Guide to Compare Home Insurance
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UPDATED: Mar 22, 2022
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When shopping for homeowners insurance, it is important to do your homework to ensure that you are getting both the correct coverage for your home and the best price for your policy.
Researching coverage options online allows you to do the necessary research from the comfort of your own home and during hours convenient to you.
Learning What Homeowners Insurance Is
Homeowners insurance provides you with financial protection in the event of events which cause damage to your home or injury to someone on your property.
Coverage on your home would pay to repair damage due to fire or natural disaster such as a fallen tree.
Policies cover not only structural fixes but any loss of or damage to personal property within the structure.
Is homeowners insurance necessary?
Homeowners are not required by law to have insurance. However, mortgage companies typically require the homeowner to have coverage in order to protect their investment in the property.
Mortgage companies typically require the homeowner to have enough coverage to rebuild the home in the event of a complete loss.
Homeowners typically want to have coverage that will also replace any damaged or destroyed personal items such as clothing, furnishing, jewelry and collections.
What do standard homeowners insurance policies cover?
Standard policies include a basic level of protection that cover most homeowners’ needs such as:
- Repair/rebuilding of the home
- Replacement of personal items including a specific allowance for clothing, appliances, etc
- Housing costs if the family/individual is unable to remain in the dwelling while repairs are made
- Liability in the event of an injury on the property
- Coverage for other structures such as fences, garages, sheds
Coverage is provided in the event of relatively common damage causing incidents including fire, windstorm, hail or vandalism.
What is not covered by a standard policy?
Policies typically exclude certain events which are either unpredictable or can be avoid with regular home maintenance. Standard exclusions are damage due to:
- Sewage backup
- Termite or insect damage
- Acts of war or terrorism
Additionally, some pets or possessions may prevent a homeowner from getting coverage.
For example, insurers will ask if there is a trampoline on the property or if particular breeds of dogs considered to be dangerous including Pit bulls, German Shepherds or Rottweilers live on the property. These types of exclusions are due to liability risks that the insurance company may not be billing to underwrite.
Is additional coverage available?
Homeowners who live in certain areas or have particular valuable possessions may want to have coverage above and beyond the standard.
Typically written specifically for the homeowner and his/her individual situation, this type of coverage is detailed in a “rider.” Riders cover a wide variety of circumstances including providing replacement costs for:
Riders also provide coverage in the event of natural disasters that are excluded from most policies.
In some areas damage caused by flood, earthquake, hurricanes or sinkholes can be covered in standardized riders.
Are all insurance companies equal?
Federal regulations do not cover home insurance; instead, individual states determine what is required. This localized practice creates an environment where there is great variations among insurers.
Rating companies review the financial stability of insurers and provide grades to the companies in order to help policyholders and investors make education decisions regarding an insurer.
Along with differences in financial stability, insurance companies differ in the way they interact with their policyholders. Searching an insurer online will provide insight into consumer experiences.
Most often mortgage companies provide the option to pay your home insurance premiums as part of your monthly mortgage payment.
Combining the two payments makes the process easier for the policyholder and provides assurance to the mortgage company that the home is insured.
However, homeowners can elect to pay the insurance company directly in annual, quarterly or monthly installments.
What should be compared among policies?
Before you finalize your coverage, review the items listed below to confirm that the policies you are comparing are equivalent.
- What is the amount of coverage?
- What does the policy cover? (Structure, belongings, liability)
- What exclusions are written in the policy?
- Does your home need additional coverage due to location? (Hurricane, earthquake, tornado)
- Will any of your possessions create a problem in regard to obtaining coverage? (Trampolines, pools, pets)
- Can you obtain additional coverage for any high cost items? How much with the additional coverage cost?
- What is the total cost of the coverage?
- What is the deductibles amount?
- Is the insurer reputable?
- How quickly can coverage begin?
The insurance industry had its own language. Details may be overlooked if the terms of the industry are unfamiliar or overlooked.
Following are some of the most frequently used insurance terms that may impact your understanding of a policy.
Appraisal – An evaluation of property to determine value.
- Claim – A request for reimbursement due to damage or loss.
- Deductible – The amount a policyholder will need to pay out of pocket for a claim. This amount is separate from premiums.
- Depreciation – A decrease in value due to aging, wear or other factors.
- Endorsement (Rider) – An addition to a policy which alters the original policy.
- Exclusion – Circumstances or property not covered by a policy.
- Lapse – The termination of a policy due to lack of payment.
- Liability – Responsibility for injury to a person or damage to property
- Premium – The cost of insurance coverage.
- Underwriting – The process used by an insurer to determine how much coverage is available to a person.
Before you begin your search for insurance coverage, it helps to know exactly what you want to insure. Insurance companies will want to know the size of your home, the materials used in the structure, the number of fireplaces and some home history.
Having those specifications nearby will make your application process proceed much more quickly. If you have any valuable belongings, knowing the replacement costs will be an important part of requesting additional coverage. The more you know about what you own, the easier the process will be.
Shopping for insurance can seem overwhelming, however with some research you can understand the options offered to you and select the best coverage for your needs. As with any purchase, being an educated consumer is the best way to protect yourself.
Be sure to use the FREE comparison tool below to start searching for quotes.
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