How to Choose the Best Home Owners Insurance Policy

How to Choose the BestHOI- Are You Choosing the Best Policy?

Within your lifetime, a home will likely be the most valuable asset you will ever purchase. It should make perfectly good sense that you want to do everything in your power to protect yourself against the possible loss of your investment in case of a disaster. That’s why you need to purchase a homeowner’s insurance policy. How important is it to secure a policy? Your lender will require it as a condition of providing you with the financing to buy your home.

What is Homeowner’s Insurance

As a homeowner, there are certain catastrophes you simply can’t avoid. Things like accidental fires, vandalism, wind damage, floods and earthquakes are all disasters that can destroy your home and all the possessions you have inside. In order to protect your investment and the equity rights of your lender, you need to obtain insurance coverage up to the value of everything you want to protect. A homeowner’s insurance policy will also protect you and your family against liability issues that might arise from people who get injured on or in your property.

How to Choose the Best Policy

Without a doubt, your primary focus when purchasing a homeowner’s insurance policy has to be making sure the amount of the insurance coverage adequately covers the replacement value of the home as well as the apprised value of the contents you want included within the policy. Beyond the amount of coverage provided by the policy, there are two things to consider when selecting the best policy, the reputation of the insurance companies under consideration and the various factors that can affect the cost of your policy.

Key Factors in Choosing an Insurance Company

key factors in hoiAll insurance companies are not created equal. As is the case in most industries, there are good companies and bad companies. In order to make sure you are purchasing a homeowner’s insurance policy from a reputable insurance company, you want to consider these factors:

  • The Financial Stability of the Insurance Company – If the company is a publicly held, it should be quite easy to locate recent financial statements. If the company is small and/or privately held, you are within your rights to ask for audited financial statements. You should only purchase policies from profitable insurance companies.
  • Timeframe for Claims Processing – If you lose your home due to a natural disaster, you will most likely have very little time to relocate and start the recovery process. Consumer reports and watchdog groups often provide service ratings that rank insurance companies based on the efficiency of its claim processing.
  • Discounts – If all things are equal, you might want to look for insurance companies that offer a wide range of discounts that you might qualify to receive.

Other Factors to Consider When Comparing Policies

In order to control the cost of your homeowner’s insurance policy, there are several things you need to consider.

Factors HOI

  • Deductibles – Make sure you can secure as large of a deductible as you can afford. You policy will cost less proportionate to the amount of deductible risk you’re willing to tolerate.
  • Know What is Covered – It’s very important that you understand exactly what a quoted policy is going to cover. If intolerable policy limits are in place, you might be able to pay a higher cost to make sure you have adequate coverage.
  • Consider Risks Versus Costs – If you live in an area where flooding and earthquakes are historically nonexistent, you might want to take a risk and exclude those types of coverage from the policy to help control costs.
  • Package Deals – If you have auto and/or life insurance with an insurance company that also offers homeowner’s insurance, you might be able to secure a decent discount by packaging all your policies with the same company.
  • Securing All Available Discounts – Insurance companies will typically offer discounts to customers living in close proximity to a fire hydrant and/or fire station. They also offer discounts on houses with alarm systems, smoke detectors, fire extinguishers and updated electrical and plumbing. You want to make sure you request any available discounts.

It’s true that purchasing homeowner’s insurance can be a real financial burden. However, it pales in comparison to the financial devastation you would incur if you lost the total value of your home and possessions. That’s why lenders demand you cover its interests. If you do your homework, you should be able to find a policy that provides all the coverage you need at a price that falls within your budget.

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