Opening the Door to a Good Rate on Homeowners Insurance
Every home usually comes with a big “to do” list—cut the lawn, fix the gutters, paint the living room, buy homeowners insurance…. Yes, that’s right, homeowners insurance. In fact, when you’re buying a home, you need to put insurance at the top of your “to do” list. Most lenders won’t provide a mortgage without homeowners insurance coverage.
Homeowners insurance is a very important investment. You want to get the best coverage available for the price you can afford, so it’s important to shop around for the most competitive rates. Online comparative quote services—such as NetQuote—can make shopping for homeowners insurance more efficient. You can type in your information and get a list of comparative quotes within 10 to 15 minutes.
Before you even begin shopping for homeowners insurance, start gathering information on the house. The more information you have, the better.
Size and Condition of Home — Know the square footage, number of bathrooms, materials used for the roof and exterior walls, age and condition of the house, and condition of decks, patios, garages, etc. These things will help determine how much you’ll pay for coverage.
Flood Plain — Find out if the house is in a designated flood plain. Visit www.floodsmart.gov.
Inspection — Having an inspection helps identify potential problems.
Get a CLUE — Most insurance companies use the Comprehensive Loss Underwriting Exchange (CLUE). CLUE lists the property insurance claims history of individuals and homes, regardless of ownership. Some companies may deny coverage or charge more if a home has had certain types of damage, such as water damage, in the past.
Inventory Property — Make an inventory of household items, especially those of great value such as jewelry, artwork, collections, etc. You may need to purchase a separate rider for such items.
What to look for in insurance companies.
When purchasing homeowners insurance, it’s important to consider not only the price, but also the carrier and the coverage. As with any product or service, the value of a low price is quickly forgotten if you aren’t getting the coverage or service you need. Beyond price and amount of coverage, other factors determining your selection should include:
•The reliability of the insurance company based on customer satisfaction reports. •The financial strength ratings of the insurance companies that interest you. •The insurance company’s payment policy (When are payments due? What happens if you’re late in making a payment?) •Discounts offered by the insurance company that pertain to you. •A toll-free customer service number to call for questions that can’t get answered online.
Factors influencing homeowners insurance rates
Factors influencing homeowners insurance rates include:
The Condition of the Home — New homes tend to be in better condition than older homes, so some insurance companies will offer up to a 15% discount if your home is new.
The Construction of the Home — Certain types of homes are less expensive to insure because they’re more resistant to damage. For example, brick homes are preferable because of their resistance to wind damage.
Safety Factors — Many insurance companies offer discounts for safety features such as burglar alarms, deadbolts, window locks, smoke detectors and sprinkler systems. Also, if your home is close to a fire or police station you may get a discount.
Geography — Where you live matters. People living in locations prone to natural disasters or in high crime areas tend to pay higher premiums.
Smokers — Because smoking in the home greatly increases the risk of fire, some insurers will offer a discount if no one in the home smokes.
History of Claims — The number of claims you file over a certain period of time can put you at risk for non-renewal or higher premiums.
Loyalty to One Insurer — Insurance companies will often reduce their rates if you buy more than one type of coverage, such as auto, from them or if you stay with them for a period of time.
Credit Rating — Many insurance companies view having a poor, or even no credit history as suggestive of higher risk.
Carrying a Higher Deductible — The deductible is the amount that you, the policyholder, must pay out of pocket before your insurance company starts paying benefits. The higher your deductible, the lower your premiums.
In the end, it pays to shop multiple companies when looking to buy homeowners insurance. In many cases, in addition to the variable rates offered by different carriers, some carriers may be trying to break into your market and offer substantial discounts in order to attract clients. It could have you living with a better bargain in the end.