How to Shop for Homeowners Coverage

Buying a home might be the biggest investment for most people. If you’re borrowing money to purchase a property, you’ll be required to get a home insurance policy. Lenders require homeowners insurance to protect their investments from potential risk. 

But home coverage does not only benefit the lender. It primarily safeguards the owner’s property from different forms of damage or loss. With its advantages, homeowners insurance can serve as your safety net and lifeline. Knowing how to buy this insurance policy is good practice.

If you feel overwhelmed by the process, follow this guide on how to shop for the best coverage for your home.

1. Determine What Types of Coverage You Need

There are different types of home insurance policies available in the market. Depending on your needs, your homeowners insurance includes coverage for the following:

• Your Dwelling or House
• Other Structures (Detached Garage or Shed)
• Personal Property
• Liability
• Additional Living Expenses (ALE)
• Medical Payments 

Aside from these coverage options, you’ll likely need to choose between replacement cost coverage and actual cash value coverage. Most lenders and mortgage companies will require that you have a replacement cost policy. With the coverage, the insurance company will pay for repairs and replacement of the damaged items. On the other hand, actual cash value policies reimburse you for the depreciated value of the damaged property or item. 

2. Choose the Appropriate Coverage Amount

The next thing you need to do is ensure you have enough coverage. If disasters like wildfire or hurricane strike, your homeowners insurance should be sufficient to cover the costs. Your coverage amount should be used for rebuilding the structure and replacing your damaged belongings. 

First, consider getting a more accurate estimate of your property’s replacement cost, total value of belongings, and value of your financial assets. It’s recommended to create an inventory of everything you own. By doing this, you can determine how much insurance you need to cover your possessions.

Those who live in areas with a higher risk of flood or earthquake will need additional coverage. Since standard homeowners insurance does not cover these types of natural disasters, a separate policy with a different coverage amount is required.

3. Research the Insurance Company’s Track Record

Your insurance provider should have an excellent track record and reputation within the industry. To get a sense of their customer service, take a look at the reviews and ratings. These online reviews reflect the quality of their products and service. 

Aside from this, you need to assess their financial stability. A financially strong insurance company means they can fulfill their financial obligations and with risk management practices. This also means that they can provide reliable and long-term homeowners coverage for their clients.

4. Decide on the Deductible

A deductible is an out-of-pocket amount you have to pay before the coverage kicks in. Setting your deductible is one of the most crucial steps. These deductibles are usually in percentage, which is between 1% to 10% of your home’s insured value. 

Let’s assume that you chose a deductible of $1,000 when you purchased your policy. When your detached garage was damaged by a fire, you filed a claim of $20,000 for the repairs. The remaining $19,00 will be paid by your insurance company.

Higher deductibles mean lower premiums, and vice versa. If you fail to pay your deductible, filing a claim will be difficult. You may ask your insurance agent how to calculate the right deductible for you. 

5. Compare Homeowners Insurance Quotes

Rates for home coverage differ depending on a number of factors. Every insurance company charges different rates, that’s why it’s better to compare quotes. When you differentiate quotes side-by-side, you’ll find the best coverage at the best rates. 

When shopping for homeowners insurance, get at least three quotes. Some companies offer discounts for existing clients, so check if you can bundle your homeowners insurance with other policies like auto or umbrella coverage. 

Let’s Protect Your Home Today!

Gain the peace of mind that you need knowing your home is insured and protected. Local Retirement Group is a local insurance agency that offers a wide range of insurance products. We will help you protect the things that matter most. If you have questions, talk to an experienced insurance agent today. We’ll provide you with a customized quote!