Home insurance is necessary to protect you in the face of disaster. Just because it’s necessary doesn’t mean you have to overspend on it, though. In fact, you should make it a habit to shop your homeowner’s insurance every year. This way you know you are getting the best rates possible.
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Before you start shopping around, consider the following factors.
Get Your Facts
First, you’ll want to have all of the necessary facts for the insurance agent. These facts include:
- Age of your home
- Location of your home
- Type and age of the roof
- Size of the home
- The age and type of plumbing and electrical systems
- Any safety factors you have in place, such as security alarms or carbon monoxide monitors
- The number of claims you’ve filed in the past
With this information, an insurance agent can give you a fair quote. In fact, they’ll be able to tell right off the bat if you won’t qualify. For example, let’s say you’ve had three claims in the past year. Not too many insurance companies are going to touch that. It’s too risky for them. They only want homeowners that rarely file claims, as it’s more profitable for them.
Figure Out the Amount of Coverage
Your mortgage company will require you to have at least as much coverage as the amount of your mortgage. You probably want as much coverage as it takes to rebuild your home should complete disaster strike.
The insurance agent will likely give you a quote for replacement cost. This is enough coverage to rebuild your home given today’s prices. What happens if you keep the same policy but don’t have a total disaster for five years? Chances are the cost of materials and labor will increase by that time. This could leave you shortchanged when you file your insurance claim. Instead, make sure you ask about replacement cost coverage.
Replacement cost coverage increases your coverage by a percentage. You can ask for replacement cost coverage from 125% to 200% (double your coverage). Ask insurance agents for quotes on each type of coverage so that you can see where you stand. If the premiums are extravagant, you may not want to have excessively high replacement cost coverage, but a little cushion is nice.
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Talk About Discounts
We talked about a few discount possibilities above, such as security alarms and carbon monoxide monitors. There may be other ways to get discounts on your home insurance too. A few examples include:
- Multi-policies – If you insure your car and house with the same insurance company you may get a discount
- Security alarm discount – As long as your monitor is centrally monitored you may get a discount
- Fire alarm – If your fire alarm is centrally monitored you may get a discount
- Senior discount – You may even get a discount for blowing out more candles on your cake
Ask your insurance agent about any possible discounts that will lower your premium. You won’t know what’s available until you ask.
Ask About Additional Policies
Don’t take an insurance policy at face value. Ask the insurance agent what it includes. For example, how much liability coverage does it include? Do you feel that it is enough or do you need more? Many people don’t realize that it’s not all that much to increase your liability coverage by a few hundred thousand dollars.
What about your personal belongings? The coverage for individual items may have a cap. If you have items that exceed that amount, you may want additional insurance on them. Again, the rider probably isn’t more than a few dollars a month, but it will give you the peace of mind knowing that your belongings will be insured should something happen to them.
Most importantly, make sure you shop around. We know how easy it can be to stick with the same insurance agent. It’s convenient, but it’s not the best deal in town. This is especially important if you’ve had the same agent for several years. Get out there and see what other policies are available. You may be surprised to find that you’ve been overpaying all of these years.
Finding the right home insurance means taking your time and asking a lot of questions. Inquire about the policies included in the insurance quote and always ask about discounts. Once you have a few quotes, you can compare your options and choose the one that is right for you.
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