Insurance is not a favorite topic, but it’s an important one. And for homeowners, it can mean the difference between protecting your investment at an affordable rate and overspending for poor coverage that leaves you vulnerable to expensive problems and issues down the road.
Whether you have a house under contract and are looking for a homeowners policy to get approved for a loan, or you’re a current homeowner who wants to shop around for a better rate/coverage, it’s helpful to know how to go about it.
Your home is almost certainly the largest assets/investment you own. Unfortunately, it’s also exposed to numerous risks and threats. This includes natural disasters, burglary, vandalism, and malfunctioning home systems. But homeowners insurance can reduce the severity of these risks and provide financial protection and peace of mind.
Here are some specific reasons why homeowners insurance is needed:
So, whether you’re buying a house with financing or you already own a home in cash, you can clearly see how the right homeowners insurance policy is an important investment for you and your family. Even if you toss the financial side of the equation out, there’s significant peace of mind that comes from having the right policy in place.
Now that you understand the significance of having a homeowners insurance policy, let’s get down to the nitty-gritty details. Here’s how you can find the right policy for your needs:
The first and most obvious tip is to shop around for quotes from different insurance companies. There are big national companies, smaller local companies, and everything in between. Rates can vary quite dramatically from one insurance provider to the next, so it’s wise to get at least three quotes.
These days, you can plug your information into one of the many tools online and get a bunch of quotes within a matter of hours. This is a good starting point, but you’ll want to narrow your list down and get some more concrete numbers from each provider before proceeding.
Cost-conscious homeowners often get caught up with the pricing of different policies, but make sure you’re looking past this. After all, what does it matter if one plan costs $50 less per month if the insurer doesn’t treat you fairly?
“In our summer 2018 homeowners insurance survey—answered by more than 81,000 Consumer Reports members—nearly 7,000 respondents told us how satisfied they were with their experience when they had a claim,” Consumer Reports explains. “Companies’ damage estimates were among the best predictors of customer satisfaction. Lower-rated insurers tended to have a greater percentage of customers who disagreed with their damage estimates and felt their final settlement was too small.”
Do your research, ask friends and family members for referrals, read online reviews, and gather as much information as you possibly can. Reliability and fairness are far more important than price.
If you’ve never read the details of a homeowners insurance policy, you might not be familiar with what they actually cover. For the most part, the list of covered perils includes:
But even though most policies cover these issues, the deductible, amount of coverage, and additional coverage on other items varies.
Homeowners policies generally range from HO-1 to HO-5 ratings. The lower the rating, the more basic the policy. As you go up in rating, the policy gets more expensive.
When comparing insurance policies from different providers, make sure you’re comparing apples to apples. If you’re trying to compare an HO-2 policy to an HO-4 policy, you’ll just end up confused and frustrated.
There are often ways to lower the cost of coverage by taking advantage of discounts. Here are two common ones that homeowners often qualify for:
You also have the option of upping the deductible. When you pay a higher deductible, you get lower premiums. For example, going from a $500 to $1,000 deductible can lower your payment by as much as 25 percent.
At Green Residential, we understand the importance and significance of working with the right companies. Whether you’re a homeowner or a real estate investor with a portfolio of rental properties in the Houston area, we would love to help you buy, sell, and maintain your properties. Contact us today to find out more about our services!
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