Finding the Best Homeowners Insurance Policy

top 5 benefits of homeowners insurance orig

Your home and all of your stuff are a big investment, so naturally, you don’t want to go with a company just because you see a commercial on TV. Here are some tips to help you get started on your shopping journey.

Determine How Much Coverage You Need

The key to figuring out how much home insurance you need is to look at each standard coverage type and adjust the amounts to fit your specific needs, then add extra coverage to plug any gaps. Here’s what that might look like:

  • Dwelling coverage. Since the cost to replace your home and other structures could vary depending on local construction and material costs, it’s difficult to come up with a number on your own. Your insurance agent can help provide an estimate. It’s a good idea to add extra coverage like extended or guaranteed replacement cost coverage, if it’s available, to help account for possible surges in local construction costs, especially if your area is prone to natural disasters.
  • Contents coverage. A good way to calculate how much coverage you need for all your stuff is by creating a home inventory. It’s a good idea to have “replacement cost” coverage in your home insurance policy, which pays the cost for new items. Actual cash value only pays the depreciated value of your damaged items.
  • Liability coverage. You want to buy enough liability coverage to cover what can be taken from you in a lawsuit, like your savings.
  • Additional living expenses (ALE) coverage. ALE coverage is typically set at a percentage of your dwelling coverage, such as 20%. But if you need more, you can increase your loss of use coverage. This pays the extra costs if you can’t live at home due to damage.
  • Other coverage types. You can fill gaps in a policy with coverage types such as flood insurance, earthquake insurance, water and sump overflow and home systems breakdown coverage.

Compare Home Insurance Quotes

Once you know how much coverage you need, you can start shopping around. It’s important to compare home insurance quotes from multiple insurers because rates can vary considerably for the same coverage.

You can get free home insurance quotes:

  1. Online. You can get them from an insurer’s website or by visiting a website that specializes in providing multiple quotes at once.
  2. Insurance agent. An independent insurance agent can get quotes from multiple companies. A “captive” insurance agent only works for one company.

Home Insurance Discounts

Make sure you ask about discounts. Here are some common types to look for:

  • New or renovated home discount. This is a price break that often requires upgraded wiring and plumbing.
    Safety and security discounts. Having fire safety devices (such as smoke alarms and sprinklers) and security devices (such as burglar alarms and deadbolts on exterior doors) often leads to a discount.
  • Roof age discount. If you have a newer roof your insurer might lower your rate.
    Disaster preparedness discount. Ask about this discount if you take steps to safeguard your home against natural disasters, such as installing storm shutters and shatterproof glass if you live in a hurricane-prone area.
  • Multi-policy discount. This discount is frequently available if you buy more than one type of policy from the same insurance company, such as auto, RV and motorcycle insurance. Bundling auto and home insurance is typically one of the best discounts you can get.
  • Multi-home discount. If you need to insure more than one home, find out the discount if you insure them with the same company.
  • Claim-free discount. Ask about a price break when you don’t have a recent history of insurance claims.
    Insurance payment discounts. You can often get small discounts for going paperless and paying your premium in full.
  • Employment, organization and association discounts. Depending on your occupation (such as educators) or if you are a member of a union, professional organization or alumni association, your insurer might have an affiliation discount.

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