how to choose homeowners insurance

How to Choose The Best Homeowners Insurance

Protecting your home with insurance is important, here is a quick guide on how to choose the best homeowners insurance for your home.

In 2018 alone, more than 5.34 million homes sold to new owners. And for many of those buyers, it was their first time buying a house of their own.

For most first-time homebuyers, the process can be a bit confusing. But no matter what type of house you buy, homeowners insurance is an absolute must. The right policy protects both the structure and the things you keep inside the home.

But finding the best policy for your needs can be almost as confusing as buying the house in the first place.

Here’s how to choose homeowners insurance that fits your needs and your budget from the very beginning.

Think About How Much Your Home Is Worth

When you think about the value of your house, you probably think about what you paid to buy it. While this is a great place to start, that amount isn’t always the amount of insurance you need to buy.

In fact, the amount of insurance needed to cover the actual house itself has nothing to do with Market Value or Tax Value…insurance carriers are only concerned with the calculated REPLACEMENT COST of your home.

However, there is FAR more that you should be concerned with in case of a total loss.  This is because there’s more to the value of your home than the structure alone. You need to consider the value of your belongings, the appliances, and even the food in your cabinets.

How Much “Stuff” Do You Have

Talk about a daunting task!!!

If I asked you how much “stuff” you have in your house, you would probably be hard-pressed to give me an accurate number.

Before you start walking around your house and totaling up the value of your stuff inside, you should know that on most standard home insurance policies the insurance carriers give you Personal Property Coverage (i.e. your stuff) of 70% of whatever the home is covered for (example – $100,000 Replacement Cost Home would have $70,000 of Personal Property Coverage).

Having said that, there are limitations on certain types of “stuff” you may have (jewelry, watches, art, antiques, cash just to name a few).  You should talk with your advisor to determine if you should endorse your policy to include these types of items.

Remember, not having enough insurance puts your finances at risk. If your home gets destroyed by a qualifying event, you want your homeowner’s policy to provide enough compensation to rebuild and replace the items inside.

Figure Out What Coverage You Need

Unfortunately, standard homeowners insurance doesn’t protect against every possible disaster. You may need supplemental coverage as well.

Think about the risk factors for your property. Are you near a river or waterway? If so, you may want flood insurance to protect against damage.

If you’re worried about the toilets backing up in your home, sewer backup policies may be worth looking into.

Keep in mind that each policy and provider is different. This means you’ll want to clarify the types of coverage options available before making your decision. Your insurance agent will help you determine which policies fit your needs and your budget.  

Get Quotes from Different Providers

It’s rare that the first insurance policy you find will fit your needs completely. Instead of picking a provider arbitrarily, shop around.

Ask different insurance companies for quotes on coverage.

Once you have a few quotes, compare the coverage options in detail. Look at the insurance limits, the premium amounts, and the suggested deductibles for each policy.

Though it’s tempting to choose a policy solely based on price, don’t. Think about how the policy will benefit your home and make sure you’re comfortable with the coverage as a whole. You may end up paying a higher price, but it’s always best to choose a policy you’ll be happy with for years to come.

Ask for Discounts

Most insurance providers offer discounts on coverage, but they rarely advertise them. You need to ask your agent to see if there are any discounts you qualify for.

Most providers offer discounts for certain energy-efficient home improvements, bundled policies, and even loyalty discounts for working with the same company for several years.

You just have to take the time to ask. And be sure to ask again each year. New discounts get rolled out often and if you don’t have your agent check for them, you might be missing out on savings.

Research the Company’s Reputation

Before you commit to a policy, do a bit of research on the provider’s reputation. Standard & Poor’s rates insurance providers’ financial stability and publishes the ratings online.

If a company has a good rating, it shows that they’re able and willing to pay out when you file a claim. But if the rating is low, you’ll be better off working with a different provider.

Every insurance company is reluctant to settle claims. After all, they don’t want to spend money any more than you do. But companies that are struggling financially will fight you on your claims or refuse to payout entirely.

This will show up in their rating.

Be Willing to Review Coverage Each Year

Your coverage needs change every year. This means the coverage you get when you first purchase your house may not be the same amount you need a few months down the road.

The only way to know is to review your coverage needs each year.

Walk through your home and see what new belongings you’ve acquired. Are they valuable? If so, you’ll want to increase your coverage limits.

And if you’ve made some improvements to the house over the year, those improvements could decrease your premium payments. Speak with your insurance agent about those changes and see if your coverage needs have changed.

REMEMBER…your Insurance Advisor is there to ADVISE you!  There is no way for him/her to know if you have made changes to your home or acquired more “stuff” unless you keep them in the loop!

Still Wondering How to Choose Homeowners Insurance?

These tips should take a lot of the stress out of learning how to choose homeowners insurance. But if you’re still feeling confused, you don’t have to handle the search on your own.

Contact our agents today to find the best homeowners policy for your needs and your budget. We’ll help you protect your house so you can enjoy living in it year after year.

Leave a Reply