How to Get the Best Homeowners Insurance Rates
Unlike your auto insurance policy, homeowners insurance isn’t a legal requirement in any U.S. state. But you should have it: your home may be the single biggest investment you own.
If you’re financing your home through a bank or other financial institution, your lender will likely require you to have some kind of protection for such a valuable asset for exactly that reason.
We’ve spent more than 600 hours researching homeowners insurance companies and bring several decades of experience in the insurance business. And this is our list of the best homeowners insurance for you.
But what does homeowners insurance cover and how much protection do you really need?
Homeowners Insurance – What Form of Coverage Do I Need?
Before you start shopping for rates, look into the different insurance options available to you.
There are multiple types of homeowners insurance policies with varying levels of coverage: from basic protection plans to comprehensive options for valuable personal belongings.
All policies, however, work much the same way, by assessing the value of your property and setting limits for insurability.
Homeowners Insurance Forms Include:
What Does Homeowners Insurance Cover?
You may have heard stories about homeowners’ insurance policies not covering the full cost of damages to the home after a natural disaster.
In many cases, people are unaware of their policy details, specifically what they do and do not cover.
Most standard homeowners insurance policies include:
Six Different Types of Coverage
Virtually no standard homeowners insurance policy will cover damages caused by flooding, earthquakes, and hurricanes.
If you live in an area that is prone to any of these, be aware that you will have to pay extra to protect your home from such perils.
More Comprehensive Homeowners Insurance Coverage
If you’re looking for a more comprehensive coverage, some insurers offer optional riders or endorsements that can enhance your homeowner’s insurance policy.
These, of course, have an additional cost and can increase your premium payments considerably.
Common endorsements include:
The better informed you are with regard to your policy details, the better prepared you’ll be when it’s time to file a claim.
If you’ve filed a claim that was denied and feel your insurance company has made a wrong call, please know you have the ability to appeal its decision and ask for reconsideration by hiring the services of a public adjuster.
What Goes Into Your Homeowners Insurance Premiums?
Just as with any other type of insurance, homeowners insurance premiums are based on a number of factors, including the area where the home is located, its age, and the construction materials from which it was built, particularly the roof.
These are important because older houses are more likely to require expensive repairs for major household systems.
In addition, the cost of reconstructing an older home with new materials and construction techniques may surpass its current value.
Meanwhile, homeowners in areas with high crime rates, prone to natural disasters or located far away from emergency services can expect to have higher premiums due to the increased likelihood of these homeowners filing a homeowners insurance claim.
Other Relevant Factors Include:
How to Lower Your Homeowners Insurance Premiums
In life be sure to take everything with a grain of salt especially advice on financial products such as home or life insurance.
That being said, we compiled some useful tips to help you keep your insurance premiums affordable:
Play with the Deductible
Deductibles are a way for insurance companies to shift some of the risks of insuring a home to the homeowner. That means the higher the deductible is will translate as lower premium payments and vice versa.
Opting for the highest deductible you can comfortably afford is a great way to obtain a lower premium amount. Just remember not to exceed what you can actually pay out of pocket in the event of a covered claim.
When shopping around for a homeowners insurance coverage, ask what your premium would be if you chose the highest possible deductible you could afford and compare the difference in monthly premium payments.
Opt for the Right Coverage & Amount
This one might be more common sense than anything else, but really consider the type of coverage you’re likely to require based on your location and past claims history.
If you have a mortgage and are required to pay homeowners insurance when you don’t feel you need to, you may opt for basic coverage.
Otherwise, calculate how much it would cost to rebuild your home based on local construction costs and base your decision on that amount.
You’ll have a choice between a replacement cost coverage and an actual cash value coverage.
Replacement cost coverages tend to cost more because they do not factor in depreciation when reimbursing you for damaged or stolen items.
In contrast, actual cash value coverages only reimburse you for the depreciated value of your personal items at the time of the covered claim.
Improve Your Credit Score
Although home insurance scores are different than credit scores, they are also based on your credit history.
The best way to improve your credit score and build more credit history is to keep up-to-date accounts open, diversify your credit usage, and make timely payments to keep credit card balances low.
Enhance Your Home’s Security
Enhancing your home’s security by installing an alarm system, overhead sprinklers, and other security features may reduce your risk of filing homeowners insurance claims and earn you a discount on your monthly premiums.
Bundle Your Policies
Own a car? Bundling auto insurance with a homeowners policy can be an excellent way to save on premiums.
Most insurance companies that offer both products also extend discounts to those who purchase these policies together.
Summing It All Up
The best tip you’ll get regarding homeowners insurance is to shop around and compare quotes before settling on a policy.
If you already have coverage and haven’t reviewed it in some years, it might be time to search the market for a more comprehensive policy with lower premiums.
Experts suggest the best time to shop for quotes is when the value of your home changes, such as after a renovation or interior redesign, or when you switch to a different car insurance carrier.
If you haven’t had a claim in a good number of years and your premiums have increased, that might be another great opportunity to look around for a better deal.
If you’re still unsure of where to start shopping for quotes, take a look at our list of leading homeowners insurance carriers and brokers to get a better idea of what you can expect when comparing insurers and insurance products.