How to compare homeowners insurance policies
Your home is likely your biggest financial investment, which is why protecting it is so important. But between confusing insurance terms and the temptation to just choose the lowest price, it's easy to feel overwhelmed. Taking a few minutes to learn what to actually look for could save you a great deal of time and money in the long run.
Here's how to compare your homeowners insurance policies:
1. Check the financial strength and reputation of the insurance provider
When choosing an insurance policy, the most important factor is whether the insurance provider has the financial strength to pay large claims when they arise, as well as years down the road after a major catastrophe or recession.
Before finalizing your policy purchase, do some research on the insurance provider(s) offering your top quote choices. Here are some sources that may be helpful when gathering information:
AM Best:
- Look for an “A” rating or better
Online reviews:
- 50 or more reviews
- At least 4.5 stars
- Detailed reviews discussing claim process and speed, customer service, and responsiveness
Better Business Bureau (BBB):
Read through their listing on the Better Business Bureau. Things to consider:
- Rating (A+ to F)
- Complaint history
- Whether complaints were resolved
Your state's insurance department:
Every state regulates insurance companies and agents. Check for:
- License status
- Disciplinary actions
- Customer complaints
2. Evaluate the price
When it comes to home insurance coverage, the lowest price doesn't always mean the best deal. So look for policies that provide the best value instead just the lowest dollar amount.
3. Explore potential homeowners insurance discounts
You may be eligible for home insurance discounts or other savings opportunities. An insurance agent can review your policy and make sure you're taking advantage of every discount you're eligible for.
4. Consider replacement cost vs. actual cash value
Check whether your home and belongings are covered at replacement cost or actual cash value. Replacement cost coverage helps pay to repair or replace damaged property at current prices. Actual cash value coverage factors in depreciation, which may result in a lower claim payout.
5. Compare homeowners insurance coverage limits
Choosing the lowest price doesn't automatically mean it's the best choice. Compare the baseline coverage limits for these key areas:
- Dwelling Coverage: covers the physical structure of your home
- Personal Property: covers your belongings
- Liability Protection: covers legal and medical expense if someone is injured on your property
6. Review homeowners insurance deductible types and amounts
A deductible is the amount you pay out of pocket before your insurance coverage kicks in. Choosing a higher deductible might give you a lower price, but means that you'll pay more if you file a claim. So, when comparing insurance policies, take a look at what deductible amounts are being offered. Also see if the insurance provider uses percentage deductibles or dollar amounts.
7. Work with a local Comparion Insurance agent
For personalized guidance, reach out to a local Comparion Insurance agent like me. We can help you understand your options and find the right combination of coverage and value for your home.
At the end of the day, the best homeowners insurance is the one that has your back when things go wrong. Use these tips to compare your home insurance options with confidence.
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