After you close the deal on a new home, the next step is to purchase homeowners insurance. If you’ve purchased insurance in the past, you know it’s not always cheap. In fact, the average homeowners insurance rate in the U.S. was $1,211 per year, as of 2017.
If you’re in the market for homeowners insurance, you don’t have to settle for an expensive rate. You can find a great deal on homeowners insurance by getting multiple quotes and comparing them. In this article, we’ll help you understand how insurance quotes work, how to get one and how to compare them.
What is a home insurance policy?
A homeowners insurance policy is a contract between you and your insurance provider that guarantees insurance coverage for your home. You agree to pay the insurance company a certain amount of money each month, and in return, the insurer promises to reimburse you for certain covered losses.
A homeowners insurance policy protects your home from covered perils, which are sudden or accidental events that cause damage. Some common examples are fire, wind damage and theft. Here are the coverages you’ll find with any standard homeowners insurance policy:
- Dwelling: Dwelling insurance covers the exterior and physical structure of your home.
- Personal property: Personal property insurance covers all of your and your family’s personal belongings inside and outside the home.
- Liability: Liability insurance covers your legal fees if you accidentally damage someone’s property or someone injures themselves in your home.
- Medical payments: If a guest gets hurt on your property, medical payments insurance will cover their medical fees, regardless of who was at fault.
- Additional living expenses: If your home gets damaged and you have to move out while it’s being repaired, additional living expenses will pay for hotel and restaurant bills.
Some insurance policies can have additional coverage options beyond these you can add for more protection.
Where do you get a home insurance quote?
Getting a homeowners insurance quote is simple.
You can get a quote with the following methods:
- Use an online quote tool: Most major insurance companies have a free online quote tool, which generates an estimated rate based on personal information and details about your home. Companies like Geico, Allstate, Nationwide and State Farm all offer this service to any homeowner who is browsing for insurance.
- Contact an agent: If the insurance company you’re looking at doesn’t offer an online quote tool, call the company and speak with an agent. If you’re looking at local insurance companies, you’ll most likely need to get a quote over the phone or in-person at their local office.
Whether you get a quote online or over the phone, you’ll need to provide some information about yourself including your name, age, marital status, employment status and social security number. You’ll also be asked about any insurance claims you’ve filed over the past few years.
Next, you’ll need to give some information about your home, including the address, zip code, year it was built, when you purchased it, any renovations that have been made and what materials the home was built with. If you don’t have this information, an agent can find it for you.
The steps above cover the basics of getting a home insurance quote. However, you might also get asked about adding endorsements to your policy during the quote process. An endorsement is an add-on policy for certain things.
For example, if you live in a hurricane zone, you’ll want to consider purchasing a flood insurance endorsement. If you keep valuables in your home, like jewelry or coins, you’ll want to purchase a scheduled personal property endorsement to raise your coverage limits for those expensive items.
If you know you’ll need extra coverage, ask an agent about the endorsements the provider sells or check the website. Before you sign a policy, make sure you’ve added all the endorsements you need and understand how they will affect your premium.
How can I compare insurance policies?
The best way to compare insurance policy prices is to get multiple quotes from providers, but there are other important factors to consider besides price.
Here are some steps we recommend:
- Refer to your state’s department of insurance website: Visit your state’s insurance website to check the ratings for insurance companies that sell policies in your area. You should also be able to find the average cost of home insurance in different cities in your state.
- Check reviews and claims satisfaction scores: For every provider, check financial strength ratings from AM Best, S&P and Moody’s. You can also review ratings from J.D. Power, Consumer Affairs and BBB to get a sense of customer satisfaction, claims outcomes, and customer service.
- Compare prices, coverage limits and discounts: Getting quotes from a few providers will help you determine which company can give you the best deal. However, make sure you’re taking note of the coverage limits and discounts that each company offers. The company that gives you the lowest rate might not offer the amount of coverage you need. Similarly, a company that gives you a higher quote, but that offers a number of discounts, might end up being the cheapest option.
- Talk to an agent: The best way to compare insurance policies and companies is to call an agent. You can ask questions, explain your situation, and get a more accurate quote than what you can get online. Talking to an agent also helps you get a sense of their customer service.
How are home insurance rates determined?
There are a number of factors that determine your homeowner’s insurance premium, such as:
- Where you live: Home insurance rates vary significantly by state.
- Your age: Younger homeowners may pay more than older homeowners.
- Your marital status: Married homeowners often pay less than single homeowners.
- Your claims history: If you have a history of insurance claims, expect to pay a higher premium.
- Your credit score: The lower your credit score, the higher your home insurance premium will be.
- The size of your home: The square footage of your home will impact your rate.
- When the home was built: Older homes are typically less expensive to insure.
- Materials used to build the home: Cheaper materials mean a lower rate.
- Recent renovations: If you’ve recently renovated your home or replaced the roof, it will affect your rate.
What will be in my insurance policy?
When you purchase homeowners insurance, you’ll receive documents that list everything in your policy. The most important information can be found on the declaration page, which is the first page of your policy documents. This page lists information like:
- Policy number
- Insured home’s address
- Homeowner’s name
- Type of policy
- Types of coverage, limits and deductibles
- Policy start and end date
- Annual premium
This page is your go-to when you have questions about what your policy covers.
Too long, didn’t read?
Owning a home is a big responsibility, and you need to have homeowners insurance to protect your investment. Getting a home insurance policy is simple. Find insurance companies that sell policies in your area and get multiple quotes to determine which provider can give you the best rate. Don’t forget to check customer reviews and financial strength ratings, compare coverage limits, and talk to an agent about endorsements. Before you sign a policy, make sure you have enough coverage to protect your home and personal belongings against potential losses.
Last updated July 13, 2020 – Updated quote instructions and recommedations.
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