How to decide on the most effective home insurance – Bankrate.com
Buying a home is one of the biggest investments you can make. To protect this investment, home contents insurance is extremely valuable. While home insurance costs vary by location, claims history, square footage, and coverage limits, the average rate in the U.S. is $ 1,312 per year for $ 250,000 of home insurance.
Before you take out home insurance, you should find out more in advance. Not all providers offer the same insurance coverage or tariffs, and every homeowner, like every house, has their own insurance needs. If you are wondering how to choose the best home insurance, there are several important criteria that can help you make the right decision.
How to choose the best home insurance
There are dozens of home insurance policies out there, so comparing providers can help narrow down your options. Some of the most important things to consider are your location, the cost of coverage, and third-party reviews. The following five steps will help you understand how to choose the best home insurance for your needs:
1. Take your location into account
Home contents insurance prices vary by state, city and zip code, based on the most common causes of damage in the region. For example, home insurance costs in high crime areas tend to be more expensive than average rates in a safer area. Knowing the most common causes of damage in your location can help you determine what type of coverage you need. Here are a few things to keep in mind:
- Crime Rates: If you live in an area with a high rate of break-ins or theft, your home insurance premium may be more expensive. You can even opt for more coverage to protect yourself from a possible break-in if your home is in a high crime area.
- Weather events: If you live in an area with severe weather risks such as hurricanes, tornadoes or hail, you should look for insurance that will provide adequate protection in the event of a major storm. Remember that home contents insurance is usually more expensive in countries with a high risk of bad weather.
- Proximity to the fire station: Homes that are within a mile of a fire station are often cheaper to insure. On the other hand, if you live several miles away from a fire station, a fire could cause more damage to your home, which means you may want to consider a higher amount of coverage.
2. Take into account the characteristics of your home
Certain factors like the square footage of your home, building materials, and security features can all affect the cost of home insurance. When shopping for insurance companies, it is helpful to look for providers that cover these features and offer discounts. For example, many home insurance policies will lower your rate for a high impact roof or home security system.
To maximize your post-loss payout, consider a replacement value policy (RCV), which pays off to repair or restore your home to its original value without taking depreciation into account. It is also a good idea to look at endorsements that may come in handy depending on the features of your home, such as covering the yard and garden or covering water reserves and sump pumps.
3. Check trusted third-party reviews
Many home insurance policies are rated by third party organizations. When comparing insurers, J.D. Consider power for overall customer satisfaction, which takes into account real customer feedback on costs, agent interactions, and claims handling.
Also, see each vendor's AM Best and Standard & Poor’s (S&P) rating for financial strength. A company with strong financial stability is likely to have enough cash to repay its policyholders in the event of a loss and is unlikely to give up. Many insurance companies post these reviews on their website.
4. Take into account insurance experience
Some home insurance policies are better than others when it comes to customer experience. However, this depends a lot on what you want in an insurance company. Here are some of the factors to consider when evaluating an insurance provider:
- Accessibility: Think of the customer service options and accessibility for any business. For example, if you'd rather work face-to-face with an agent, look for companies with offices near you. If you want to know that you can always reach an agent, prioritize companies with 24/7 customer service and claim reporting.
- Digital administration: If you prefer not to work with a broker, you can look for home insurance that has a mobile app and an online customer portal that allows you to manage your policy and make claims anytime, anywhere.
- Claims: Check out the J.D. Power Property Claim Satisfaction Study to get a better idea of each company's claims handling reviews. J.D. Power ratings take into account things like comparisons, claims service, and the home repair process.
5. Compare offers based on coverage
When you take out home insurance, the rate depends on a number of factors that are unique to you and your home. In addition, every home insurance calculates a different tariff. Compare offers from several providers for the same amount of coverage to find out which company is best for you.
Remember that most home insurance policies will reimburse you based on Actual Present Value (ACV), which includes depreciation in your payouts. You have the option to upgrade to an RCV policy, but it will be more expensive. If you get options like flood insurance, shared apartment insurance, or scheduled personal property insurance, your tariff will also increase.
The last thing to consider is discounts. Most home insurance policies offer discounts to help homeowners get a lower rate. Although specific discounts vary by company, some of the most common discounts include savings for bundling a home and car policy, paying your annual premium in full, installing a home security system, and no recent insurance claims.
frequently asked Questions
What is the best home insurance?
The best home insurance depends on many factors, including where you live, how much coverage you need, how much you want to spend, and what you value with an insurance company. To find the best provider, shop around, compare some providers, and get quotes to find a plan that you are comfortable with.
What does the home insurance cover?
Standard HO-3 home insurance covers many things, including the physical structure of your home, personal effects, liability, medical payments, and downtime. Many insurers sell endorsements that you can purchase for more specific protection.
Do I need home insurance?
No. Unlike auto insurance (in most states), states do not require home insurance to be covered by law. However, if you have a mortgage, your lender will likely require that you take out home insurance until you have paid off your loan in full.