For the millions of homeowners in the United States, home insurance is a crucial element of protecting their finances and investment. Whether it’s a natural disaster, a flooded basement, or theft, homeowners insurance is an important part of owning a home.
But what factors should you consider when choosing a homeowners insurance policy from one of the many providers on the market? Here are seven aspects to pay attention to.
1. Is there a discount for getting a quote in advance?
If you’re shopping for the best price on home insurance, start early. Most insurance companies offer a discount for getting a quote in advance of when you need the policy to begin, anywhere from three days to 10 days in advance. A similar discount applies when you pay your homeowners insurance renewal early.
2. Can insurance products be bundled?
If you also drive a car or own a boat or RV, or if you have life insurance products, you might be eligible for bundled insurance rates.
Not only can you simplify any premium payments and communications by going with one provider for all your insurance needs, but you can also save money. Bundling insurance products with an insurer like Progressive can save you around 12% on your premiums.
3. What discounts are available?
You might be able to save more money yet if you choose the right insurer. Before settling on an insurer, shop around to find out which discounts you may be eligible for. Examples include security systems or safety device discounts, pay-in-full discounts, new home construction discounts, or new policy discounts for switching providers.
4. What are the policy limits?
One of the most important aspects of an insurance policy is obtaining the right coverages. If the worst-case scenario happens and you lose everything, will your policy cover all of the costs to rebuild, restore, and replace your home and belongings? Ensure your home and its contents are valued appropriately in your policy. Consider getting a home appraisal to determine the right coverage limits.
5. Do you need additional coverage for perils?
Are you in a flood-prone or earthquake-prone area, or do you have obscenely strong windstorms? Around 15 million U.S. homes are at risk of overland flooding and earthquakes are a risk for residents in 42 states.
Add coverage, or at least have the option to add coverage, for perils that aren’t included under a standard homeowners policy.
6. What is your deductible?
In the event of a sudden or accidental loss, your homeowners insurance will cover you against the majority of costs. However, you’re responsible to pay the first portion of the loss with a deductible. Choosing a deductible is an important part of a homeowners policy:
- A higher deductible will keep the premiums more affordable, but if you can’t afford to pay the deductible in a loss, it’s unhelpful.
- A lower deductible comes with higher premiums, but it makes it more manageable if you experience a loss.
Choosing the right deductible is based on your personal situation, and it has to work for you.
7. Can you get extra coverage for high-value items?
Perhaps you have items that are more valuable than your policy limits would cover. An expensive guitar or piano, fine jewellery, a stamp collection, or furs could be worth more than your policy allows under a standard policy. Consider upping the limit with riders or endorsements on your insurance policy for your high-cost possessions if you’re concerned about replacement value in a loss.