Buying a new home is the biggest financial decision most of us will make in our lifetime. It makes sense that you would want to make sure your investment is protected. When shopping for an insurance agent, and policy, it’s important to do your research. Not all of us know how to choose the right homeowners insurance – which is why we’re here to help.
The Paperwork
Before you meet with your potential insurance agent, make sure you have all documentation related to your home. If you have purchased an existing home you will need a claims report from the seller. This report details any previous insurance claims including flooding or fire history. Prior damage to the home can result in higher rates for you. In addition you will need to disclose home specifics such as custom remodeling completed, age of HVAC and appliances, and construction details like square footage, building type and the age of your home.
The Money
One of the first things your agent will ask you is how much coverage you need. This is not an easy question to answer. When deciding on an amount consider the replacement value of your home and everything inside, inflation, and appreciation and depreciation of your home’s market value.
The next question asked will likely be in regard to your deductible. Deductibles are the amount of money you are required to pay out of pocket on an insurance claim. High deductibles give you a lower monthly bill, however it increases the amount you will need to pay if something happens to your home. In turn, lower deductibles mean a higher monthly premium with less out of pocket for a claim.
The Rates
Credit scores impact your insurance rate. Because there is less risk with a consumer with a high credit score, their rates will be lower. The lower your score, the higher your rates. Similarly, the location of your home will affect your yearly insurance premium. Insurance agents will consider the risk of the area based on crime, natural disasters in the area, and whether you are in an urban area or outside the city limits. Many insurance companies offer discounted rates.
The Decision
Ultimately, choosing your homeowners insurance comes down to your specific needs. Provide accurate information when receiving your quote, consider the personal communication style of the agent and carefully review the numbers. Purchase a policy you can afford that will give you all of the coverage you may need in the event of damage to your property.
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