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The Complete Guide to Picking the Right Homeowners Insurance

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homeowners insurance

Anyone who owns a home can attest to the fact that homeowners’ insurance isn’t a luxury, it’s a necessity. It protects your home and all possessions therein against incidents such as theft and damage, thus safeguarding your investment. Similarly, mortgage institutions require prospective homeowners to have an insurance cover that corresponds with the value of the property they intend to purchase.

Homeowners’ insurance is not only meant for new homeowners but also for renters. It covers costs relating to:

  • Damage to your home’s exterior after a fire, vandalism, hurricane, or other covered disasters.
  • Personal liability for any injuries caused by either you or your family members
  • House rent or hotel accommodation costs while your house gets rebuilt following a disaster.

For your peace of mind to be guaranteed, you need homeowners’ insurance that provides full coverage. Here’s how to find the right homeowners’ insurance cover for you:

Compare the Policies of Different Insurers

When it comes to homeowners’ insurance, you have to choose a policy that not only fits your budget but also guarantees sufficient indemnification. Comparing what different companies offer will give you an upper hand during the negotiations. An independent homeowners’ insurance agent can do the shopping for you, thus enabling you to differentiate the policy endorsements and prices of different insurers. By leveraging their expertise, it will be easier for you to compare the extent of coverage and limits when assessing different insurers.

While undertaking a comparison of different insurers’ policies, you should also compare deductibles. Generally, homeowners’ insurance deductibles are set after you start building your policy. A deductible is the amount of money that you are required to pay out of your pocket when you make a claim. A higher deductible means you’ll have lower monthly premiums. Likewise, having a lower deductible means that you will pay less money out of your pocket. Your homeowners ‘insurance rates will also be higher. Compare-the-Policies-of-Different-Insurers

Work With Your Independent Insurance Agent

If you already have an auto insurance cover, consider bundling it with your homeowners’ insurance. This is where independent insurance agents come in. With their industry experience and market know-how, they can recommend the most affordable way to bundle your auto and homeowners’ insurance policies. According to insurance market insights, bundling your homeowners’ and car insurance policies leads to savings of up to 32%. Moreover, staying with the same insurance company for a significant period entitles you to a reduction of rates.

Even if your auto insurance company doesn’t offer homeowner policies, an independent insurance agent can recommend a company that provides the most flexible and affordable policy. Regardless of whether you choose to bundle your insurance policies or separate them, you should ask about the discounts offered by the individual insurers. The most comprehensive homeowners’ insurance cover doesn’t necessarily cost a fortune. Often, insurers offer discounts, which can help you save money.

Assess Your Insurance Needs

While shopping for the most suitable homeowners’ insurance cover for your new or rental property, you should first assess your needs. Generally, homeowners’ insurance covers fall under three broad categories.

  • HO-3 Cover. This is the most common homeowners’ insurance policy. It’s a broad policy, which financially protects you against all unexpected disasters. It covers your home and attached structures such as the garage and deck. H-03 covers also protect you against financial liability if you damage someone’s property, or injure someone accidentally on your property.
  • HO-4 Cover. Popularly known as the tenants’ policy, HO-4 only covers personal belongings and liability rather than the building structure. Similarly, it includes living expenses in case you’re forced to move somewhere while your apartment gets fixed up following a disaster.
  • HO-6 Cover. This homeowners’ insurance policy is meant for condo owners. It provides financial protection against personal liability and belongings. Similarly, the policy extends to the floors, walls, and ceilings of a condo unit. Incidents covered by a typical homeowner’s policy also apply to HO-6 coverage.

Undertake a Company Health Check of Different Insurers

Besides assessing the policies offered by different insurance companies, ensure that you conduct a health check of companies under consideration. You can find out information about different insurance companies from the websites of credible credit agencies such as the National Association of Insurance Commissioners.

Such websites track client complaints against insurance companies besides providing information relating to customer feedback and claims processing. Going through these websites gives you an insight into the financial health of an insurance company and its ability to pay your policy if you lodge a claim in the future. Undoubtedly, every company will claim that it has an impeccable claims service.

To confirm the veracity of such claims, ask your agent or a company rep about the annual percentage of policyholder renewals. If a company has a high retention rate, it means that clients are satisfied with its services. It is equally advisable to evaluate the claims response process of an insurance company that is under consideration. In the event of a significant loss, the financial burden of catering for repairs on your home while waiting to be reimbursed by an insurer can affect your economic well-being.

Today, some insurers outsource core functions such as handling of claims. Before you purchase a homeowners’ insurance policy, establish whether the outsourced adjusters will be receiving and processing your claims. Look for an insurance company that has a proven track record of providing fair and timely claim settlements. Likewise, you should have an idea about your insurance company’s stance on hold-back provisions.

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Top 5 Mistakes to Avoid When Shopping for Home Insurance

Choosing the Cheapest Policy

A premium you can afford is important, but a homeowner’s insurance policy that leaves gaps in your coverage will cost you more in the long run. To save money and get the coverage you need, talk to your independent insurance agent about your budget and your potential risks. Ask if you’re eligible for discounts and the benefits of bundling your insurance policies.

Failing To Read and Understand the Policy

Your home insurance policy contains important information about your coverage including covered events, terms of reimbursement, and exclusions from coverage. If you don’t read the policy and ensure you understand the terms, you may not find out about gaps in coverage until it’s too late. All too often, homeowners assume that insurance covers everything that happens to their home. Getting the right amount of coverage hinges on knowing the coverage you have.

Choosing a Deductible You Can’t Afford

Most people are aware that a high deductible can help lower monthly payments, but that viewpoint fails to consider the purpose of homeowner’s insurance. While we hope you never have to use your policy, your deductible should be an amount you can afford to pay if a disaster occurs.

Choosing Cash Value Instead of Replacement Value

The housing market rises and falls. The cost of building materials changes over time and most possessions depreciate in value over time. An insurance policy that pays cash value after a covered event doesn’t take any of those fluctuations into consideration. Instead, it pays what your home and possessions were worth at the time of purchase. Choosing replacement value means your policy will reimburse you the amount you need to replace the items you’ve lost.

Choosing the Wrong Insurance Company

Many consumers mistakenly think that all insurance companies and the policies they provide are basically the same. The easiest solution is to purchase insurance from a large company that you frequently hear about. Unfortunately, taking this route can leave you underinsured while paying more money. Choosing a local insurance company means your agent will be more familiar with local risks. Additionally, local agencies often have cheaper rates and an independent insurance company, like LoPriore can help you get insurance that fits your lifestyle at the best price available.

The Top Questions Asked by Homeowners when Buying a Home Insurance Policy

Do I have to have homeowner’s insurance?

The short answer is no. Massachusetts doesn’t require you to have homeowners insurance. However, there are many situations that require homeowners to purchase homeowner’s insurance. For instance, if you’re making mortgage payments, the terms of your mortgage agreement may require you to purchase a certain amount of home insurance. In some areas, HOA agreements require residents to have homeowner’s insurance as well. Even when it’s not required, home insurance will provide you with a way to replace your home and possessions in the event of an unexpected disaster.

What Perils are covered by home insurance?

A basic home insurance policy usually covers damages due to lightning, hail, windstorms, burglary, smoke, vandalism, or an explosion. You can also purchase optional coverage to take care of perils like fire, flood, and earthquakes.

Will my policy pay for my living expenses while my home is uninhabitable?

To determine how much your policy reimburses for extra living expenses, ask your insurance agent about the ALE (additional living expenses) provided by the policy. Most insurance policies include some ALE that will pay for expenses that go beyond your customary living expenses, like hotel bills.

How much home insurance do I need?

You should purchase enough coverage to replace your home and possessions in the event of a total loss. To calculate this, you’ll need to consider the value of your home and all your possessions inside your home. To determine a specific value, it’s important to take the time to take inventory of all the items in your home.

How can I save money on home insurance?

When looking for ways to save money on home insurance, it’s important to avoid choosing a cheaper policy that leaves coverage gaps or choosing a deductible you won’t be able to afford. Instead, try these tips.

  • Choose a local insurance company with a solid reputation.
  • Ask about discounts and offers.
  • Bundle policies for better rates.
  • Work with an independent insurance company that works with multiple insurance providers

Next Steps

Purchasing a home is one of the best investment decisions that you can ever make. For this investment to have long-term benefits, it is advisable to protect it against unforeseen disasters. Homeowners’ insurance is the surest way of protecting your investment. However, the main problem with homeowners’ insurance is that it is somewhat complicated.

It is essential to understand what you are signing up for so that you choose the best homeowners’ insurance cover. If you are looking for an insurance binder or you want to purchase a homeowners’ insurance cover that offers you more options and value for your money, contact LoPriore Insurance agent today to get started.

See How Much You Can Save!


GET A FREE home Insurance QUOTE

To learn more about how homeowners insurance can protect your business, get in touch with the independent agents at LoPriore today. Our experienced insurance agents are available 24/7 to answer your questions, provide information about our home insurance policies, or provide you with an instant quote.

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One Response

  1. John, thanks for mentioning how a good way to save money on homeowners insurance is by choosing a company that has a solid reputation. My brother-in-law and his wife purchased and moved into a new home last month, so they need to get homeowners insurance quickly. I will suggest that they look into the reputation of any insurance company they consider before they choose them.

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