While shopping for homeowner’s insurance can be a challenging task, there are a few things to keep in mind before you choose your next insurance company. Some of these may not be things you like to hear, but it’s important to understand them regardless, as failing to do so can leave you more confused.
1. It is vitally important that you know, and accept, your home’s true value. Just because you agreed to pay a certain price for your new home does not mean that is the value of the home. You may have gotten very lucky and benefited from someone else’s urgency, or perhaps you bought your home in an area where housing prices are at a premium. The number you really need to know is what would it cost to rebuild your home from the ground up if it were destroyed tomorrow. Land value does not play into your house value, and often people misunderstand this important fact.
2. Not all insurance companies are created equal. While it may seem that each company is providing the same basic service, there are many differences that you need to consider before you make your choice. Aside from the price quote you get on a new policy, you should also consider the company itself. Do your research and find out how long it takes a company to respond to a claim. If a company stalls and takes months to provide the funds required to rebuild, you could have considerable out of pocket expense while you live somewhere else waiting for your repairs to begin. A quick internet search will generally alert you to any problems in this area, but it is good to also check with the Better Business Bureau for any complaints and make sure the company you plan to do business with is financially stable as well.
3. Better is often more. Be sure to be very wary of basic policies with low premium rates. You need to make sure that your possessions and valuables are covered as well as the structure itself. If you are not careful, it is very easy to find yourself in a situation where you agreed to a policy that only covers a portion of your rebuilding costs.
4. You are a statistic. To an insurance company, you are not an individual person, but rather a complex set of risk factors that equals out to a certain type of gamble. To protect yourself from being stuck with high rates in the future, be careful how you handle yourself and your finances today. Even your credit score can impact your insurance premium, so be certain to stay on top of your finances.
These are a few of the basics you should consider when you shop for homeowner’s insurance. Be sure to shop around and find the insurance company and policy that is right for you. Ask for discounts, you will be surprised how much you can save if you simply ask. But most of all make certain that you are paying for the coverage you actually need.