In this beautifully illustrated complete guide on where to buy homeowners insurance, we will discuss everything you need to know on where to buy the best cheap homeowners insurance.
Homeowners Insurance Policy Basics
The best homeowners insurance companies generally offer three levels of protection: Basic, Broad and Special. A basic home owners insurance policy covers ten perils.
- Fire or smoke
- Hail and windstorms
- Damage from vehicles
- Damage from aircraft
- Riots and civil commotion
- Volcanic eruption
A broad homeowners policy covers several other perils.
- Falling objects
- Weight of ice, snow, or sleet
- Freezing of household systems like AC or heating
- Sudden and accidental tearing apart, cracking, burning, or bulging of pipes and other household systems
- Accidental discharge or overflow of water or steam
- Sudden and accidental damage from artificially generated electrical current
A special homeowners insurance policy provides special coverage for things like your garage, fence, deck or outbuildings. It provides protection from general liability claims filed against you for things like a tree falling on your neighbors property or an injury someone might incur while on your property. Every homeowners insurance policy is different so be sure to check your policy for any stated exclusions. If your policy doesn’t state the specific exclusion then you should be covered up to the limits of your policy. An example of an exclusion would be water and sewer back up. But don’t worry we will discuss insurance coverages that you can typically add on to your policy.
How To Find The Best Homeowners Insurance Policy
Now that you know what types of homeowners insurance policies there are, let’s discuss how to find the best homeowners insurance policy.
- Go to the web. Start with a search engine like Google or Bing. Once you have selected your search engine type in several phrases in the search bar. Good terms or phrases to search would things like: homeowners insurance, best homeowners insurance, cheap homeowners insurance, cheapest homeowners insurance, home insurance policies, homeowners insurance policy, homeowners rates and discount homeowners insurance.
- Talk to a homeowners insurance agent.
- Ask your friends, family or coworkers about their homeowners insurance policy.
Talk to your friends, family and coworkers about the homeowners insurance coverage they have. Hear what they like or dislike about their home insurance.
Picking The Best Homeowners Insurance Company For Your House
Now that you have performed your google searches, talked to a home insurance agent and talked to your friends, family and coworkers it’s time to select the best homeowners insurance company for you. When choosing the right insurance company for you make sure to find out their financial rating. You’ll want to select an insurance company is A rated or better by one of the major financial rating companies like Moody’s or Standard & Poor or Fitch Group. You can check them out here https://corporatefinanceinstit...see which rating service you trust the most.
Now that your comfortable with the financial rating of the homeowners insurance company you will want to see what others are saying about their experiences as a policy holder. Look for things like claims handling, customer service or homeowners insurance rate increases. Knowing the financial strength, customer service experience and rate increases will put your mind at ease when you experience as homeowners insurance claim.
Choosing An Agent Or Working With The Insurance Company Directly
Now that you have selected the homeowners insurance company you want to use you’ll need to decide if you want to work with an agent or directly with the insurance company yourself. Let’s look at some of the pros and cons of both.
First let’s discuss the pros and cons of working with a homeowners insurance agent.
Pros of Working With A Homeowners Insurance Agent
- You will have someone experienced to offer you advice on selecting the coverages you need.
- Extra layer of security by having an insurance agency working on your behalf when a claim arises.
- Ability to make changes to your policy or make premium payments locally.
- The ability to get an unbiased opinion on the right coverages for you.
Cons of Working With A Homeowners Insurance Agent
- Cost. Insurance companies pay agents commissions on the policies they sell. This means an added cost to the policy.
- Sales Quotas. Many insurance companies and agencies have production requirements for their agents. This means that agents are required to sale a certain amount of policies per month or year. Unfortunately human nature causes many agents to maybe reccomend a policy or coverage that you might not need. It also means an agent might not recommend a policy or coverage that you really need in order to make the sale when price is concerned.
- Cross Sales. Some insurance agents will attempt to sell you other insurance products or services that have nothing to do with homeowners insurance.
Pros Of Working Directly With An Insurance Company
- Cheaper Premiums. By choosing to work directly with the insurance company you are in a sense cutting out the middle man aka the agent.
- Generally no cross sales pitches. Most insurance companies will not try and pitch you services or products not related to homeowners insurance.
- Technology. Home insurance companies are usually billion dollar companies and more which allows them to spend money on things like apps and advanced websites that allow you to make changes to your policy online 24 hours a day.
Cons Of Working Directly With A Homeowners Insurance Company
- Not local
- Speak to a new person every time you call
- Outsourced customer service to foreign companies
- No one working on your behalf
- Longer response times to claims
- Unfamiliar to hazards that might affect where you live. Examples: Tornadoes, Wild Fires and Earthquakes.
Always Choose An Agent
After saying the pros and cons of both most people choose to buy their homeowners insurance from an agent. The expertise, local offices and one on one customer service generally outweigh the increased costs of dealing with an agent. Because most Americans choose to purchase their homeowners insurance directly from insurance agents, insurance companies still don’t charge you huge fees because they still rely on agents to sell the majority of their policies. Pick a good local agent to purchase your insurance from. Next we will discuss what type of agent to pick. Their are two types of agents: Captive and Independent. We will discuss what those mean and the pros and cons of both.
Independent Insurance Agent vs Captive Agent
There are generally two types of insurance agents: Independent and Captive. An independent agent works independently of an insurance company. A captive agent works for one insurance company. Let’s look at the pros and cons of both.
Pros of Choosing An Independent Insurance Agent
- Not beholden to one insurance company
- Generally more knowledgeable about homeowners insurance
- Offers unbiased advise on selecting the right home owners insurance policy
- Has many different home owners insurance companies to select from which will allow you to compare multiple homeowners insurance quotes.
Cons Of Working With An Independent Agent
- We honestly couldn’t come up with any
Pros Of Working With A Captive Agent
- Offers homeowners insurance from only one company so the agent will generally know every bell and whistle, coverage and exclusion and all other policy information off the top of their head.
Cons Of Working With A Captive Agent
- Generally only offers one homeowners insurance company to select from.
- Often unaware of new features and coverages that other insurance companies place on their home owners policy’s that might be a better fit for you than the only policy they offer.
- Often times a captive agent will be unable to insure your home because they already have to many houses insured in your area. Insurance companies have to protect themselves from getting over exposed in the case of a natural disaster.
Our Choice: Independent Insurance Agent (BUT THIS IS NOT ALWAYS THE CASE DEPENDING ON YOUR CIRCUMSTANCES)
Strictly based on the fact that captive agents are generally limited to offering home insurance policies from one company, we choose working with an independent insurance agent. With that said there are many great insurance companies that only offer their policies through captive agents and you should defiantly consider them when selecting an agent.
Selecting Your Coverages, Limits, Endorsements And Deductables
Now that you have selected your insurance company and your agent, let’s discuss your policies coverages, limits, endorsements and deductibles. First off what are they? What do they mean? Coverages are exactly what you think they are. Coverages are the protections your policy offers against perils or in other words when bad things happen. Limits are the amount of money the insurance company will pay out in the event of a total loss. Endorsements are coverages not offered on any of the three types of homeowners insurance policies. Lastly, deductibles are the amount of money you will have to pay towards your claim in the amount of a loss. Let’s take a look at them.
Coverages And Endorsements
- Basic, Broad and Special. Remember basic provides the least amount of coverage and special requires the most.
- Water & Sewer Backup
- General Liability
- Medical Payments
- Contents. Most special coverage homeowners insurance policies include half of the value of your home. Contents are the personal property in your home such as furniture, electronics, appliances and clothing. Important to note your jewelry and fine art may not be included in this coverage. You might have to add those coverages through what’s known as an endorsement. We recommend that before you purchase your policy you take an inventory of your contents and have in mind the value it would cost to replace everything in your home.
- General Liability. We recommend that your general liability limit be at least half of your net worth or at least $500,000, whichever is greater. If you own a swimming pool, trampoline, swing-set or playground we recommend that you carry at least $1,000,000 limit. Life can be unkind and accidents don’t care that you aren’t as financially stable as you’d like to be. In the unfortunate event that someone was seriously injured or even killed on your property, you’ll be glad you have the higher limit. As always by as much as you can afford if these limits are just not affordable to you.
- Deductibles. The most common amount for homeowners insurance policies is $1,000. However, $2,500 is becoming more common as more and more insurance companies are only offering this amount for wind & hail coverage. General liability coverage usually does not require a deductible. We recommend a deductible as low as $500 if you can afford it.
What We Recommend
- Replacement Cost of Your Home
- $500,000 and up General Liability Coverage
- Replacement cost on the contents of your home
- $1,000 deductible if you can’t get $500 deductible
- Endorsement: Fine Art & Jewelry, Water & Sewer Backup, Mold and Medical Payments
Buying The Best Homeowners Insurance Policy At The Cheapest Price
The last step before you sign on the dotted line is to take your quote that the independent insurance agent prepared specifically for you-and shop it. That’s right, we want you to select two other insurance companies at least, provide them with the coverages, limits, endorsements and deductibles you selected and see if you can get it cheaper. Remember, only call agents who offer homeowners insurance policies with A rated insurance companies or better who have a great reputation for customer service, claims handling and minimal to no rate increases.
Your On Your Way To Buying The Best Cheap Homeowners Insurance
That’s it. You are on your way to buying low priced, max protected cheap homeowners insurance. If you will follow this complete guide to buying the best cheap homeowners insurance you will no doubt save money on your homeowners insurance policy.