Buying Homeowner’s Insurance: What To Look For And How To Keep Your Rates Low

When we bought our house back in 2006 we bought homeowner’s insurance after running some quotes online, and purchasing the coverage that we felt best fit our needs, at the lowest possible cost.

Over the ensuing couple of years we watched as our rates went up and up.  After 2 years of that, I decided to look into it a bit more.  I found that we had way too much coverage on a house that had dropped in value. So I asked them recalculate how much coverage we had on the house so it was more of a replacement cost. They grumbled about it, but they did and our rates dropped by a couple hundred dollars.

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A couple more years have gone by and our rates again have gone up considerably. Not only that we just got a notice in the mail that certain coverages that we have on the policy were being dropped. I’m about fed up with the company we’re with because they haven’t been very responsive, we’ve gotten less coverage and the rates have gone up.  We’re now paying $400 more than we were even a couple years ago. in general I’m not very happy with their service.

It’s time to look into buying homeowner’s insurance from a new company.

Get Quotes From Multiple Companies For The Same Coverage

homeowners insurance tipsOne thing you want to do when you’re searching for a new homeowner’s insurance carrier is to get a ton of quotes from a bunch of different companies. It can be kind of a pain to go through the hassle, but in the long run it will be worth it.

When you’re getting a quote make sure that you’re getting quotes for the same coverage.  Make sure the coverage on your home, other structures, personal property and the loss of use of your property are all the same. Also make sure that the liability coverage on the property is the same.  If any of the numbers are different in the quotes that you get, it could mean wildly different quotes.

So where can you go to get quotes on your homeowner’s insurance?

Luckily through this site I work with a company that is an aggregator for insurance companies, and I can just go to my “homeowner’s insurance” page and get quotes for multiple companies, and so can you. Otherwise if you just do a simple Google search for homeowner’s insurance quotes, you’ll find quite a few places to get quotes, either through direct insurers, or through 3rd party sites.

Before getting quotes you may want to check the financial stability of the companies you’ve narrowed it down to through one of the ratings agencies like Standard & Poor’s or A.M Best. A lot of ocompanies have had issues in recent years after being faced with huge losses in the wake of Katrina, and superstorm Sandy.

Get Homeowner’s Insurance Quotes

Have A Higher Deductible If You Can

When you’re getting homeowner’s insurance, one way that you can save cost is by having a higher deductible on your policy.  For us we originally had a $500 deductible, which we raised to $1000 once we had an emergency fund that could cover the higher cost.  Our current policy also has a separate deductible for wind and hail damage which is currently at $5000, so we may see if we can get that reduced while paying less.

Get Guaranteed Replacement Cost

If you can find a policy that offers guaranteed replacement cost for your house, go with that policy. It will ensure that your house is replaced at whatever the current replacement cost is.  Otherwise what you’ll have to do is revisit your policy every few years and make sure if your home value has increased that your coverage has increased as well. Along the same lines if your home value has dropped by as much as ours has, you may be paying for more coverage than you need. It’s not a bad idea to check every year or two.

Remember, you’re getting coverage to replace the house, not the cost of the land as well (cause it can’t burn down!), so take that into account when getting coverage.  Also, you can get an idea of actual replacement cost by talking to a builder in your area and finding out the cost per square footage in your area, and adjusting for any custom upgrades you mayhave.

Also get replacement cost for your possessions, not cash value, otherwise you may get depreciated cash value for your possessions, not what it costs to replace them in today’s costs.

Get Good Liability Coverage

One thing a lot of people think that they can skimp on is the liability coverage.  The cost of the liability coverage is relatively cheap, however, so it’s often a good idea to get a bit more coverage there.  If it’s affordable we plan to get $500,000 in liability.  If you end up needing that coverage in all likelihood they aren’t going to sue you for just $100,000 or $200,000. They’ll sue for a lot more – so buy it!  You may even want to consider umbrella coverage to cover even more if your situation and assets warrant it.

Know What You Need To Cover In Your Area

When buying a house you will want to make sure that you know what types of things your home needs to be covered for in your area. For example, are you in a flood plain, and will you need to cover yourself with flood insurance as well? That will be an extra policy you buy from the government, and will be additional to your normal policy.  Find out on the government site if you’re in a flood prone area. Thankfully all we really need to worry about in our area is the risk of  high winds, hail or tornadoes in addition to the random grass fire, normal stuff.

Maintain Good Credit

Having good credit is important for a variety of reasons, but one of them is because it can affect your insurance rates.  Some in the insurance industry see your credit situation as an indicator of future possible losses for the insurance companies, and as such will charge higher rates the lower your credit. Stay on top of your credit score and make sure that you’re aware of just how much having good credit (or bad credit) can affect your insurance rates.  If you can, try to improve your score before buying!

Buy Home And Auto Policies From Same Insurer For Discounts

If you buy your auto and home policies through the same insurer, you can often expect to see discounts in the range of 5-15%.  I’ll be getting a quote from my auto insurance provider to see if the rates are lower than the ones I’ll see with other companies.  If they are I’ll most likely go with it. I already know that my auto insurance is pretty low, having checked the rates recently.

Make Sure High Value Items Are Covered

When buying coverage you’ll want to make sure certain high value items are insured.  Most policies will have limits on how much they’ll reimburse for certain items like jewelry, computers, guns and furs. So if you have a special engagement ring, or high value photography equipment for example, you may want to get a rider on your policy to include those items at some minimal extra cost.

Make Sure To Revisit Your Policy On A Regular Basis

As with any insurance coverage, make sure to revisit your policy on a regular basis to see if the policy still fits your needs. In our case, our policy, and our current insurer, no longer fit our needs. We’ll be getting some quotes on coverage and finding a new insurance provider.

Have any of your own tips for finding the best and most affordable homeowner’s coverage? Tell us in the comments!

Read about how we saved almost $1000 on our homeowner’s and auto insurance!

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Last Edited: 29th November 2012

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Comments

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    • says

      I made the mistake of being naive and going with my dad’s insurance agent for a long time, years ago. I regretted it later because I found out that I was overpaying on our auto insurance to the tune of $1000 dollars a year! Here I thought this family friend was giving me a good rate, only to later find out that they were raking me over the coals. Always pays to do some comparison shopping.

    • says

      Yeah, it’s interesting how the coverage varies from provider to provider. They all seem to have coverage limits on certain things, and they’re all different, which makes comparing coverage difficult sometimes. We’ll definitely be getting the replacement value coverage when I switch.

  1. says

    I’m surprised by how any people just pay it when the cost goes up as opposed to shopping around. Our policy doubled this year, so we found a new carrier that was similar to our old price, but for our rental that we bought, they were way more expensive, even with the multipolicy discount, so we have a separate company for that one. It pays to look around.

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