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6 Things to Consider When Shopping for Home Insurance

Home insurance is a must-have. In fact, homeowners with a mortgage are usually required to carry home insurance. After all, the bank wants to protect its investment. Homeowners insurance is a lifeline when disasters occur, like fires, hail and storm damage, or flooding. Here are a few things to consider when shopping for home insurance.

How Much Are Premiums?

Obviously, the monthly or annual premiums are a key consideration when you’re purchasing home insurance. Premiums vary based on coverage options, the state you live in, your home’s condition and its replacement value, as well as whether your home is in disaster-prone areas, like a flood zone. is an excellent resource for comparing average costs by state and obtaining quotes from multiple insurance companies.

What’s the Company’s Record for Claim Service?

The insurance company’s reputation is an important consideration when buying homeowners insurance. If a company offers comprehensive coverage but takes months for processing a claim, it’s frustrating when your home is in need of urgent repairs but can’t get the necessary funds from your insurance company. If your kitchen is flooded, for instance, waiting for months without the ability to cook in your own home is inconvenient.

What is Your Home’s Replacement Cost?


Image via Flickr by BFS Man

The most comprehensive home insurance policies pay the full replacement cost of your home in the event of total destruction. The value of your land shouldn’t be calculated into this figure, however – only the cost of rebuilding the structures.

Make sure your replacement cost is reasonable and doesn’t include land value, otherwise you’ll pay higher premiums. Land isn’t destructible from wind or storm damage, so exclude that value from the replacement cost estimate.

What are the Available Coverage Options?

Homeowners insurance varies from basic policies that cover only the basic structure. But your home likely has many items of value inside, which can be lost due to disaster or theft. Choose a policy that offers the most protection for various causes of loss, and opt for plans that also cover your belongings inside the physical structure.

How High is Your Deductible?

Most home insurance policies have deductibles, meaning you’re responsible for paying a flat fee when you file a claim. This ranges from a few hundred dollars to a few thousand dollars – the higher your deductible, the lower your premium. But that also means that if you have a small claim, it may make more sense to pay for the repairs out-of-pocket instead of filing a claim. If the amount of the repairs is lower than your deductible, it’s not worth filing a claim.

Are There Discounts Available?

If you already have auto insurance, consider obtaining home insurance through the same company if available. Some companies offer discounts when you bundle home and auto insurance together. In addition, ask about discounts for paying your premium annually instead of monthly. Every dollar you can save counts.

When shopping for home insurance, consider all your options. Carefully read policies and options before choosing a plan. Home insurance is often the only lifeline for families suffering natural disasters, and the only recourse for rebuilding their homes and personal belongings.


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