There are important aspects of homeowners insurance coverage that you should consider when choosing the right provider.
This should include the extent of coverage you desire, whether or not you receive actual cash value or replacement cost value coverage, and the additional coverages that you may require.
This review provides insightful tips to keep in mind as you go through the process of choosing the right homeowners insurance for you.
4 Tips For Choosing The Right Homeowners Insurance
You are likely to come across many different terms that may seem ambiguous when choosing the right homeowners insurance. Of course, every home is unique and you should have a personalized policy that meets your coverage needs and preferences.
The following should help prevent and clear up any confusions you may have about starting your homeowner’s insurance policy and what you should look for when deciding on the right provider for you.
Understand The Different Types Of Coverages
There is a range of coverage types. In general, your standard policy should cover any damage that occurs to your home as a result of a fire, hail, lightning or a hurricane (along with other possible perils.) The five most notable types of homeowners insurance coverage include:
- Dwelling coverage
- Personal property coverage
- Other structures coverage
- Loss of use (ALE) coverage
- Liability coverage
A standard homeowners insurance policy does not cover flood or earthquake damage as this is covered under a separate policy. It is important to understand precisely what your policy covers and does not cover before beginning your policy.
Consider The Premium, Limits And Deductible
An insurance premium refers to the amount you pay for your homeowners insurance coverage each month. This amount varies based on the extent of coverage and whether you have actual cash value or replacement cost coverage (see below).
Limits refer to the maximum amount the insurance provider will cover, and a deductible refers to the amount you must pay out of pocket to start your plan. It is important to consider the premium, limits and deductibles when choosing your homeowners insurance policy.
Actual Cash Value Vs. Replacement Cost Coverage
Actual cash value covers the cost of the damage to your home, other structures and property after assessing depreciation of the damaged property. Replacement cost value covers the entire replacement cost of the damage without factoring in depreciation.
Replacement cost is, of course, more extensive, but it often comes with a higher premium and deductible. Actual cash value does not offer the same level of coverage after a claim, but it may come with lower monthly payments and a lower deductible cost.
It is important to determine which is more preferable when choosing the right homeowners insurance policy for you.
Compare Insurance Quotes From Multiple Providers
If you are unsure if the quote you received for homeowners insurance is fair, then you can compare insurance quotes from multiple providers.
This allows you to compare the overall value of your policy. However, the least expensive policy is not necessarily the best policy. It is important to compare the overall extent of the coverage you receive with the premium cost, deductible cost and limits.
You should also check the reputation and reviews of any providers you consider to ensure they have a reputable and trustworthy track record.
How To Keep Your Insurance Costs Low
You may be able to find homeowners insurance discounts based on your situation. For example, if you receive both auto and home insurance from certain companies, they offer slight discounts by combining the two premiums into one.
You can also lower premium costs by increasing the size of your deductible. However, this comes with increased risk as you are responsible for higher out-of-pocket deductible payments if a claim is made.
To offset this risk, be sure to reduce the risk of anything happening to your home by ensuring the security of your home with an alarm system, fixing any issues with your home’s foundation, and replacing an outdated roof.
Paying off your home as quickly as possible so that you have 100 percent ownership of your house may also allow you to lower your insurance premiums as well. This is because many insurance providers believe if you own the home completely, then you are more likely to take good care of it.
Speak With The Insurance Pros At Merchant Family Agency
If you are unsure what your coverage needs are and would like to discuss homeowners insurance with a trusted insurance agency, then contact our friendly and professional team at Merchant Family Agency today.
We are glad to answer your questions and help you put together a comprehensive policy that provides you with the coverage you need while ensuring you do not pay for anything that is not entirely necessary.