An astonishing 90% of homes in the United States are now underinsured. This is primarily due to rising building costs.
Victims of the recent wildfires in Colorado discovered this. Their insurance policies covered rebuilding costs to a certain point.
Building costs now exceed those limits, leaving many struggling to come up with tens of thousands of dollars to rebuild.
That should make you worried if you’re looking for an insurance quote. You don’t want to be in a position where you have insurance but you still need thousands of dollars because of underinsurance.
How can you get the peace of mind you need from your homeowner’s insurance policy? Read on to learn what to look for to compare home insurance quotes.
1. Look Beyond the Monthly Premium
Do all insurance policies look the same to you? That makes you compare the monthly premium and choose the least expensive policy.
You have to look at the deductible, too.
The deductible is the amount that you pay out of pocket for a claim. Let’s say your claim is $5000 and you have a deductible of $1500.
The insurance company settles your claim for $3500 and you pay the remaining $1500 out of pocket.
You’ll have a lower deductible with a higher monthly premium and vice versa. It’s up to you to weigh the costs and benefits of each before you sign up.
2. Understand Homeowners Insurance Policy Types
HO-5, HO-2, HO-1. These are homeowners insurance terms that make a huge difference in the level of coverage.
If you don’t know what they mean, don’t let your pride get in the way. You could end up grossly underinsured because you didn’t want to understand what your policy really means.
HO-1 is a very basic insurance policy. The structure and contents of the home get covered, but the settlement value is low. It’s also limited in what events get covered.
HO-3 is the most common insurance policy. It’s called a special form policy.
Does your home contain valuable items such as fine art and antiques? These items aren’t covered in standard insurance policies.
HO-5 is a comprehensive form policy that insures homes with high value and valuable items.
3. Bundle Discounts
Insurance companies offer discounts if you have other policies with them. Bundle discounts apply to homeowners and auto policies. If you have health or other policies with them, you’ll get a small percentage off of the premium.
Insurance companies offer other types of discounts. For instance, if your home is a new build, you can get a discount.
That’s because they’re less likely to have claims than an older home.
Security cameras, smoke detectors, and other safety devices can make you eligible for a discount, too.
Homeowners that have had insurance policies with other providers and no claims could qualify for additional discounts.
4. Service and Reputation
The downside to getting insurance quotes online is that you don’t get a sense of the service of a company.
Look at online reviews to gauge the level of service of companies. Find out how long they take to settle claims.
5. What’s Actually Covered
Do you know what’s actually covered by homeowners insurance?
There’s one word that you should be familiar with: exclusions. This is the fine print in your insurance policy.
Read this carefully, because it describes all of the situations that your policy doesn’t cover. Mold, floods, and landslides might not be covered in your policy.
If your home is in a flood plain, get a flood insurance quote. This ensures your home is totally covered.
Moving into a new area could bring surprises. There might be other hazards that you’re not aware of. Check with the insurance company to review the risks and possibilities in your area.
Then read the fine print of your policy to make sure it works for you, not against you.
6. Cash vs. Replacement Value
Your belongings depreciate in value over time. Insurance companies know this and they’re willing to
The most common homeowners insurance policies have a big loophole. They only cover the cash value of the contents of your home.
Look for policies that settle based on the replacement value of your belongings.
If you have an $800 TV that’s two years old, its cash value is probably around $400. Yet, if you have to replace the TV, it’ll cost you $900.
As you review insurance quotes online, check the settlement method the insurance company uses.
7. Ease of Updating Your Policy
You can easily access policies and insurance quotes online. What if you have to make changes to your policy?
One reason why so many homes are underinsured is that homeowners bought their policies years ago. Building costs have changed.
Homeowners purchased new furniture and items that aren’t covered in the policy. If you completed a home remodeling project, you need to update your policy.
It’s good practice to sit with a representative of the insurance company and review your policy annually. This ensures your policy is always up to date and you have peace of mind.
If it’s hard to meet with an agent in your area, this isn’t going to happen.
Read an Insurance Quote With Confidence
It’s entirely possible that you’d look at an insurance quote and not understand what it really means. Instead of looking at the monthly premium, you now understand what to look for in home insurance quotes.
Be sure to look for things like the deductible amount, type of insurance policy, the method to settle the claim, and exclusions.
If you get insurance quotes online, be sure to find out how easy it is to update your policy.
With that kind of peace of mind, you’ll want to find ways to enjoy yourself. Take a look at the Lifestyle section of the blog for great tips today!