Comparing home insurance quotes is key to getting the right coverage at a good rate. We asked an expert what to look for when shopping around.
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Home insurance is important, but no one loves paying for it. That’s why people like to open their browsers and search for “cheap home insurance” and “how to save on home insurance.”
Any insurance professional will tell you that there’s no easy answer for cheap and full coverage, as it’s really about finding the best plan for your needs. But it can be done. You have to do your homework. Shop around. Compare quotes. Luckily, there are a few hard and fast rules to keep in mind when comparing home insurance quotes.
While you don’t need home insurance by law, as you do with car insurance, your mortgage lender or landlord will often require it. Home insurance experts will tell you that the key to getting the best plan in terms of cost and coverage is to shop around and compare policy offerings from company to company. In your search, these are the main kinds of coverage you’ll come across:
Comprehensive: This is the most inclusive type of policy, covering sudden and accidental occurrences involving buildings and personal property, as well as liability. You would be covered for everything, except for the exclusions specified in your policy.
Broad: Considered a middle-tier offering between basic and comprehensive coverage, broad policies come with comprehensive coverage on certain items, such as the building, but also with more exclusions for your home’s contents.
Basic: Also called “named perils,” these policies cover only the basic perils that are named in the policy, such as fire, wind and theft. They are more affordable than broad and comprehensive options.
No frills: This type of policy offers the least amount of coverage and is designed for homes that don’t meet normal standards for insurability. For example, if your home has structural problems, you may need this type of insurance until you make the necessary fixes and can qualify for a different type of coverage.
Considering all policies aren’t the same, getting an accurate comparison between providers can be tricky. Tara Laidman, vice-president of property & casualty business operations at The Co-operators, says common differences to watch for include the specific perils covered, the limitations on big-ticket items such as jewellery, and the additional coverages included in the policy, like identity fraud.
When comparing home insurance quotes, you should consider a number of additional factors, including replacement cost or actual cash value (ACV) coverage.
With replacement cost insurance, your claim covers the lesser cost of restoring items to their original condition or buying new items of similar quality; there’s no deduction for depreciation. In other words, if your four-year-old TV is stolen, the claims payment will be equivalent to what it would cost to buy a new TV with similar features as the one that was stolen. The payment may not be equal to what you originally paid, however, as a similar model may now be less expensive.
The pros and cons of replacement cost, according to Laidman:
Pro: Your claims payment will allow you to adequately replace your lost items.
Con: Your premium will be significantly higher.
With an ACV policy, your claims payment is based on the cost of buying items in similar condition to the ones you’ve lost, factoring in depreciation. So, if your six-year-old washing machine is damaged in a fire, your insurance company will determine the current value of that same machine in its used condition and pay you that amount.
The pros and cons of ACV, according to Laidman:
Pro: You’re likely to be charged a lower premium.
Con: You’ll be on the hook for the difference between the insurance payout and the cost of a brand-new item.
When comparing home insurance quotes, know that there are a lot of factors that affect the cost, no matter what company you choose. Some of the most important considerations include:
It’s likely you can get a better deal on home insurance while still maintaining the level of coverage you need. We asked Laidman for tips on how to save. Here’s what she had to say:
Learn more about how to save on home insurance.
There’s a lot that goes into calculating your home insurance premium, from the type of policy you want to the age and state of your home. That makes comparing home insurance policies all the more important. To effectively compare your options, start by understanding how policies are built for different needs, and always provide the same information to your insurance broker or the providers you’re considering.
This article was originally published on July 16, 2021. It was last updated on Aug. 3, 2022.
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Be sure to look at flood and earthquake protection as well. Many policies don’t cover these without additional premiums.