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What I Wish I Knew Before Shopping for Homeowners Insurance

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  March 2nd, 2019  By John Puterbaugh

I currently have 11 separate homeowners insurance quotes in my inbox, attached to emails from seven different insurance agents. Plus two emails directly from insurance companies. Throw in additional quotes for bundled auto and umbrella insurance, and I’ve got a couple dozen separate estimates to sort through. Buried somewhere in all those emails, words, and numbers is the insurance I need at a price I want.

Making it even more complicated: I have to figure all this out in the immediate aftermath of going under contract for a new house to move my family into. What better time to make important financial decisions than while buying a house and trying to stay afloat atop the waves of home-buying planning and paperwork?

One bright side? I’ve realized a few things I could’ve been much smarter about if I had known them from the beginning. And I just so happen to have a job where I can share what I’ve learned:

1. Compare equal coverage levels

By the end of my first day of receiving quotes from agents, I realized a key mistake I had made in gathering quotes. If you ask an insurance agent for a homeowners insurance quote without knowing the specific coverage levels you’re looking for, the agent will send you their unique but general recommendation, and its related cost. Seems reasonable, right? If you’re only planning to talk with one agent, it’s not so bad, but you should compare multiple quotes to find the best price. And there’s much a better way to do that.

Coverage levels are a key factor in determining how much your policy will cost. The more you insure you home and property for, the more expensive your premium will be.

Before you start gathering quotes the way I did, figure out the specific coverage levels you want, and then ask agents and companies to quote you based on those levels. We recommend doing your own research using resources such as our Guide to Homeowners Insurance Coverage and Homeowners Insurance Buyer’s Guide. Getting quotes based on a single set of coverage levels makes a world of a difference when it comes to comparing them in a more apples-to-apples way.

Here’s why an equivalent comparison is important: Without paying close attention to the coverage levels, you could be enticed into choosing cheaper premiums for policies that don’t offer sufficient replacement coverage. Say you have a quote for one policy that covers your home for $200,000, and costs $70 per month. And then imagine another policy that covers your home for $150,000, and costs $50 per month. While saving an extra $20 sounds nice, it won’t be worth paying another $50,000 to rebuild your home after a disaster.

2. Consider bundling

Once I started receiving quotes, I had to start thinking about bundling my home and auto insurance. I’ve happily insured my cars with the same company for years, so it has been an unexpected but significant change to consider.

Take stock of how willing (or unwilling) you might be to switch your car insurance before starting your homeowners insurance search. Depending on your current auto insurance, you could stand to save as much as 30% by switching to the same company you ultimately go with for homeowners insurance. However, premium costs are determined by a variety of personal factors, which means those savings won’t apply to everyone. So thinking ahead of time about the pros and cons of switching your current auto insurance can help guide your efforts to find the best homeowners insurance for you. If you love your auto insurance and can’t imagine switching, then start with that company for a homeowners insurance quote. If you’re ready for a change to your auto coverage, then put it all on the table and see who can give you the best deal for both.

3. Decide on umbrella coverage

On a nice day last summer, a fellow dad and I watched our young sons playing like maniacs on his backyard playset, jostling for position atop a slide. While we both shared an instinctual parental concern over the risk they could fall off and badly hurt themselves, my friend eased the tension with a joke about how it was all good, because he’d recently gotten an umbrella policy. Knowing him to be a smart and successful friend, I thought I should look into this additional insurance coverage I wasn’t so familiar with.

Your homeowners insurance policy will include liability coverage that would cover injuries to other people while on your property, or lawsuits over such injuries. But what if the cost of such injuries or lawsuits exceeds your policy’s liability limit? Well then you’d be on the hook for the difference, unless you have an umbrella policy. Typical umbrella policy coverage would kick in for up to an additional $1 million to protect you against lawsuits over injuries that occur on your property, or damage to other property that you cause.

Whether you need an umbrella policy is a personal decision based on your own risk tolerance preferences. The additional coverage typically costs around $15 per month. It could be particularly attractive to people with a lot of valuable assets, but it’s definitely extra security no matter what your personal financial situation. For many homeowners, it’s better to have it and not need it than to need it and not have it.

4. Find an agent with the right communication style

In the course of my insurance shopping, I’ve found a mix of different communication styles in the agents I’ve worked with. My own personal preference is to communicate via email for the initial back and forth on getting the actual quotes, and then to follow up with a phone call for more specific questions and to get a better feel for those agents whose quotes seem most interesting or appealing. An agent who calls me every step of the way, and takes a long time to respond to emails or doesn’t respond at all, is probably not my ideal agent for dealing with a claim someday, should I ever have one.

Think ahead of time about your own communication style preferences. If you prefer email, send emails to agents asking for quotes. If you prefer phone, call them instead. By starting communications in the format you’re most comfortable with, you can get an immediate sense of whether a particular agent will respond in the way you prefer. And once you start talking to different agents, don’t hesitate to ask them directly about how they communicate with their clients. If you want to know whether an agent will see and respond to a text over the weekend, ask them straight up if they will. These are reasonable questions to ask when considering a financial commitment such as homeowners insurance.

5. Understand buying from an independent agent vs. a company

There are three main ways you can buy insurance: from an independent agent, from a captive agent or directly from a company. An independent agent can compare and sell policies from multiple companies, and essentially works directly for the client (you) to get the right coverage at the best cost. A captive agent can only sell policies from one company (e.g. a State Farm agent). And then buying from the company is just that – calling the company and setting up a policy with a representative over the phone.

For no particular reason, I’ve always bought insurance directly from the company. So switching up and going with an agent would be new for me, but there are potential benefits I’m picking up on. Dealing directly with an insurance company means handling insurance matters on your own, from the claims process to the initial setup with regard to buying and insuring a new home. I’ve always done this in the past and never had any major issues, but handling these types of things on your own means a greater time investment.

Before you start shopping for homeowners insurance, give some thought to whether you might prefer working with an agent, or buying from and working directly with the company. In some cases, you might get a better price buying directly from the company, though with one company I’m looking at, the quote I got directly from the company was only $1.08 cheaper per month than getting coverage through an agent. So depending on your personal preference and the potential cost savings, it’s worth exploring what will work best for you.

Now go buy some insurance

Now that you’ve learned from everything I wish I knew before I started comparing homeowners insurance quotes, it’s time for you to confidently pursue the best insurance solutions for you. Comparing multiple quotes when searching for insurance is the best way to make sure you’re getting the best price for the best coverage. By thinking things through a bit ahead of time, you’ll save yourself a lot of hassle when it comes time to actually compare and choose from multiple quotes.

Read more:

Homeowners Insurance Buyer’s Guide

The Best Homeowners Insurance Companies

Guide to Homeowners Insurance Coverage

The Best Cheap Homeowners Insurance

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