Home insurance is a necessity for any homeowner. It helps protect you, your family, your home, and your personal property from a variety of common hazards, ranging from fire to theft. Moreover, almost all mortgage companies require borrowers to have sufficient home insurance coverage before approving a loan.
But finding the right homeowners insurance policy isn’t always easy. It’s important to find a policy that offers the coverage you need to satisfy your mortgage requirements and protect all of your property while remaining within your budget.
Here’s everything you need to know about how to choose the right home insurance policy.
What Home Insurance Covers
Homeowner’s insurance policies are very customizable, but almost all of them contain the same basic coverages, including:
● Dwelling coverage
● Other structures coverage
● Contents coverage
● Personal liability coverage
● Medical payments coverage
● Loss of use coverage
These coverages are included in nearly every homeowner’s insurance policy. Homeowners can customize the limits for each coverage to suit their needs and meet the requirements set forth by their mortgage providers.
Depending on your needs, you might also consider adding additional coverages, like water backup coverage, earthquake insurance, or flood insurance.
Together, these coverages protect your home, its detached structures, and its contents from common perils like fires, lightning, theft, falling objects, vandalism, and smoke. Your insurance policy will list all of the perils that it covers.
How Claims are Paid
Homeowners should also understand how different policies pay out claims. In general, there are three levels of coverage offered by home insurance policies: actual cash value, replacement cost, and guaranteed replacement cost.
These levels of coverage determine how much you are eligible to receive if you suffer damages due to a covered peril.
Actual cash value
Actual cash value covers damages to your home and personal belongings, minus their depreciation. This means that you will be reimbursed for how much these items are worth at the time of damage.
Replacement cost policies reimburse you for the damages suffered based on the original price of your home and belongings, regardless of depreciation. This means that, if your home was destroyed by a fire, you would be able to rebuild your home to its original state.
Guaranteed replacement cost
Guaranteed replacement cost offers the most comprehensive coverage as it promises to pay to repair or rebuild your home to its original state, regardless of your coverage limit. These policies are typically more expensive but offer the most complete protection available.
Factors that Impact Home Insurance Rates
When determining your home insurance rates, insurance companies mainly consider how likely you are to make a claim and how much they would have to pay.
Insurers look at many factors to determine your policy cost, including:
● The size of your home.
● Your area’s crime rate.
● Your claims history.
● The likelihood of certain natural disasters in your area.
● Your credit history.
Other factors that can impact your rates include your deductibles, coverage limits, endorsements, your home’s value, home features (e.g. pools, trampolines, security features), and your home’s condition.
How to Choose the Right Home Insurance Policy
Choosing the right insurance policy is mostly a matter of determining how much coverage you need, and comparing quotes from multiple insurers to find the best rates available.
Here are a few tips to keep in mind to help you choose the right home insurance policy.
Determine how much coverage you need
When shopping for home insurance policies, it’s important to know how much coverage you need for each type of coverage.
● Dwelling coverage: In general, your dwelling coverage limit should at least be equal to the replacement cost value of your home.
● Contents coverage: To determine your contents coverage limit, take inventory of your belongings, and consider if you need additional coverage for expensive items like jewelry.
● Personal liability coverage: It’s always a good idea to get as much liability coverage as you can afford. Liability coverage is typically available in amounts from $100,000 to $500,000.
● Loss of use coverage: Your additional living expenses coverage should be equal to about 20% to 30% of your dwelling coverage limit.
Determining your coverage limits and deductibles before you start shopping will help you find more accurate quotes.
Shopping online is one of the quickest and easiest ways to shop for and compare policies. Use insurers’ online quote systems to get fat and accurate quotes that you can compare to find the best rates available.
Get personal referrals
Personal referrals help homeowners find reliable home insurance companies that pay their claims quickly. Talk to your neighbors and friends to find out which insurance companies they use and ask about their experiences with these companies.
Compare multiple quotes
Most importantly, you should be sure to compare quotes from at least three insurers using the same coverages, coverage limits, and deductibles for each quote. By getting multiple quotes, you can get a good idea of what you should be paying, and you can use quotes from other companies to negotiate lower rates from your preferred insurer.
How to Cut Home Insurance Costs
There are a few tips to keep in mind to help you lower your premiums when shopping for home insurance policies:
● Ask insurers about potential discounts
● Consider raising your deductible, if you can afford it, to lower your premiums
● Install a security system
● Regularly shop for new policies to search for lower rates
● Avoid adding high-risk amenities, like pools or trampolines
By following these tips, you can lower your home insurance rates without sacrificing important coverages.
Request a Home Insurance Quote
Home insurance offers necessary coverages for homeowners, and it is typically required by mortgage lenders in order to be approved for a loan. By knowing how to find the best home insurance policies, you can find a policy with affordable premiums while obtaining the comprehensive coverage you need to protect your home and your belongings.
Contact FIB Insurance today to get a custom quote and learn more about home insurance in Miami, FL.