When it comes to protecting your home and family, there is very little that can cover your financial angle and a solid home insurance. Most of us cannot afford to pay from our pockets for the major disasters that befall our property. If we experience a tornado, flood, or other risk of damage, most of us may file a claim with the homeowner’s policy to cover the cost of reconstruction or replacement. After all, that’s what they’re trying to do. Still, just as many homeowners are different, not all homeowners have the same policy. Which policy is best for you and your policy and how you get it may vary depending on a variety of factors. Bankrate insurance experts have created this guide to help you find homeowners’ insurance that meets your needs and budget.
How to shop for home insurance
When learning how to shop for home insurance, the first thing you need to know is that buying homeowner insurance may be easier than you think. Depending on your selected home insurance company, you may be able to purchase your policy completely online. These five steps may be a good starting point if you are wondering how to buy home insurance and what coverage you need.
1. Decide what you need to guarantee
The main coverage for a home insurance policy is the coverage of your residence, or coverage. Most insurers have estimation tools that can help you determine your housing coverage needs based on the properties of your home, such as age, area, and house style.
Personal property compensation, or coverage, is usually a percentage of residential coverage, so it is also important to know if it will cost you to replace your personal belongings if you experience complete losses in your home. As with other structures (coverage B) and additional cost of living (coverage D), other coverage types are usually calculated as a percentage of total housing limits.
You may be able to help you get inventory of what you own and give a rough estimate of what it is worth and determine the individual coverage you need. You may want to consider the following factors:
- Does your home have many upgrades, including a professional stainless steel kitchen appliance or granite countertop?
- Do you have hardwood floors in your home?
- Do you have any gems, valuable collectibles, custom furniture, or other valuables?
Knowing the valuables you have and their costs may help you determine if additional compensation is required. As home insurance policies may limit coverage for high-value items such as gems, antiques, and art, you may need to purchase approvals to add coverage for these items.
Plus, you’ll want to stock up on replacement costs for detached structures such as pools, garages, sheds, and fences. Coverage B, other structures are also usually percentages of residential coverage.
2. Research Home Insurance Company
Researching home insurance companies may offer several benefits. Your research will give you a clear comparison of available coverage options and variations in functionality from one company to the next. One company may offer more coverage options than another. Researching your provider in advance can give you a better feel for the digital experiences your company offers.
When conducting a survey to find the best home insurance companies on your short list, it may be helpful to find companies with features that are important to you. These include:
- Mobile App
- Local Agent
- Digital Claims Filing
- Customer Support
- Various potential discounts
- Approval options that suit your needs
You can check customer reviews to learn more about how your company handles complaints and claims. JD Power releases a survey each year that ranks top home insurance companies based on customer satisfaction. Additionally, the financial strength rating is best. Most insurance professionals recommend narrowing down the list of homeowner insurance companies to 3-5 insurers for comparison.
3. Explore coverage add-ons
Standard home insurance may not meet the needs of the homeowner. Most household insurance does not cover earthquakes or flood losses. If you live in an area that is prone to earthquakes or floods, additional compensation may be required. In some cases, mortgage lenders may need to carry flood insurance if they live in a high-risk flood zone. While some insurance companies offer earthquake approvals, most coverage of earthquakes and floods is sold as an independent policy. You can also purchase flood insurance through the Federal Emergency Management Agency’s National Flood Insurance Program or through the homeowner’s insurance company.
Approval options vary by carrier, but some of the most common ones we recommend looking for are:
- Sewer/Water Backup Coverage: This approval provides financial protection against damage caused by a receding drain or a failure of the sump pump.
- Compensation for identity theft: This could fund legal costs and other expenses related to identity recovery.
- Business Real Estate Scope: Many standard home insurance does not cover business assets stored in your home. This approval may be useful when running your home business by increasing the coverage limits on inventory and other business assets.
- Scheduled Personal Property Compensation: This approval provides additional coverage of specially listed high value items such as jewelry, antiques, and musical instruments.
4. Compare quotes
On average, homeowners pay $2,329 a year on their homeowner’s insurance policy, with $300,000 in coverage. The same type of home insurance coverage may vary in prices based on the company, its discounts, and your personal rating factors. So it might be a wise move to get estimates from various household insurers and see which one can offer the lowest rate in your situation. Getting quotes is usually free. Once you have narrowed down the list of carriers that may meet your insurance needs, you may be able to get a quote online or via an agent.
To get a home insurance quote, you probably need to provide it.
- Your home address
- Your home is close to the fire station and fire hydrant
- Your home age
- Your home area
- Details of roof types and ages
- Number of bathrooms in the house
- Construction materials such as floor types, countertop materials, and other finishes
- Garage type (built-in or separate)
- Foundation type (basin, slab, or crawl space)
- Security features such as Deadbolts and Alarm System
Most insurance companies have easy-to-understand online quoting tools. If you have questions or need some guidance in the process, you can call to get a quote from a licensed agent.
5. Buy home insurance
Once you’ve rounded up your quote and decided on the best home insurance company, it may be time to buy an insurance policy. You will want to review the key coverage details of your policy so that you feel you are properly insured. Standard HO-3 homeowner policies must include:
- Coverage A, Residence: This coverage is the computational cost of rebuilding a home. Costs differ from the market value of your home and include the land where your home is sitting.
- Coverage B, other structures: This coverage is usually 10% of the housing volume and covers damage to detached garages, fences, sheds and other structures.
- Coverage C, Personal Property: This is usually 50% or 70% of the residential coverage limit, covering content within the home and away from home like a storage unit.
- Coverage D, Loss of Use: This coverage applies to additional costs incurred if your home is unresidized due to a covered bill and requires temporary residency elsewhere.
- Compensation E, liability: This covers the costs associated with the litigation and litigation that you may incur if someone is injured in your property or is deemed to be infringed and damaged someone else’s property. Different compensation options apply, but the limit is typically $100,000, $300,000, or $500,000. Some real estate insurers may offer higher coverage restrictions.
- Compensation F, Medical Costs: This can be set at $1,000, $5,000 or more, covering costs if a guest is injured in a target incident.
Other aspects of the policy that are worth reviewing are deductible amounts, approvals you want to add, and payment options. If you have a mortgage, you may need to share your mortgage company details with your home insurance company and pay coverage via your escrow account.
Once confirmed, you will receive a copy of the declaration page and everything the policy covers. You will need time to review and make changes. Once approved, the insurance policy will be enforced based on the date you choose. Each insurance company may have payment options, but payments may be made when coverage begins. On the other hand, if you have a mortgage, you may be paid your home insurance through escrow every month when you pay off your mortgage. It is important to note that changes to rates from an insurance company or an insurance company that affects premiums will also affect escrow payments.
When should I buy home insurance?
For some reason, you can always buy home insurance. New home buyers who have not yet implemented policies will want to shop as soon as they find a home, so they can take the time to find the best policy and price for their needs.
If you already have a policy in place, and if you have the following insured, it may be a good time to buy homeowner insurance.
- You are moving to another state or city
- Existing household insurance fees are rising
- Your current insurance company does not provide the approvals you need
- Your coverage needs are changing
- Your policy will be updated immediately and you want to see if you can get better home insurance premiums
- You have experienced important life events such as marriage or a decline in your credit score (applicable condition)
- You want to bundle your home and car insurance
If you are planning to switch homeowner insurance companies, most insurance professionals recommend purchasing a new policy before canceling an existing policy and making sure there are no gaps in coverage.
