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Insurance

How to Shop for Home Insurance

Shopping for home insurance isn’t the most exciting type of shopping you’ll do when buying a home, but it’s arguably the most important type of shopping. If you’re financing your home, it is highly likely that your lender will require you to have homeowner’s insurance, so don’t try to skip out on it.

Not to mention, your home insurance will cover damages from wind storms, most water leaks, and freak accidents. Want to know how to shop for home insurance and what to look for in home insurance? Read on for our guide.

Decide What Kind of Coverage You Need

Most mortgage companies require you to have a replacement cost policy. This ensures that if your home is damaged or destroyed, your insurance company will pay to repair or rebuild it based on the current cost of construction (which might be very different than what you paid for your home, especially if you’ve been living in your home for a long time).

An actual cash value policy takes the original value of your home and your possessions and subtracts the cost of depreciation and pays you that amount for any repairs or rebuilding.

The other option is extended replacement cost coverage, which pays for the replacement costs for repairs, replacement, and rebuilding even if it is above and beyond the limits set by the insurance policy. This type of policy will bring with it a higher premium.

Decide How Much Coverage You Need

Your insurance agent will be able to help you determine how much coverage you need. You will need enough coverage to repair or replace your home if it is destroyed, but you also need to make sure you have sufficient coverage for your personal property.

There are also many different calculators you can use to tally the cost of your personal property to get an idea of how much home insurance coverage you need.

Gather and Compare Quotes

Once you know what type of coverage and how much coverage you need, you should gather quotes from different companies. An insurance agent can also help you understand your home insurance policy and compare the different quotes that you get.

Pay attention to the deductibles and coverage amounts to make sure you’re comparing apples to apples and not apples to oranges. You may be tempted to choose a higher deductible to get a lower premium, but make sure that you will always have the money available to pay this deductible in the event of damage to your home.

How to Shop For Home Insurance: Use Our Tips

Now that you have the basics of how to shop for home insurance, you can start gathering quotes and determining which company offers the best coverage for your home. It’s also important to read reviews of the companies you are considering.

If you found this home insurance guide helpful, be sure to check out more of our insurance and real estate guides before you go.

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