For many of us, a tremendous amount of research and work goes into buying a home. When my husband and I bought our first home two years ago, I was surprised to learn that everything I thought I knew, I didn’t really know – including how to choose homeowners insurance.
I hadn’t thought about homeowners insurance until my mortgage company called and told me they needed my policy information. Panic poured over me. What policy? What are my options? How much coverage do I need? Where do I start? I was overwhelmed with questions and at a loss for answers. I had a whole lot of research to do and with a mortgage already underway, not a lot of time to do it.
Homeowners insurance policies can be confusing and complicated, especially if you’re not familiar. While these tips may be too late for me to use, I hope they can help you when considering your home insurance options.
Talk with Your Local Insurance Agent
If there’s one thing I recommend when it comes to homeowners insurance, it would be to talk to someone who knows your area like the back of their hand.
“Local agents are familiar with the city and surrounding areas – this means they should have a general knowledge of the market values and other information that may play a role in determining your coverage needs,” says Sarah Haun of Advanced Insurance Designs, Inc., who has been selling and servicing homeowners’ policies for more than 15 years.
Insurance agents can also help in determining how much coverage you need and if it makes sense to bundle your various insurance policies together. Bundling car and home insurance saves my husband and me a couple hundred dollars a year, but that’s not the case for everyone, so be sure to ask.
Haun also suggests working with an independent agent. “Independent agents have the ability to quote several different carriers, to find you the best coverage at the best value,” says Haun. “This may be a good option if you want to get several quotes without making several phone calls or filling out several online quote forms.”
My agent is an independent agent and I highly recommend using one. If ever I have a question about my policy, I call him directly. It also benefits me in the fact that he’s always looking for ways to save us money each year, and if he sees an opportunity, he shares it with us.
Shop for Home Insurance like You Would a New Car
“It pays to shop around,” says David Reiss, Professor of Law at Brooklyn Law School. “You want to shop around to get the best price, but you also want to get a sense of how each company you are considering treats claims when they are made,” he says. “Do they have a reputation for being difficult to work with and a reputation for not paying legitimate claims? You want to take that into account when you are making your decision.”
If you decide to go it alone, Haun suggests to get three estimates and compare.
What’s Covered and What’s Not
You wouldn’t get halfway through a good book and stop reading it, so don’t just give your policy a once over. Experts recommend you read through your policy in full detail to know what is and what is not covered.
According to Haun, insurance coverage may include damage from
- Weight of snow/ice
- Bursting of pipes
“Damage from normal wear and tear would not be covered,” adds Reiss. “If an old boiler gives out, that’s on you.” Also, if you’re going to keep valuable items in your home like jewelry, collectibles or art, Haun suggests you tell your agent about them and ask what the best options are for covering those items.
Haun adds that shoppers should make sure the policy includes replacement cost. Without it, she says, your home and personal property will be covered using Actual Cash Value (ACV), which is depreciated. If this happens you may end up losing money because ACV = replacement cost – depreciation.
Keep Your Credit Score High and Your Small Claims Low
The higher your credit score the better. As with a credit card, personal loan or mortgage, a higher credit score may get you a better deal and a better rate on insurance, which may save you money.
“Your claims history is similar to a credit history,” says Haun. “A record is kept of all past claims, and excessive claims can not only make your rates higher but could determine your chances of being placed with a standard market carrier.”
I hope these tips help you to choose the right homeowners insurance for you. If you have a tip or experience that you’d like to share, we’d love to hear it! Share in the comment section below.
Already have homeowners insurance but looking to make a change? Check out this read for everything you need to know about changing homeowners insurance policies.
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