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What to Expect from Homeowners Insurance Companies
Author David Schneider | Aug 29,2007
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Want discounts off your homeowners insurance? This is actually one of the best things you can expect from homeowners insurance companies, since they don't really want to pay out claims if they can avoid it. Therefore, insurance companies will often give discounts on your monthly premium if you take some steps to make your home a little safer. Dead bolt locks, fire-retardant building materials and burglar alarm systems could all save you money on your premiums.
Other discounts exist as well. You might be able to receive a discount from your homeowners insurance company if you are a senior citizen. It's also possible that a company will give you a discount if you have other policies with them, such as life insurance or auto insurance. You can also get a discount if you increase your deductible or pay your premium on a yearly basis instead of quarterly or monthly.
Expect a good financial rating for your insurance company
Just like stocks and bonds, insurance companies are rated based on their financial strength. A.M. Best, Moody's Investor Service, Standard & Poor's and a number of other companies rate the financial strength of insurance companies. Be sure that your company is ranked highly - the greater their financial strength, the more likely they are to pay out on large claims. Look for "excellent" or "good" ratings.
Expect there will be differences between insurance companies
Insurance companies base their rates on the expected loss they will face in the event of a claim and on their own administrative costs - marketing, staffing, etc. The higher these costs, the higher your premiums might be. That is why so many insurance companies are now offering direct insurance instead of selling through an agent. This may be a good option for some, but be sure that there is someone at the company to ask about all of your individual concerns before deciding that direct insurance is better for you.
Expect a number of factors to affect your insurance pricing
A variety of different factors will affect your premiums. These include the amount of coverage you need, whether that coverage is "actual cash value" or "replacement" coverage and some other things that you can't control - the age of your home, your home's location and the way your home was constructed.
Actual cash value homeowners insurance will be a bit cheaper than replacement coverage, but you can only file claims for the value - including depreciation - of your personal property. Replacement coverage will allow you to claim the cost of replacing an item. Usually replacement coverage is the better route.
Older homes, generally, are more prone to damage and loss. If your home is located somewhere that is more susceptible to natural disasters its also likely that your premiums will be affected. As you comparison shop for homeowners insurance, ask your neighbors about their policies. Not only will this give you a sense of what kind of premiums to expect, you might also find that a particularly well-respected company is insuring all of your neighbors. |
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