When it's time to compare quotes for home insurance, there are many factors to consider. It might seem like the deciding factor is price, but pursuing that strategy could be a big mistake.
While you want your policy to fit your budget, you still need to compare coverage options and the reputations of the providers in order to make the best choice for you. Otherwise, you could be left with insufficient reimbursement or inferior service when you have to file a claim. That's the last thing you need when you're facing the stress of repairing damage to your home!
Here we'll share some of our strategies for comparing home insurance quotes to make sure you're getting a solid mix of budget-friendly coverage.
Compare coverage
Start your home insurance quote comparison by looking at coverage. After all,coverage is essentially what your policy is, and reading the details tells you:
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What’s covered.
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When it's covered.
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How much coverage you have.
You likely know that your homeowners insurance includes dwelling insurance to cover repair costs when your home’s main structure is damaged. But you also want to take a look at the other structures coverage, personal property coverage, and personal liability coverage to see if they fit your situation.
Depending on the value of your home and other factors, you'll need a certain amount of each coverage to ensure that you're properly protected.
Comparing coverage limits
Your home insurance quote should have a coverage limit, also called a limit of liability, for each type of coverage your policy has. This is the maximum amount the insurance company pays for losses that trigger coverage.
When you’re comparing home insurance quotes, you want to make sure that you're comparing similar coverage amounts. Otherwise, you may choose a less expensive policy only to find out that you don’t have the proper amount of coverage.
The policies we offer insure your primary dwelling for its full replacement cost. That’s what it would cost to rebuild your home from the ground up after a total loss using materials of a similar kind and quality.
Comparing coverage exclusions
Some events aren’t covered at all by home insurance. Most exclusions are similar across insurance companies. Here are a few examples of perils that are fairly common in the industry:
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Home-based businesses.
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Cash.
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Floods (most often require a separate flood insurance policy).
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Earthquakes.
Just like when you compare coverage amounts, you want to look at home insurance quotes that have similar exclusions. A policy that has more exclusions probably costs less, but may leave you more exposed to loss.
Comparing reimbursement methods
There are two main methods that home insurance companies use to calculate payments to homeowners when they file a property damage claim: actual cash value and replacement cost.
If your policy uses the actual cash value method, it calculates payment based on the current value of your home, building materials, or other items included in your claim. Taking into account depreciation means that a claim payment probably won’t be enough to return your home to the condition it was in before it was damaged.
Replacement cost, on the other hand, means the policy pays the amount needed to fully repair or replace the damaged property using the same or comparable materials. Replacement cost policies typically require higher premium payments, though it may be worth it depending on your home’s structure.
Compare costs
Knowing the average cost for homeowners insurance – whether in the nation or for your state — is a good place to start when comparing premiums on a home insurance quote.
But like we said before, premium only tells you so much. You also need to make sure you’re looking at similar coverage amounts for the premium or it’s not an accurate comparison.
Once you ensure you’re comparing quotes with equivalent coverages, then you want to look at deductibles and discounts.
Comparing deductibles
Deductibles are the out-of-pocket costs that homeowners are responsible for paying before the insurance provider steps in. All home insurance policies have a standard deductible, but some may also have a wind/hail deductible, a hurricane deductible, or both.
The basic rule of thumb is that raising your deductible lowers your monthly premium and vice versa. In other words, the more money you put up now in premiums, the less you pay when it comes time to file a claim.
Again, you want to make sure your deductibles are similar when you compare home insurance quotes. More importantly, you want to be careful about deductibles when you ultimately pick your policy. You want a deductible that you’re comfortable paying out-of-pocket in an emergency.
Comparing discounts
Most insurance companies offer discounts on their policies if you meet certain requirements. Homeowners sometimes get discounts for:
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Being a recent homebuyer.
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Installing safety features.
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Mitigating wind risk.
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Being a loyal customer.
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Keeping claims of their insurance history.
Compare providers
This one’s pretty simple: Get to know the insurance company before you sign on the dotted line. It's fairly easy to find out about a provider's financial stability and customer satisfaction. You'll need to know if your company will be there for you when it's time to file a claim, and if a company's service and actions on your behalf will be satisfactory.
Comparing financial ratings
Rather than taking the risk and having your own bad experience, turn to financial ratings from rating agencies. Insurance company financial ratings are scores that help consumers know if an insurance company is financially healthy. They were created by independent ratings companies to indicate if an insurer can pay claims, especially in a catastrophic scenario.
Financial ratings are usually readily available online and are often touted on the individual carrier's website.
Comparing customer reviews
Just like you check out restaurants before you go out to dinner, take a moment to read customer reviews for insurance companies. These reviews can be very helpful when you are comparing home insurance quotes.
Organizations like Consumer Affairs and the Better Business Bureau give reviews of insurance companies and allow for customer comments. Look for comments about customer service quality, availability of support, and the speed and efficiency of the company's claims process.
Regularly review your policy and company
Circumstances always change. Perhaps you've purchased some new high-end items or have decided to build an addition to your home. These could affect the coverage you need or even the discounts you're eligible for.
Even if you're satisfied with your home insurance, we recommend reviewing your policy and company every year. If you decide to look around at other options, you may find other companies that improve your experience and lower your costs.
