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How to Find the Best Homeowner Insurance Rates

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How to Find the Best Homeowner Insurance Rates

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1 Types of Homeowner Insurance
2 Importance of Protecting Your Home and Assets
3 Price vs. Reliability
4 How to Find the Best Home Insurance Rates

When you purchase a home with a mortgage, the bank mandates home insurance to protect their investment. But even if you are fortunate to have the funds to buy a home with cash, you’ll want homeowner insurance to minimize your financial risk.

Home insurance is designed to cover the cost of loss due to fire, storm damage, theft, vandalism and other events. It also protects your financial interests if someone is injured on your property.

When you’re shopping for a home insurance policy, it’s important to understand the types of coverage, risks of being uninsured or underinsured, factors that affect rates, and how to find the best policy to meet your needs and budget.

Types of Homeowner Insurance

Different aspects of your home insurance policy protect your home and family against various risks. When you’re shopping around, make sure your policy has the coverage you need.

  • Dwelling
  • Liability
  • Personal Property
  • Loss of Use
  • Flood Insurance

Dwelling

The most basic type of coverage, dwelling coverage provides financial reimbursement if your home is damaged due to storms, hail, fire, theft or vandalism. “Full replacement value” covers you for the entire cost to rebuild your home, up to your policy limit, even if it is more than what you paid for the house.

Liability

Liability insurance covers medical costs, lost wages, pain and suffering, legal fees, and other costs associated with someone who is injured in your home or on your property.

If you accidentally damage someone else’s property, your liability policy may also cover those costs.

Personal Property

Personal property, or contents coverage, covers the loss of items in your home, such as furniture, clothing, and small appliances. If you have valuables such as jewelry, fine art, or valuable collections, you may want to consider a separate rider to cover these high-value items.

Loss of Use

The “loss of use” section of your home insurance policy pays for a place to stay, whether temporary housing in an apartment or hotel or a trailer on your property, while your home is being repaired.

Flood Insurance

Although dwelling coverage protects against most incidents and natural disasters, it does not cover flood damage. Homeowners in flood zones might consider this important additional coverage.

Importance of Protecting Your Home and Assets

For most people, their house is their biggest and most expensive purchase. You want to make sure that a fire, storm or other natural disaster doesn’t spell financial ruin and leave you homeless.

Risks of Being Uninsured or Underinsured

Not being insured can leave you homeless in the event of a natural disaster. If you have a mortgage and don’t make your home insurance payments, your lender may write a policy that’s more expensive and add the cost to your mortgage payment. If you don’t make the payments, you could be at risk of foreclosure.

There are also risks to being underinsured. A recent Leaf Group study revealed that 60% of homeowners faced “significant out-of-pocket expenses for extreme weather damage.” Many faced bills of $5,000+. Meanwhile, homeowners who filed large claims (over $15,000) often received just 14% of the damage costs.

Price vs. Reliability

When you’re shopping around for a home insurance policy, you want to balance costs with the company’s reputation for reliability and service. Read reviews on trustworthy websites. Ask friends and neighbors for recommendations.

When you’re buying a new home, your Realtor or mortgage company may have recommendations for home insurance, but also do your own research and compare rates. Professionals might recommend others in their circle as part of mutual referral agreements and those service providers may not always offer the lowest prices or best service.

When you’re comparing insurance companies, consider:

  • The claims process
  • Financial rating and stability (through A.M. Best or another service)
  • Customer complaints

 

How to Find the Best Home Insurance Rates

Once you’ve narrowed your choices down to some of the best home insurance companies, you’ll want to take steps to secure the best rates.

  • Compare Multiple Quotes Online
  • Ask About Discounts

Compare Multiple Quotes Online

Working with an independent insurance agent who represents multiple brands can help you get the lowest prices combined with personalized service. But you can also shop for home insurance easily online.

Refer to sites like TheZebra, QuoteWizard, PolicyGenius, and Solvable to compare hone insurance rates in minutes.

Ask About Discounts

Once you’ve found a few companies you like, make sure you’re taking advantage of any discounts available. Insurance companies may offer discounts for:

  • Monitored security systems
  • Automatic sprinkler systems or other fire protection
  • Weather-proofing (impact-resistant windows, storm shutters)
  • New roof
  • A new home
  • Non-smokers
  • Military members
  • Seniors
  • Paying premiums in full annually

You may also save money by bundling your home and auto insurance with the same provider. A recent report from Bankrate showed that homeowners can save between 20% and 25% on insurance from top carriers by bundling their policies.

You can also reduce your home insurance costs by increasing your deductible. However, you want to make sure you can afford the deductible in the event of damage.

Understand Policy Limitations and Exclusions

If you’ve taken the above steps and shopped around, you may think you’re getting a good deal on home insurance. But read your policy carefully and understand any exclusions or limitations. The insurer providing the lowest rates may not be a bargain if the policy leaves you underinsured or your insurance company denies your claim.

Policy limitations describe coverage limits. In other words, if your dwelling is only insured up to the cost of your mortgage, you may not have enough coverage to rebuild if your home is destroyed in a fire.

Exclusions describe events that aren’t covered by your policy, such as floods or earthquakes. You may need a separate policy to cover these natural disasters.

Policy exclusions may also include issues caused by neglecting regular home maintenance, intentional acts, pre-existing damage, or acts of war or terrorism.

Before you sign up with a new insurance company, understand exactly what’s covered and any additional policies or riders you might need to cover risk gaps.

Dawn Allcot
Author:
Dawn Allcot

Dawn Allot is a full-time freelance writer and content marketing expert specializing in finance, real estate, and technology. In addition to her work at Solvable.com, Dawn regularly writes for The Motley Fool’s Millionacres website, LoopNet, and Bankrate.

With more than 20 years editorial experience, her work has appeared on prestigious sites that include Forbes, LendingTree, Money.com, and the award-winning Chase News & Stories website. A former trade magazine editor, Dawn specializes in taking complex topics like taxes and technology and simplifying them for today’s internet readers. She lives on Long Island with her husband, two kids, two cats, and two lizards.