Did you know that the average premium for homeowner’s insurance increased by 4% in 2020? That means that the rates for homeowner insurance are rising faster than inflation.
Sadly, homeowner insurance is a necessary expense for anyone that owns the property. But, that doesn’t mean you need to spend a fortune on it.
The reality is that you can find the best homeowner insurance for your needs by doing a little searching.
To help you out, we made this article. In it, we’ll go over everything you need to do to find the best insurance option. Let’s get started!
Know About the Different Types of Homeowner Insurance
It’s important to know that not all homeowner insurance is created equally. Depending on what policy you go with you will receive different levels of coverage on your home.
You should be familiar with the different coverage levels. That way, you don’t think you’re being covered for something that your not. You can break homeowner insurance coverage into three categories. They include:
- Actual cash value – covers your entire home and belongings after depreciation
- Replacement cost – covers your entire home and belonging original cash value without a deduction from depreciation
- Guaranteed replacement cost – covers your entire home and belongings even if it costs more than your policy limit
If you want the most comprehensive type of homeowners insurance plan, go with guaranteed replacement cost insurance.
If you can only afford the other policies, that’s fine. Just keep in mind that they likely won’t cover the entire value of your home.
Make Sure the Company is Legitimate
The first thing you should do is look into whether the insurance company is creditworthy. This is a good indicator of their legitimacy. How do you do it?
Simply go to the Department of Insurance found on your state’s website. This will give you a list of all the insurance companies that are properly licensed to do business in your state.
More importantly, it will give you a rating of the company, as well as any potential complaints that have been lodged against them. This is a good way to cross certain companies right off your list at the start.
It will also list the average price of insurance in your area or city. Make sure you take a look so you have a rough estimate of how much it will cost you.
That way, you aren’t taken advantage of by a company giving you an expensive policy.
Look Into the Claims Response
When you experience a home insurance emergency, the last thing you want is to be put on hold for hours. Sadly, that’s the case for a lot of homeowner insurance companies that outsource their claims department to save money.
So, when talking with the company ask whether a licensed adjuster will be handling your claim or a third-party call center. If they use a third-party call center, it should be viewed as a red flag.
You can also read customer reviews to get a sense of what the average claim was like. Did the insurance company provide fair settlements delivered on time?
Or did they fight nails and teeth for each nickel and dime? A company’s claims response is a good indicator of its legitimacy.
Ask About Insurer Retention Rate
Every company will likely claim that they have great claims service. After all, who would admit that they have bad service? But, you can cut through the smoke and mirrors by asking the agent about the insurer retention rate.
This is the percentage of the company’s policyholders that decide to renew their policy for another year. A healthy insurer retention rate should fall between 80% and 90%.
If it’s lower than this, that should be a sign that the claim process was not satisfactory for the majority of policyholders.
Get Multiple Quotes
A homeowners insurance policy can get complicated because every home has different coverage needs. That’s why it’s important to get as many quotes as possible.
This will reveal the variation in price and coverage for your area. But, exactly how many quotes do you need? We recommend starting with five quotes. This will give you a good idea of what people are offering.
More importantly, it can give you information to leverage in a negotiation. Some providers might be willing to adjust their price if they know a competitor is offering a better deal.
Try an Independent Agent
Sadly, getting multiple quotes from a large homeowner insurance company can be a challenge. When you go with a large corporation the only quotes they will give you are the ones they offer.
These are referred to as captive agents since they’re held captive by their insurance company in terms of what they can offer. This can severely limit your options.
Instead, consider going with an independent agent that offers homeowners insurance. Why? For one thing, they’re a local option with real people you can talk to.
What’s more, they’ll be able to provide you with multiple quotes. That’s because independent agents work for multiple insurance companies.
That means they can not only find you a better price but more comprehensive coverage for your specific needs.
Found the Best Homeowner Insurance? Keep Reading
We hope this article helped you find the best homeowner insurance for your needs. For many people, homeowner insurance is an afterthought. But, it shouldn’t be.
When the unexpected occurs, this form of insurance is often all that stands between you and financial ruin. So, be a smart homeowner. Don’t take the search for a good provider lightly, especially if you’re a first time home buyer.
Do you not want this article to end? We don’t blame you. Luckily, there are hundreds more that you can check out by continuing to explore our site. So, get started!