How To Choose the Best Homeowners Insurance Policy 2023
How To Choose the Best Homeowners Insurance Policy 2023
Although buying the right home insurance policy may seem complicated, it’s actually a fairly straightforward process. To begin, you’ll need to determine the value of your home and its contents. Then, select a company and policy that provides the coverage options you need at a reasonable price.
Take the following steps to purchase homeowners insurance:
1. Decide what you want to insure. A standard homeowners insurance policy may not cover valuable jewelry, artwork, or other collectibles. Likewise, you may need additional coverage if you have a trampoline, pool,
or something else on your property that poses a risk of injury or death to others. Also, if your home occupies a flood-prone area, you’ll probably need a separate flood insurance policy from your home insurance provider or the National Flood Insurance Program.
Similarly, if you live in an earthquake-prone region, you will need additional insurance to cover related damage. Use the U.S. Geological Survey’s fault map to find out how close you live to a fault line and to better understand your risk of an earthquake.
2. Determine how much home insurance you need. Take an inventory of your personal belongings. If you have receipts, file them away. For your home and other structures on your property, get an estimate from your insurance company or a real estate agent for the average rebuilding cost in your area per square foot.
Use this information to decide how much coverage you need for your property. The general rule is that you should have enough homeowners insurance coverage to repair or replace your home and everything in it after a total loss.
Determine how much you might spend on a hotel, meals out, and other living expenses if your home were to be destroyed or become uninhabitable after a disaster. The Insurance Information Institute (III) can help walk you through the process, as can a licensed insurance or real estate agent.
3. Choose an insurance company. To choose the right homeowners insurance company, you will want to find an insurer that sells policies with the coverage and other features you need at an affordable price.
In addition, look for a company that has a high financial strength rating from AM Best or another rating agency, gets good consumer and professional reviews, and allows you to file a claim or seek assistance 24/7.
4. Choose a policy. The right home insurance policy will provide sufficient coverage, have terms that are easy to understand, and may even offer discounts. Consider purchasing a replacement cost policy that will reimburse you for the cost of replacing your property with new items, rather than a cash value policy that only pays the depreciated value.
Bundling Homeowners and Auto Insurance
Many insurance companies will give you a discount if you buy more than one type of policy from them, such as home insurance and auto insurance. This is called insurance bundling or a multi-policy discount. This is worth it to the insurance company because it generates more revenue per customer and helps promote customer loyalty.
Insurance bundling doesn’t always save money. For example, an auto insurance company may offer lower rates than companies that sell several different types of policies, according to Amy Bach of the consumer advocacy group United Policyholders.
Bach says that a company that specializes in auto insurance may also offer benefits not available in an insurance bundle from another insurer, such as ticket forgiveness or claims-free discounts.
Determine how much insurance coverage you need. To estimate the coverage you need, take a home inventory. A home inventory is a detailed account of all of your personal property both inside and outside your home.
Calculate the cost to rebuild your home after a disaster. (Ask a real estate agent for building costs in your area.) Determine if you need additional coverage for earthquakes, floods, or a high-risk item, like a swimming pool.
