When you’re shopping for home insurance, a good price is likely at the top of your list, but it shouldn’t be the only factor. Here are other considerations when you want to get the best homeowners insurance coverage.
Don’t Ignore Customer Service
While a good price is often a deciding factor when buying home insurance, don’t sleep on good customer service. If you need to file an insurance claim for a problem like a house fire, you want to be treated well. Your goal is to find a home insurance company with top-notch service at a reasonable price.
Adjust Home Insurance Coverage to Your Needs
Your home insurance policy protects one of your most significant investments: your house. You want to be sure you have sufficient coverage without overpaying for unnecessary insurance.
When you’re looking for the best home insurance, it’s a good idea to go look at each standard coverage type within a homeowners policy and adjust the coverage limit to meet your specific needs. Here’s how to do that.
Get the right dwelling coverage. The dwelling section of the policy covers your house structure. It should reflect the cost to rebuild your home based on the construction and labor costs in your area.
If you live in a disaster prone region, there could be a temporary but unwelcome increase in rebuilding costs due to high demand after a natural disaster (like a tornado). Some home insurance companies sell “extended replacement cost” or “guaranteed replacement cost” to help absorb a spike that makes repair costs go above your dwelling coverage amount.
Choose the right contents coverage. This coverage pays to repair or replace your personal belongings. It’s usually set between 50% to 70% of the dwelling coverage amount. For example, if your dwelling is insured for $250,000 and your contents coverage is set at 50%, you’ll have $125,000 in contents coverage. You can buy more coverage if you want it.
A good way to figure out how much your belongings would cost to replace is by creating a home inventory.
“Schedule” high-value items. Certain types of items, such as jewelry, have “sub-limits,” meaning your insurance company will only pay up to a certain amount for those items. For example, a standard home insurance policy usually has a $1,500 sub-limit for theft of jewelry. If you need more coverage for valuable items, you can “schedule” them for their appraised value.
Consider replacement cost instead of actual cash value (ACV) coverage. Replacement cost pays to replace an item with a brand-new version, whereas ACV reimburses you for an item’s depreciated amount. Have a five-year old TV that was destroyed in a fire? Then you would be reimbursed for a five-year old TV under ACV coverage.
Choose replacement cost coverage if you’re looking for the best homeowners insurance.
Get better liability insurance. While it’s easy to focus on the material items like your house and belongings, homeowners insurance includes crucial coverage for liability.
This liability insurance pays for injuries and property damage accidentally caused by you to others. For example, if a guest trips on your sidewalk and gets hurt, liability insurance can pay their medical bills. Liability also pays for a lawsuit judgment if you’re sued.
If your liability coverage is inadequate, you could be on the hook for any amount over the policy limits. For the best homeowners insurance coverage, a general rule of thumb is to buy enough liability insurance to cover your net worth, or what can be taken from you in a lawsuit.
Umbrella insurance is an inexpensive way to add more liability insurance.
Get sufficient additional living expenses coverage. Also known as “loss of use,” this coverage pays for expenses like hotel bills, restaurant meals and pet boarding if you can’t live in your home while it’s being repaired due to damage covered by the policy.
The amount you have for additional living expenses is typically set at a percentage of your dwelling coverage amount, but you can buy more if you don’t think it’s enough.
Buy endorsements that fill specific gaps. Endorsements are add-ons. They are a good way to tailor your home insurance policy and fill in any coverage gaps. For example, some insurance companies sell increased coverage for landscaping, home systems breakdown, and water backup and sump overflow.
Buy Additional Insurance for Natural Disasters
Even the best homeowners insurance plans can unravel if certain natural disasters hit, such as floods, earthquakes and landslides. That’s because these problems aren’t covered by home insurance.
For example, a home insurance policy might cover water damage if your roof leaks because of a hurricane, but it won’t cover flood damage from the same hurricane. These types of problems require special policies such as flood insurance and earthquake insurance.
