When my wife and I were preparing to buy a house this year, we had no idea what we were doing. We’d never bought a house before, and there’s only so much you can learn without going through the experience yourself.
So, when the loan officer was setting up our escrow account and asked where we wanted to get our homeowners insurance, I immediately responded with the name of the company we get our car insurance through.
For starters, it’s easy to have both policies in one place, and I knew we’d get a multipolicy discount. In hindsight, however, I realize it might not have been the best choice.
How to choose the best homeowners insurance policy
Several factors go into a homeowners insurance premium, and getting the best rate requires some work. Here are seven tips for finding the best homeowners insurance policy for your needs.
1. Shop around
The first thing you should do when you research the best homeowners insurance is compare policies from several insurance companies.
Specifically, look at the different coverages, limits, deductibles, and exclusions. For example, no homeowners insurance policy will cover damage resulting from the following:
- General wear and tear
The cheapest policy might not offer the best value, especially if it comes with high deductibles and subpar coverage.
In other words, avoid sacrificing protection just to get a slightly lower monthly premium.
2. Ask about discounts
Insurance companies offer discounts to entice homeowners, but they often aren’t advertised in the initial homeowners insurance quotes you get online or by phone.
What’s more, the discounts vary by insurer. For example, Esurance offers a discount if your home has storm shutters on all exterior windows. And State Farm offers a discount if you have certain impact-resistant roofing on your home.
Most insurers also offer a multipolicy discount — when you have an auto insurance policy and a home insurance policy with the same company, for example. Other basic discounts include:
- Home safety discount for homes with a security alarm
- New-home discount if your home was built recently
- Pay-in-full discount if you choose to pay annually instead of monthly
- Smoke-free discount if no one living in the home smokes
The more insurance companies you compare, the more discounts you’ll find that might apply to you.
3. Research the company’s financial strength
When you finally settle on an insurance company, you’ll want to know that it can meet its financial obligations — specifically, paying claims. If the company hits a rough financial patch or goes under in the middle of a claim, you might be left high and dry.
To assess a company’s financial strength, four independent agencies — A.M. Best, Fitch, Moody’s, and Standard & Poor’s — publish financial ratings for major insurance companies.
The following ratings are considered good or better:
- A.M. Best: A++, A+, A, A-, B++, and B+.
- Fitch: AAA, AA, A, and BBB
- Moody’s: Aaa, Aa, and A.
- Standard & Poor’s: AAA, AA, A, and BBB
In many cases, the insurance company shares its financial rating from at least one of the four agencies. Otherwise, you can simply go to the agencies’ websites to do a quick search.
4. Answer all the questions correctly
The application process for homeowners insurance is long, even if you do it online. You’ll be asked about several features of the home. For example, you might see the following questions:
- What materials were used to build your roof?
- Is your garage connected to or separate from the home?
- When were some of the home’s major systems (water piping, air ducts, etc.) last renovated?
- What percentage of the home is carpeted?
Avoid making guesses when you fill out this portion of the application. Answering correctly ensures you’ll get the right policy for your needs.
Note that leaving stuff out, intentionally or unintentionally, can give you an inaccurate quote and an inadequate policy. In some situations, the insurer might even cancel your policy.
5. Know how much coverage you need
If you’re buying a home, the lender typically will have requirements for coverage levels. Make sure you know what those requirements are before you start shopping around.
Next, speak with an agent at one or more insurance companies to get an idea of what you need to have covered. For example, you’ll want to insure your home based on its replacement value, not how much you paid for it. In some cases, it might cost more than the sales price to do a complete rebuild.
6. Evaluate customer satisfaction
Getting the cheapest policy available might not give you any peace of mind if the company is slow when it comes to processing claims.
J.D. Power publishes an annual study on customer satisfaction for the top insurance companies. Its 2017 study ranks the best homeowners insurance companies based on the following factors:
- Overall satisfaction
- Policy offering
7. Boost your credit score
During the application process, insurance companies run a soft credit check to get an overview of your credit history. According to a study by Quadrant Information Services, homeowners with bad credit pay more than double what homeowners with excellent credit pay in premiums.
To get your credit back on track, work to address the issues at hand. Get a copy of your credit report from AnnualCreditReport.com and review it to see what’s dragging your score down.
For example, if you have a delinquent credit account, pay it off. If your credit card balances are high relative to your credit limits, pay them down.
The sooner you start improving your credit, the sooner you can qualify for better rates.
The best homeowners insurance depends on your needs
There’s no one best homeowners insurance policy out there for everyone. That’s why it’s essential that you do your due diligence to find the right one. Know your home in and out and actively search for ways to cut costs without sacrificing coverage.
Since your home is one of your most valuable assets, you’ll want to make sure you get the best protection available.
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Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|