How to Choose a Home Insurance Company

If you own a home, it’s critical to have a homeowners insurance policy to protect it. Homeowners insurance not only offers financial protection for your home and its contents, but it offers financial protection for liability cases, in the event someone suffers a personal injury or damage to their property while on your property. Choosing the right insurance company and coverage can be an overwhelming task. Here’s what you need to know about how to choose a home insurance company.

What is home insurance?

Your home is likely the most expensive purchase you’ll make. You want to protect your investment the best you can, and choosing a good insurance plan through a reputable home insurance company is the first step.

Like auto insurance, you can choose from a variety of plans to fit your needs and budget. Home insurance policies start with basic plans that cover basic disasters, such as fire, lighting, explosions or falling objects. More comprehensive plans can extend to other dwellings on the property and cover a wider range of types of damage and losses.

You can choose how certain valuables are covered, such as jewelry, artwork, firearms, or money that’s kept at home. Most insurance companies give homeowners the option to choose either the item’s cash value, or the replacement value of the items. For expensive jewelry pieces, many people opt to carry a separate jewelry insurance policy in addition to their home insurance policy.

Most homeowners choose middle-of-the-road plans, while some choose more comprehensive plans, especially those who are at risk for substantial loss due to their location or other mitigating circumstances. Those with higher-valued homes and high-priced belongings, typically want better coverage that will help them recoup the full value of their property.

Steps for choosing a home insurance company

Policy rates will vary from state-to-state, city-to-city, and from one company to another. Here’s what you should know when researching home insurance companies in your area so you can make the best decision when it comes to who will be insuring your home and personal property.

1. Location

The state, city and zip code of your home will play a big role in the type of coverage you need. Research your area well so you are better informed on the type of coverage you need. The type of coverage will depend on the types of losses that are common for the location. Common types of losses that impact policy coverage and rates may include:

Crime rate Certain locations have higher crime rates than others. Higher crime rates, such as break-ins, property theft, and vandalism may have higher insurance premium rates, due to these issues. If your home is in a location that’s at a greater risk for crime, choosing the appropriate coverage plan to protect you in the event of a theft or property damage, is important. You should also consider installing a good alarm system. Most insurance companies offer a discount for functioning home security systems.

Weather and natural disasters Certain locations are more prone to harsh weather conditions than others, such as hurricanes, tornadoes, flooding, hail, fire, and high winds. Insurance premiums are typically higher in areas where there is a higher risk of property damage due to harsh weather. Many companies require you to carry flood insurance on homes close to lakes, rivers, or other types of possible flooding events.

Are you close to a fire station?

Did you know that your location in reference to a fire station can impact your premium? It’s true that insurance companies will give homeowners a discount if you live within a mile radius of a fire station. Close proximity is an added protection for the homeowner’s home and belongings, which lessens the risk of greater loss for home insurance companies.

2. Your home’s features

Home insurance companies consider the features of every home they insure and offer discounts for anything that mitigates an increased risk of a payout on their end. Before you shop around for insurance companies, it will help to make a list of your home’s features and look for companies that will honor discounts for them. Some common features that home insurance companies look for include:

– New construction homes often get lower premiums than older homes. New construction is considered to have all the newest materials and built up to code, while older homes may need updates to meet certain requirements.

– A fully operating and monitored security/alarm system always ensures a reduction in premium costs.

– Home safety features, such as deadbolt safety locks, reinforced windows, and a new, soundly structured roof.

– Smart devices can add extra safety measures. Video doorbells and smart locks and window sensors are common smart devices used in homes today.

– Fire safety features can include fire-resistant materials, sprinkler system, multiple fire extinguishers, and smoke and CO2 detectors.

– Green home discounts are offered to those who have environmentally friendly features in their home, like Energy Star-rated appliances or solar panels. If your home is LEED-certified home, this could lower your premium.

– A non-smoker home may get a discount in their premium. Homeowners that smoke, especially inside their home, are at a greater risk for fire damage, which means there’s a greater risk the home insurance company may have to pay out.

3. Third-party ratings

Before you decide on a company, compare the ratings of a variety of companies. Third-party companies, like J.D. Power, compare insurance companies based on their performance. They gather information for consumers regarding premium costs, how efficient and friendly agents are, how they handle claims, and overall customer satisfaction.

4. Quote comparison

Lastly, document each quote you get from each home insurance company, based on all the info you’ve gathered and submitted to them, and compare the coverage each company offers, with the premium quotes. Ultimately you want the best coverage for the best premium rate you can get.