How To Compare Home Insurance Quotes

Tips for finding the right policy at the right price

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You've found the house of your dreams, and you're ready to buy. Before you can officially close and pick up the keys, you must show your lender proof of home insurance. So, you start filling out one online form after another, trying to find the best policy. But after staring at the quotes for so long, they all sort of look the same.

It's tempting to pick the cheapest policy, but that could be a mistake. While cost is important, it's not the only part of the quote that matters. You also need to evaluate what each policy covers and if it's the right amount of coverage for your needs. Additionally, it's essential to verify that the insurer is reputable and in good financial standing.

Key Takeaways

  • Take the time to get quotes from several reputable companies. But make sure you're comparing similar policies, or you may wind up overinsured or underinsured.
  • Look at the price tag, but don't stop there. Consider what each policy covers and its limits and exclusions.
  • Once you have your options narrowed down, examine the financial stability of each insurance company to pick one that's reliable.

What Makes Insurance Providers Different?

Not all home insurance companies are created equal. Some insurers are more reputable than others, and some offer more comprehensive coverage than competitors.

There are also differences in customer service. If you can't get a hold of your insurance agent when needed, it doesn't matter how low the insurer's premiums are. To get a better understanding of how well each insurance company treats its customers, check the complaint index on your state's insurance department website or on the National Association for Insurance Commissioners (NAIC) website.

You want to work with a proven insurer, not a fly-by-night company that has trouble paying out claims. Take time to review the ratings from independent agencies for each insurance company you're considering. This can help give you confidence in the financial stability of your choices.

If you already have an insurance company you know and trust, check to see if you can bundle your home insurance with your other types of insurance. You might get a discount for having more than one policy.

How To Compare Home Insurance Quotes

Once you have a few quotes from reputable insurance companies, it's time to compare them. Here's what you should look at before you decide.

Set a Price Point

How much does each policy cost? Pick a policy that fits within your budget but also meets your coverage needs. Knowing what coverages and amounts are most important to you will make it easier to get premiums within your price range by allowing you to adjust non-essential coverages and benefits.

Review Coverage and Limits

If something happens to your home, you don't want to find out the event isn't covered by your home insurance policy. When you're comparing options, always look at the coverage in detail.

There are likely several different types of coverage listed on your policy, each with its own coverage limits. Ensure those limits are high enough to provide enough protection for your situation.

For a quick estimate of your home's rebuilding costs, take the square footage of your house and multiply it by the building costs per square foot in your area. Local licensed homebuilders and insurance agents can provide a general idea of rebuild costs in your area.

Here's a quick look at the types of coverage usually included to ensure you're getting the protection you need.

  • Dwelling: This helps repair or rebuild your home if a covered peril occurs.
  • Other structures: If your house isn't the only building or structure on your property (such as a work shed, fencing, or detached garage), also protect the others with this type of coverage.
  • Personal property: This protects your belongings, such as your clothing, appliances, and your kids' toys, so that you can replace them after a covered loss.
  • Additional living expenses: This coverage helps pay the additional costs for temporary living expenses until you can move back into your home after a claim.
  • Liability coverage: If someone gets hurt at your home, you could be liable. This coverage helps pay for associated costs like medical bills or legal expenses.

Take note of the limits for each type of coverage to ensure they're the same on each policy you're comparing.

Note the Settlement Method

There are two main types of settlement methods for homeowners insurance, actual cash value (ACV) and replacement cost (RC).

ACV policies pay the original value of the lost property minus any depreciation. So if your large screen TV cost $2,000 and is three years old when it's destroyed in a fire, you'd be reimbursed for the depreciated value of that television, which might be about $1,400.

RC policies pay to replace whatever is damaged or destroyed with a comparable item. If your TV is three years old when it's lost in a fire, you'd be reimbursed for the cost of a brand-new one with similar features in today's market.

To get the type of coverage you want, make sure you understand the differences between these valuation methods and pick the one you want on each policy you compare.

Don't Overlook the Deductible

When resolving claims, insurers pay out the authorized amount for the damage minus your deductible. So, if you have a $1,000 deductible and file a $4,328 theft claim, you'd receive $3,328 from your insurance company. The remaining $1,000 would be your responsibility. It's also possible to have a deductible that's a percentage of your home's insured value.

Home insurance policies typically have a deductible between $500 and $5,000. When comparing home insurance policies, make sure the deductible is the same for each one, as this variable can impact the price you pay for your coverage.

Typically, the higher the deductible, the lower your monthly premium. However, even if it costs a bit more each month, make sure you select a deductible amount that you're comfortable paying in the event of a claim.

Seek Out Discounts

Home insurance companies often offer discounts to help lower premiums. Here are some common discounts:

  • Bundling: You might save money by combining multiple policies under the same company.
  • Safe home: Do you have working smoke detectors and a burglar alarm? These types of items can help lower your premium.
  • Claims free: You might qualify for this discount if you haven't filed any claims in the past five to 10 years.
  • New home: Are you buying a newer home or one in good condition? You might be able to score some savings.

Don't forget to ask your insurance agent about these if you don't see them on your quote or policy.

Check for Financial Stability

When you're looking for a homeowners insurance policy, make sure any company you're considering is financially stable. This means that the company can pay out claims in the event something happens to your home.

You can check an insurer's financial stability by looking up its rating. A rating is a score given to an insurer by financial rating agencies like A.M. Best, S&P Global, Fitch Ratings, and Moody's Investors Service. The score is based on the insurer's financial stability and ability to pay claims. This information can help you pick a company that is reliable.

Track Data as You Receive Quotes

When you're comparing home insurance quotes, it's easy for the information to blur together. To keep everything straight, take time to track the data you're gathering. This way, you can quickly scan the important bits and more easily compare policies.

You can create your own simple comparison chart as you take notes for each company. It might look something like this:

   Company A  Company B  Company C
 Contact Number and Agent Name      
 Financial Rating      
 Company Licensed in State Yes/No      
 Type of Policy      
 Actual Cash Value or Replacement Cost      
Deductible
Premium Amount Monthly/ Annually
Policy Exclusions
Coverage Limits/Notes
Final Thoughts

This information can take some time to gather, but it'll make it much easier to compare policies and see which one provides the best overall value.

Review the Fine Print Before Finishing Your Search

Once you've chosen your insurer, read over the fine print before signing anything. You don't want to get stuck with a policy that doesn't meet your needs.

Some things to watch for include:

  • Exclusions for damage caused by certain types of weather or natural disasters
  • Limits that are too low to replace your possessions or rebuild your home
  • Specific limits on certain types of possessions you own, such as jewelry or electronics

Read over your policy completely and ask your agent if you don't understand something.

Some damages from natural disasters, such as sinkholes, earthquakes, and flooding, are excluded from standard policies. Other common threats in your area may also be excluded from standard policies, such as wind damage in coastal regions. Talk to your insurance agent about additional coverages you might need for regional hazards.

Frequently Asked Questions (FAQs)

How do I get a quote for homeowners insurance?

Many insurance companies have online tools that allow you to get a quote without having to talk to a representative. You must provide some basic information about your home, such as its age and construction type, and basic information about yourself. Provide the information you gather into the online tool and submit it to see your home insurance quote.

Why are some company quotes so much higher than others for the same homeowners insurance?

There are a few reasons why an insurer might charge more for homeowners insurance. One is that each insurer uses slightly different formulas for calculating the risk of potential claims. Another reason that prices can vary is because of the exclusions and limitations in a policy. For example, one company may not cover damage caused by a natural disaster, while another will. Look carefully at the details.

Does homeowners insurance cover flooding?

Homeowners insurance doesn't usually cover flooding. If you live in a flood-prone area, consider purchasing a policy add-on or a separate policy from the National Flood Insurance Program (NFIP).

Article Sources

  1. Wisconsin Office of the Commissioner of Insurance. "Consumer's Guide to Homeowners Insurance," Pages 10-11.

  2. Allstate. "How To Compare Homeowners Insurance Quotes."

  3. South Carolina Department of Insurance. "Types of Coverage in a Homeowner's Insurance Policy."

  4. Progressive. "What Are Home and Renters Insurance Deductibles?"

  5. Washington State Office of the Insurance Commissioner. "How Does My Insurance Company Rate?"