Buying Home Insurance

Home insurance is never required by state law, but homeowners usually need to purchase it if they have a mortgage. Even if you don’t have a loan, home insurance is an excellent way to protect one of your biggest investments. Homeowners insurance protects your home from damage and theft, and you can usually add additional protection for things like floods or earthquakes.

When you’re looking for cheap homeowners insurance, it’s important to research your options. Some companies will suit your needs better than others, especially if you live in an area with risk factors like extreme weather, high crime rates, or frequent flooding.

It might seem confusing with so many options, but buying home insurance doesn’t have to be a challenge. Read on to learn how to buy homeowners insurance. Then, compare quotes from as many companies as possible to find the best plan for your home.

How do you buy home insurance?

Buying home insurance is a simple task when you break it down into steps. Purchasing a homeowners policy works similarly to other types of insurance, but there are a few differences.

First, the factors that affect your rates are unique to home insurance. These factors include:

• Location: Some areas come with higher insurance costs than others. Insurance companies consider crime rates, weather risks, and flood plains when they determine your rates.
• Price of your home: The more your house costs, the higher your insurance rates will be. The primary reason for this is that expensive homes cost more to repair or replace after a covered incident.
• Your home’s age: Older homes are often built with more expensive materials and are more likely to need repairs. The newer your home is, the less your insurance will cost.
• Amount of coverage: Like other types of insurance, your rates will increase the more coverage you buy.
• Home features: Insurance companies usually give discounts to homeowners who have certain safety features installed, like security systems or fire alarms.
• Credit history: Companies can use your credit score to determine rates in most states. You’ll pay more if you have a lower credit score, but you can lower your rates by improving your score.

Most insurance companies look at the same factors when crafting your rates, but they use unique formulas. It’s important to look at several companies when you’re shopping for home insurance — you’ll likely overpay if you don’t.

However, there’s more to finding affordable home insurance than just comparing quotes. Follow the steps below to learn how to shop for homeowners insurance.

Decide What Home Insurance Coverage You Need

What does home insurance cover? Home insurance covers a lot, but some homes benefit from more coverage than a standard plan. If you’re wondering how to choose homeowners insurance, you should carefully consider what you want to keep covered in your home. For example, you might need more coverage if you have valuable possessions like jewelry, art, sports equipment, or musical instruments.

Another consideration to keep in mind is where you live. People who live near fault lines should consider buying earthquake coverage. You’ll always have at least a small risk of floods, but some places are more inclined to water damage than others. Standard insurance doesn’t cover natural floods, so you’ll need extra coverage to protect your home.

Decide How Much Home Insurance Coverage You Need

While an insurance representative will help you decide exactly how much coverage you need, it helps to be prepared to fill out your application. To get an idea of how much coverage you need, you should have an estimate for your agent. Here’s how you can prepare:

• Calculate rebuild costs: You should have an idea of how much it would cost to completely rebuild your home and unattached structures like fences or a garage. If you need help, an insurance representative, appraiser, or real estate agent can provide assistance.
• Estimate the value of your belongings: Your home is more than the walls of your house. You should have an idea of how much it would cost to replace things like a barbecue, musical instruments, collectibles, or hobby equipment.
• Create an inventory: You’ll get the most from your coverage if you have an inventory of everything important in your home, including silverware, linens, and books. If you can, take a video inventory to submit to your insurer.

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Which company has the best home insurance?

While buying homeowners insurance from the home insurance company that’s best for you requires research, you can start your search by looking at the highest-rated companies. Some of the best home insurance companies include:

• Lemonade: Lemonade is a young company that offers a modern take on home insurance. Everything about your policy will be handled online, and Lemonade includes replacement coverage in standard policies.
• Erie: Although it’s only available in 12 states, Erie stands out as a good home insurance company because it offers a wide variety of bundling options. Check out our Erie home insurance review to learn more.
• State Farm: Well-known for its car insurance, State Farm also offers excellent home insurance. State Farm home insurance has reliable coverage, excellent customer service, and some of the cheapest rates in the country.
• Chubb: While Chubb might be a more expensive option than some companies, its HomeScan tool can help you detect minor problems in your house before they escalate into something much worse.
• Farmers: Farmers often has higher rates than other companies, but it has plenty of options to save. Farmers offers special discounts for teachers, doctors, and other professionals.

This is only a small selection of home insurance companies, and there’s a significant chance that a company not listed above will have the best policy for you. You should always request multiple quotes so you can find the cheapest insurance, but there are plenty of other ways to save.

How do you save money when you shop for home insurance?

The average policy with $250,000 worth of coverage costs about $119 a month, but you can see vastly different rates based on your circumstances. If you want to save on your insurance, try the following tips:

• Raise your deductible: Your deductible is the portion you pay before your insurance kicks in. You can choose a higher deductible to lower your rates, but you’ll have to pay more if you file a claim.
• Maintain a security system: Insurance companies usually give a discount for the efforts you make to keep your house safe. Installing burglar alarms, smoke or CO detectors, and deadbolt locks can lower your rates.
• Ask about discounts: Companies usually apply any discounts you’re eligible for when you apply, but you can also ask a representative to double-check you’re getting every discount. Home and auto insurance bundles are great options to ask for.
• Pay off your mortgage: While it’s not an easy solution, you’ll see slightly cheaper rates once you’ve paid off your mortgage.
• Think ahead for renovations: The materials you use for a renovation will affect how much your insurance will cost. You should also consider your insurance rates before adding a pool — risky structures increase your rates by about 10%.
• Periodically review your policy: You should compare quotes with other companies at least once a year to make sure there’s not a better option out there. Most companies don’t charge a cancellation fee for canceling your policy, so frequently comparing quotes is a great way to save.

On top of periodically comparing quotes, you should also keep your current insurance company updated when you make any changes to your home. For example, having a trampoline usually means you’ll pay more for insurance. If you get rid of it, you might qualify for lower rates.

How to Buy Home Insurance: The Bottom Line

No matter where you live, buying home insurance is crucial to keeping your house safe. The amount you’ll pay for your insurance depends on a variety of factors, but there are plenty of ways to save. From taking advantage of discounts to installing security systems, finding affordable home coverage doesn’t have to be a challenge.

One of the most important ways to keep your insurance rates low is to compare quotes with as many companies as possible. Whether you’re shopping for new coverage or you already have a policy, comparing quotes is the best way to ensure you have the best insurance at the best possible price.

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