Homeowners Insurance Quotes: How to Compare and Choose the Best Policy

Insurance companies provide you with homeowners insurance quotes, but how do you know you’re getting the best policy? You want to shop around and see who has better terms, along with a better price. This can be tricky if you don’t know what to look for. Here’s how to discern the best of the bunch.

Introduction to Homeowners Insurance Quotes

Homeowners insurance is required for homeowners who have a mortgage. The mortgage company wants to ensure that you have the means to repair the home if there is an accident, such as a fire. Even if you aren’t required to have it, it’s a good idea to have a policy that can cost you a couple of hundred dollars per month to pay for what might be tens of thousands of dollars in damages or more. 

Comparing homeowners quotes is smart because it helps you discern who has the best coverage for the best price. You may find that one company has a higher additional living expenses budget than another for the same price. You’d want to get the policy with the higher coverage. 

Factors Influencing Homeowners Insurance Quotes

Let’s look at some factors that affect the cost of homeowners insurance policies. 

Property Rebuild Value

It’s a misconception that the homeowners insurance quote is based on a property’s value. The market value is not the cost of replacing the home if it were to burn to the ground. The rebuild value is what the quote is based on, and that is the first coverage listed on the policy. Insurance companies have internal software that computes the cost to rebuild based on size, workmanship, location, and materials. This is called the dwelling coverage in the policy. 

Coverage Types and Extent

Aside from the dwelling coverage, your quote will be based on personal property and other coverages. The amount of coverage you have will affect the cost of the policy. The more coverage, the higher the cost of the homeowners insurance policy. 

Personal Factors: Credit Score and Claims History

Your credit score and claims history will affect your premium costs as well. Not every state allows insurance companies to use credit scores, but in those that do, the better the score, the better the rate. Also, being claims-free will give you a better rate than if you have a series of claims on your home. 

Market Conditions

The general insurance market conditions will affect your rates. In periods where there are a lot of claims for insurance companies to process, you may see a higher rate than when claims are down. Insurance companies must get approval from the Insurance Commissioner to raise rates in a state. This helps regulate the cost of insurance in expensive places. 

How to Obtain Homeowners Insurance Quotes

Of course, to get quotes, you call different insurance companies to obtain them. However, you want to ensure you compare the same quotes. Double-check that the dwelling coverage and personal property coverage are the same in the quotes. These will affect the price of the quote. Check to see what the liability and additional living expenses are as well. Liability coverage usually starts at $100,000, and additional living expenses will depend on the company and what they allot. Some give a dollar amount while others give a time frame. See how they compare. 

Step-by-Step Guide to Comparing Homeowners Insurance Quotes

Let’s look at a step-by-step guide on how to compare homeowners insurance quotes: 

1. Examine coverage options: The major areas to compare include the dwelling coverage, personal property coverage, liability protection, and additional living expenses. You may also want to consider high-end jewelry coverage, identity theft protection, and other endorsements such as backup of sewer and drain. 
2. Compare deductibles: See what the insurance company has set for the deductible. The higher the deductible, the lower the premium. Homeowners insurance policies can use a set amount or a percentage of the dwelling cost as the deductible. Do that math as this can dramatically affect your portion of a claim. 
3. Evaluate premiums: See which company has the best premium for the coverage offered. 
4. Understand policy exclusions and limitations: Homeowners insurance doesn’t cover everything. For example, floods and earthquakes are common exclusions.
5. Check for discounts: See if bundling the policy can get you savings, along with other discounts like security systems.

Tips for Choosing the Best Homeowners Insurance Policy

Follow these tips to get the best homeowners insurance policy.

Prioritize Your Coverage Needs

Know what coverage you need and get a policy that meets those needs. This can be done by using a rebuild calculator yourself and inventorying your personal belongings. 

Balance Cost with Coverage Quality

It’s not just about the cost of the policy. You want to balance what you get in coverage with what you pay. 

Consider the Financial Strength of Insurance Providers

Look up the AM Best rating for the insurance companies you are considering. A high rating means that the company is financially strong and capable of handling a high volume of claims. 

Review Customer Service and Claims Process

Check out review sites like the Better Business Bureau to see how customers are satisfied with claims. Keep in mind that these types of review sites usually attract disgruntled customers, you can get a sense of how the company handles claims and what potential problems will be. 

Reassess and Update Your Policy Regularly

Review your policy annually to ensure it still meets your needs. The dwelling value and personal property value may change, or you may decide that you need more liability coverage with an expanding family. Talk to your insurance agent regularly to ensure the policy still properly covers you.