Identify The Type of Policy You Need
Know that not all insurance policies are created equal. While many homeowners opt for the basic form (HO-2) or special form (HO-3), the type of dwelling you have purchased also plays into the policy as well; older homes, mobile homes, condos and townhouses are all considered and need different types of policies. Here’s how it’s broken down:
- HO-2: Only covers damage that’s caused by an event listed within the policy.
- HO-3: General homeowners insurance policy that safeguards against perils except for specific acts named within the plan.
- HO-5: Premium homeowners insurance policy that protects recently erected structures and safeguards against perils except for specific acts named within the policy.
- HO-6: A Homeowners insurance policy for condos as well as liability and personal property.
- HO-7: Insurance that is generally the same as HO-3, but for mobile homes.
- HO-8: Premium policy for older homes. Similar to the HO-2 policy.
For reference, damages covered in HO-2 insurance are generally the same for all companies:
- Fire
- Lightning
- Wind
- Hail
- Snow and Sleet
- Damage caused by the weight of ice
- Smoke
- Falling objects
- Riot or civil commotion
- Vandalism
- Theft
- Damage caused by vehicles or aircraft
- Damage caused by "accidental" bursting or overflowing from plumbing, heating, or AC systems
Getting To Know Your Location
After you’ve identified the type of coverage that works for you and your dwelling, you’ll also need to assess fine print or exclusions in your policy due to your area. Standard home insurance will not cover natural disasters like floods and earthquakes. So, if you live in an area that has these types of risks, you may have to pay more for additional coverage. Identifying the best homeowners insurance in your state is important as not all insurance companies write in each state.
Choosing The Cost and Level of Coverage
While many factors come into play to determine the cost of your coverage, one you need to think about is deductibles. This is the amount you pay upfront if an accident occurs and you file a claim. For example, if you choose to bump your deductible from $500 to $1000, you can save more on your premium. Just be sure you can easily pay the set deductible amount before your insurance kicks in!
The next thing you’ll have to consider is the two levels of coverage. One is the replacement cost, which will pay the full cost of replacing your home or property up to a certain amount, or the actual cash value which gives you the cost of the item or dwelling. Note that this will depreciate over time. Most tend to go with replacement cost, and it is generally the one available within average insurance policies.
Research Ratings & Reviews
While it sounds like something that’s a no brainer, many shopping around for homeowners insurance do not take the time to actually sit down and research the companies. Clearsurance has crowdsourced ratings and reviews of companies so you can learn from the experiences other homeowners have had. For instance, you could identify Amica as a company you’re interested in and then read Amica insurance reviews from consumers to see what the company does well and what it doesn’t do well.
Don’t Be Shy To Ask About Discounts
Going with the cheapest plan shouldn’t be how you find ways to save. Don’t be shy to ask about discounts you can receive if you go with certain insurance companies and know that many offer some sort of savings on the following:
- Bundling (insuring your home and auto through the same company)
- Burglar alarms
- Dead-bolt locks
- Smoke detectors
- High-tech sprinklers that alert first responders
Once you feel confident in your choice, and you’re sure the insurance reviews and ratings reflect the homeowners company that is right for you - it’s time to make your decision. Making a choice with these educated steps will surely help you in the future when seeking other types of insurance!
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