If you’re paying a mortgage on your home, your lender will require that you carry sufficient home insurance coverage. It’s not unreasonable for them to demand that you protect their investment. Of course, even if you own your home outright, protecting your investment is important. A fire, theft, weather, or other event can reduce your greatest asset to rubble.
But purchasing home insurance can be tricky. You want to make sure it covers what you need but you aren’t overpaying for coverage that’s not essential. After all, the amount of your premium will depend on the value of what you’re protecting.
When shopping for home insurance, be smart and informed, take your time, and ask for multiple quotes. You’re making an investment in your investment, so you don’t want to get it wrong. As you’re searching for the best home insurance quote, remember that “best” isn’t necessarily the least expensive. Here are four tips you can use to get the best — and the right — home insurance quote.
1. Make Sure It’s Flexible
A growing number of Americans own more than one home. What that means is that not everyone lives in their home full time. And if they don’t, their homeowner’s insurance needs to be flexible.
It’s highly unlikely you can insure two homes under the same policy. The structures, belongings, risks, and even the states they’re located in and therefore, insurance regulations, will be different.
How the homes are used will drive coverage as well. One will probably be a primary residence. The other may be a vacation home, but whether you rent it out or not will determine the type of coverage you need.
Some of the factors you’ll want to consider when obtaining a home insurance quote are potential perils. For example, a vacation home may be exposed to more weather-related risks. It may also be more susceptible to theft and vandalism than a primary residence. Flexibility in your policy will be key, so find insurers willing to deliver it.
2. Bundle Up
Bundling when you make virtually any purchase should garner some discounts. That’s true with garage sale finds, your cable and internet, as well as your insurance needs.
Although you probably can’t insure two homes under a single policy, you can insure both with the same insurance company. You will want to look at everything you need to insure. For example, homes, farm property, vehicles, boats, and even renter’s policies can be bundled. Most companies will offer discounts to get all your business.
It’s true that the more you have to insure, the more you’ll be paying in premiums. But make sure you inventory all insurance needs when asking for a homeowners quote. Policyholders save an estimated 20% when they bundle home and auto coverages, and that can add up.
There are other advantages to bundling as well, such as working with the same insurance agent. It will be easier to manage and make changes to your policies, if necessary. Plus, it will give you leverage for getting a bigger bang for your insurance buck.
3. Figure Out What Deductible You Can Live With
Most people know that paying a higher deductible for a health insurance policy can result in lower premiums. The same holds true for homeowner’s insurance. Before you get quotes, figure out what deductible you can live with.
Determine how much money you could come up with if a fire, tornado, or other covered event happened to your home. Perhaps it’s the amount of money you have in a savings or rainy-day account. If you earn a regular salary or don’t have kids, a higher deductible may feel like less of a risk.
What you don’t want to use in calculating your maximum deductible is your available credit. You don’t want to rely only on maxing out your credit cards to pay deductibles. That’s particularly true because in most cases, you would need to get cash advances, which come with significantly higher interest rates.
Calculate the maximum amount you think you can handle and work with that for your homeowner’s quote. Then, find out how much your premium costs increase as you work your deductible downward. Sometimes, what you save on your homeowner policy’s premium isn’t enough to warrant pushing your deductible higher.
4. Keep Your Credit Score Up
Credit scores are an indicator of risk for more than loans and lines of credit. They may also be used as an indicator of your ability to pay your homeowner policy’s premiums and deductibles.
With few exceptions, state laws allow insurance companies to consider credit scores as a rating factor for homeowner’s insurance. They use credit history to calculate an insurance score when providing policy quotes. They do it because statistically, people with higher credit scores file fewer claims — a plus for insurance companies’ profit margins.
Insurance companies will look at not only your credit score but your credit history. They’ll pay attention to the debt you’re carrying, the length of your credit history, and patterns of requests for new credit. Making timely payments and keeping your credit-to-debt ratio low will help.
Insurance is premised on risk, and companies prefer to fill their customer base with those who appear to be low risk. And don’t worry about your credit score being impacted by getting multiple quotes. Insurance companies perform “soft pulls” that shouldn’t lower your score.
Be Quotable
Insurance is one of those necessary evils. Go without it at your peril. But having coverage on the items you own can be a major financial responsibility.
It’s a smart move to periodically shop around for better homeowner’s insurance coverage at a better price. Things change. They depreciate or you add value. Make sure what you own is covered and use these tips to be savvy about it.
