Choosing the Right Homeowners Insurance: A Complete Guide
From your prized collection of vinyl records to your shelves lined with comic book memorabilia, your home is where you keep your most precious belongings — not to mention the house itself, which is likely the largest investment you’ll ever make. To protect your home and everything in it, knowing how to choose the right homeowners insurance is critical.
Fortunately, finding the best home insurance to safeguard your house doesn’t have to be overwhelming. In fact, you may be surprised to learn that your local credit union can guide you through the ins and outs of protecting your home, and even uncover discounts on credit union home insurance and other perks along the way.
Wait, do credit unions offer home insurance? Yes, many do! Start your search with our Credit Union Locator Tool, and keep reading for more tips to get the best home insurance.
Choosing the Right Homeowners Insurance
Although homeowners insurance isn’t legally required, like auto insurance, mortgage lenders typically require homeowners to carry coverage as a way of protecting their investments. Then, even after you pay off your mortgage, it’s still smart to insure your home to save yourself the potential cost of rebuilding out of pocket.
Standard home insurance policies cover the cost of repairing or replacing your home and personal property from damage caused by fire, smoke, water, theft, vandalism, or other “perils” named in the policy. In addition to covering the main dwelling and detached structures (like a garage or shed), these policies also pay for your living expenses, like hotel stays and restaurant meals, until the damage is repaired. They even provide liability coverage if someone else gets injured on your property.
While most homeowners insurance policies offer minimum coverage of $100,000, experts recommend carrying at least $300,000 worth of coverage. Unfortunately, two of every three homes in America are underinsured, often leaving homeowners on the hook for damages.
Here are some points to examine as you determine how to choose the right homeowners insurance.
Consider Your Location
Home insurance rates and availability vary by state and ZIP code, based on common neighborhood risks. For example, home insurance will likely cost more in areas with higher crime rates.
Depending on your location, you may also need to add separate coverage for extreme weather like floods, earthquakes, wildfires, or hurricanes, which aren’t covered under standard home insurance policies. Even if you aren’t in a flood zone, extra coverage might be wise, considering that more than 40% of flood claims happen outside of high-risk areas.
Know Your Home's Unique Features
The age and condition of your roof, furnace, electrical system, and other major home components also affect your insurance premiums. Some features — such as fireplaces, swimming pools, and trampolines — cost more to insure because they increase the risk of perils on your property. Other unique details, like custom crown molding or arched windows, may increase your premiums simply because they cost more to replace.
On the other hand, adding certain safety features can help lower your premiums. For example, many policies offer discounts for installing security systems, smoke alarms, or deadbolt locks. Updating your roof, heating and cooling systems, and electrical wiring may also unlock discounts on your policy.
Consult Trusted Third-Party Ratings
Home insurance only provides peace of mind if you’re absolutely certain that the insurer will come to your aid when you make a claim. Before choosing a home insurance provider, look at its track record of responding to claims. Is the company fair, timely, and accessible to policyholders?
- Check third-party credit rating agencies like AM Best and Standard & Poor’s to evaluate the financial strength of the insurance companies you’re comparing and ensure that they have the stability to pay out claims.
- Consider each company’s J.D. Power ratings for overall policyholder satisfaction and retention rates.
- Search your state’s Department of Insurance website to see each company’s ratings and complaints.
Get Multiple Quotes and Compare Based on Coverage
You might be tempted to pick the lowest premiums, but the cheapest policies generally provide the least amount of coverage. This could come back to bite you if catastrophe strikes and you have to foot the repair bills without any assistance. Instead of shopping for the cheapest plan, pay close attention to what’s included in your coverage and, more importantly, what’s not.
Comparing quotes for the same amount of coverage from several providers can reveal which company provides the best policy at the best price to meet your specific needs. During this due diligence, you’ll also discover which companies have 24/7 accessibility for customer service and claim reporting. Experts recommend comparing at least three quotes before deciding.
While many insurance websites offer estimating tools to calculate the cost of covering your home, a conversation with a real person who is trained on the subject can help you find the best home insurance for your specific situation. Be sure to ask whether you qualify for any discounts for:
- Bundling multiple policies, like home and auto.
- Paying your premium annually instead of monthly.
- Staying claim-free for a certain period of time.
Unlike other types of insurance that are more fixed, such as life insurance, it’s wise to review your home insurance options every year. Your coverage needs will change over time as you make updates to your home and purchase new possessions. Comparing your rates annually could save you considerably and keep you protected as replacement and repair costs increase.
Further Resources on Choosing the Right Homeowners Insurance
Looking for more assistance to find the best home insurance in your area? Check out these resources for more information:
- Create a detailed home inventory. If you catalog your personal possessions, you can assess how much coverage you’ll need, and make it easier to file claims after a disaster. Download the Home Inventory App from the National Association of Insurance Commissioners to keep an accurate record.
- Compare average home insurance rates. Get detailed information by ZIP code with this rate calculator from Insurance.com.
- Check with your state’s insurance department. Your specific state’s department will have resources to evaluate the insurance companies that serve your area, and which hazards require coverage.
The Credit Union Home Insurance Advantage
Knowing how to choose the right homeowners insurance boils down to selecting the coverage you need, at a price you can afford, from a company with good customer service and solid financial footing. To find the best home insurance for your needs, shop around and compare quotes to find the rate that works for you.
Your local credit union can help you navigate the complexities of home insurance to protect your nest (and your nest egg) from the worst-case scenario. If you’re still wondering, “Do credit unions offer home insurance?” then head to our Credit Union Locator to find a local credit union that can help safeguard your abode.