Homeowners insurance protects your financial investment in your home, and it may protect you from a lawsuit if an injury occurs on your property. If you have a mortgage on your home, the bank will require you to purchase adequate coverage to protect its investment, as well. Because rates and policies vary from agency to agency, it pays to compare two or more home insurance quotes before you choose.
Step 1
Complete the full applications from each insurance agency. While you can get a ball park quote on the phone, until the insurance agency knows the specifics of your home, such as the type of framing, the home's age, the finish type and the proximity of the nearest fire station, you can't be given a detailed quote.
Step 2
Look at the annual premium but only as a starting point. The lowest premium isn't always the best policy for your individual needs.
Step 3
Check out the coverage limit each plan offers. Home insurance policies may pay the fair market value of the home, or they may pay the replacement value. If you live in a large, older home, the cost to rebuild your home in the same style may be much higher than your home's fair market value. Ask yourself if you need a replacement value policy.
Step 4
Study each policy's exclusions. Unfortunately, homeowners insurance may not cover the most frequent causes of natural damage if you live in an area that suffers from earthquakes, floods or hurricanes. Weigh the risks and ask the agents how much additional coverage for specific environmental threats will cost.
Step 5
Compare each policy's deductible. This is the amount you will pay out of pocket if your home suffers damage from a covered incident. If you want a policy with a higher payout, negotiating a higher deductible may lower your annual premium, making that policy more affordable.
Step 6
Notice each policy's allowance for possessions. Some policies may limit the payout on valuables, and you may need an additional policy to cover expensive antique collections or artwork.
Step 7
Protect yourself by comparing each policy's coverage on liability. You may be liable for the medical costs of a guest in your home who suffers an injury. Many policies cap liability at $100,000, but if you have a potentially dangerous element, such as a swimming pool, a pond or large, aggressive dogs, consider a liability payout of $300,000, or more.
Step 8
Look for incentives in each policy that may lower your premium, such as installing a security system or removing a wood burning stove.
Step 9
Consider service when making a decision. You may get a lower premium through an online agency, but a local insurance agency is convenient and comforting when an incident occurs.
Tips and Warnings
- Review your homeowner's policy once a year and update your coverage if your needs change.
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