Finding Cheap Home Insurance

As individuals become adults, one of the milestones they pass is moving away from parents and establishing an independent home.

Some move into dormitories, some move to apartments or other rentals, and some purchase homes of their own such as a freestanding house, or even a condominium.

As homes are established, savings are invested in the premises and contents of the home. Homes represent a feeling of security and sense of belonging that is valuable to us as humans.

Protecting the investments we’ve made in our homes and their contents is important; one of the ways of doing this is purchasing adequate home insurance.

Home insurance is available for all types of homes: condominiums, rentals, apartments, and freestanding houses.

Home insurance protects against the vagaries of weather, thieves, vandals, fire, and many other perils. Insurance helps keep homes safe. Be sure to compare rates between insurance companies using the FREE search tool at the top of this page!

The question is, though, how do you purchase home insurance without breaking your budget?

A Few Tips about Saving Money on Home Insurance

• Do comparison-shopping – The process takes time consuming, but is well worth the time you will spend.
• Consolidate your home and auto insurance in the same insurance company because you can save up to fifteen percent on your insurance premiums.
• Increase your deductible because higher deductibles will give additional credit. Be certain that you can afford the deductible, though.
• Weather proof your home to protect against storm damage by improving the roof structure, installing storm shutters, as well as upgrading your electrical systems, plumbing system, and all the HVAC systems.
• Add smoke detectors, a burglar alarm, and secure locks for credit. Expensive systems such as centrally monitored burglar systems and sprinkler systems do offer credits, but be sure you are not spending so much you cannot recoup the cost in either insurance savings or peace of mind.
• Maintain a good credit history to ensure that you can get the best rates from your auto and homeowners policies. Most insurance companies now have a formula that is based on credit to assign the very best rates.
• Examine the limits you have set for your house, if you have one, and the contents coverage amount you carry. Remember, you don’t have to purchase insurance on the land for your house, so remove that value from the insured amount.

Rates for home insurance are based upon the following criteria:

• Whether your home (or rental) is made of brick or wood – brick is typically less expensive to insure
• Distance of your home from a water source (hydrant) and the expertise of your fire department
• Age and condition of the home
• Claims history for the home

Whether you are purchasing a new home, renting a new home, or insuring an existing one, all these factors make a difference in your rates.

Purchasing the Best Insurance Available

You are going to want to purchase insurance from an excellent company as well as save money.

Determine at least three insurance companies from which to purchase insurance by checking with your state department of insurance for the names, ratings, and complaint ratios for insurance companies.

The state website will also allow you to see if a company is licensed in your state. Asking neighbors, friends, and relatives about the insurance companies they use will help narrow the field.

Research for ratings and complaint ratios may be done by using the following:

• National Association of Insurance Commissioners (NAIC)
• A.M. Best – an insurance company rating organization.
• Another rating association – Standard and Poor’s

The rating association indicates the financial stability of the insurance company. Financial stability is important to you to be able to rely upon the ability of the insurance company to pay claims in the event of a major disaster.

For example, Hurricane Katrina stretched the abilities of the insurance marketplace to adequately cover costs and its effects are still reverberating through the insurance industry.

Quotations for Home Owner Insurance

Quotes can be obtained from a number of places, but recognize that different insurance companies establish different rates depending upon the company’s recent experience in your area, general loss experience, and rate filings. Insurance is sold by three varieties of agents:

• Independent insurance agents that may represent many companies
• Exclusive agents that sell only the products offered by one insurance company.
• Direct market sales done by Internet, mail, or telephone.

Each of these sources have advantages, but the independent insurance agency is the easiest because they represent several companies and are able to give you three quotations relatively easily.

All agents legally writing insurance in your state must be licensed and will cheerfully verify this through the state’s department of insurance.

Coverage for Home Owners Insurance

A formula exists for the amounts on home owners policies as follows:

• Home – amount chosen by owners, but must be at least 80% of the replacement cost for the building – covers damage to your house and the structures attached to your house.
• Other structures -10% of the coverage on your home – covers fences, detached garages, gazebos, potting sheds and other such additions.
• Personal property – 50% of the coverage on your home -the contents of the home – possessions, including electronics, furniture, and appliances as well as the personal property of a child at college, and storage lockers.
• Loss of Use – 20% of the coverage on your home – and includes the necessary cost of living for you and your family if you must live elsewhere while the home is repaired — up to the limits of the policy.
• Personal Liability – amount you choose, but usually at least $100,000 to pay for financial loss if you are sued and found liable for damage to someone else or his or her property. (Not automobiles)
• Medical Payments – pays medical costs for people injured on your property or by your pets.

Usual Perils Covered

Perils are the actions that cause damage to a home or contents. The usual perils advised under a home owners policy are:

• Fire, smoke, explosion
• Windstorm, hail, lightning
• Vehicular damage
• Theft, Vandalism
• Falling objects, including trees
• Plumbing, heating, air-conditioning systems or household appliances – for sudden and accidental freezing, rupturing or sudden and accidental overflowing – not that this does not include flood.

Notice that flood, earthquake, war, and nuclear accident are specifically not included in the home owner policy.

You may acquire flood insurance through the FloodSmart website. Earthquake insurance can be acquired through your agent if you are in an earthquake-prone area, but no coverage can be acquired for war or nuclear accident.

Business Use of Your Home or Property

Business equipment you use at home may be covered but be certain to check the limits for amounts.

Daycare coverage is not given if you charge for watching children in your home. Occasionally watching the neighbor’s children or grandchildren without pay is covered.

The Bottom Line

Home owners insurance quotes should be obtained and carefully examined to determine what is best for you and your circumstances.

Many renters assume they do not have to purchase home owners insurance because they do not own the building, but an adequate home owners policy can add to the security and enjoyment of your home whether you own or rent.

Remember, too, that the reputation and finances of an insurance company makes just as much difference as a slightly lower premium. Be a wise consumer.

Carefully read your insurance policy to make sure what the insurance company requires of you to maintain this coverage.

Use our FREE comparison tool below to start your search instantly!