever own and knowing how to compare homeowners insurance policy and actually getting one will protect that investment for you.
Now the actual act of comparing the homeowners insurance policy can be very draining which you may be tempted to boycott. But before you think of boycotting we would advise that you don’t make the mistake of doing such.
Never you shop around for the cheapest homeowners insurance rates, without comparing coverages, limits, and deductibles.
What does your Homeowners Insurance Policy Cover?
The first thing you should do as you plan on buying homeowners insurance, is to get yourself familiarized with a basic policy to help you understand how much coverage you’ll need. Below we present to you what a typical homeowners insurance policy is split into.
Personal property refers to your personal belongings. You may be wondering how homeowners insurance comes into play here; your homeowners insurance covers your personal property be it at home or anywhere else. If your property gets damaged or stolen, you can be sure that your insurance will cover for you.
This covers damages to others that you are responsible for. What this means is that, if someone gets injured on your property and it’s your fault, or you cause damage to someone else’s property or stuff, your insurance company will be liable for the expenses. But note this only applies to unintentional damage.
Also known as “dwelling coverage”, this coverage protects you from damages to your place, i.e., your home and everything else attached to it, like garage, chimney, in-ground pool, etc.
Medical fees to others
Homeowners insurance only covers injuries sustained by guests who may have gotten injured at your apartment, or people you may have accidentally injured outside of your home also.
Other structures on your property
This covers structures like driveway, fences, sheds, as well as other structures that is on your property.
Additional living expenses
If your house becomes uninhabitable because of fire outbreak or mandatory evacuation, you’ll be covered under what it known as “loss of use”. Your insurer may have to pay for temporary lodging where you can stay as well as some basic living expenses like food, laundry, parking, etc.
Events that are not covered by homeowners insurance
Some events are not covered by homeowners insurance policies, they include natural disasters or other “acts of God”, as well as acts of war.
If you reside in high risks areas, say flood or hurricane areas, or an area with history of earthquakes you will need to get riders or buy an extra policy for earthquake insurance or flood insurance.
You can also add sewer and drain backup coverage and even identity recovery coverage which will reimburse you for expenses linked to being a victim of identity theft.
Types of Homeowners Coverage
There are three levels of homeowners coverage.
Actual cash value
This level, covers the cost of the house plus the value of your belongings after deducting depreciation.
The replacement value policy is one which covers the actual cash value of your home and possessions without the deduction for depreciation, to enable you repair or rebuild your home up to the original value.
Guaranteed (or extended) replacement cost/value
This is the most comprehensive, inflation-buffer policy that suffices for whatever cost you incurred in repairing or rebuilding your home, even if it exceeds your policy limit.
How to Compare Homeowners Insurance
Talk to a Real Person
Note that a broker who is licensed to sell for multiple companies most times include their own fees to policies and policy renewals which could cost hundreds extra a year.
Thus the best way to get quotes, is to go directly to the insurance companies or speak to an independent agent who has dealings with multiple companies.
Get Multiple Quotes
Comparing multiple quotes will help you yield better results. But before you proceed to collect quotes from other companies, you should request a price from insurers you already have a relationship with.
Look beyond the premium
Don’t be so carried away by the premium even though it’s one factor that drives the choice to purchase a home insurance. It is best you compare coverages and limits also.
Current Policyholder Satisfaction
Most companies report retention rates between 80% and 90%, so it will be best to ask your agent or a company representative the insurer’s retention rate. You can also get satisfaction information in annual reports, online reviews and good old-fashioned testimonials from those you trust.
Review the Claims Response
Before you buy a policy, check to see if licensed adjusters or third-party call centers will be receiving and handling your claims calls. Search out a carrier with a trusted track record of fair, timely settlements and ensure you understand your insurer’s stance on holdback provisions, which is when an insurance company withholds a portion of their payment until a homeowner can prove that they started repairs.
Compare statewide costs and insurers
Do your research and ensure you end up with a provider that is legitimate and creditworthy. You can do this by visiting your state’s Department of Insurance website.
Here, you will find the rating for each home insurance company licensed to conduct business in your state and any consumer complaints lodged against the insurance company. You will also get a typical average cost of home insurance in various counties and cities.
Carry out a Company Health Check
Check out the home insurance companies you are considering through their scores on the websites of the top credit agencies.
It’s never a waste of time to compare homeowners insurance, rather you save precious time, money and stress of buying through the wrong insurer.