How to compare home insurance before you buy
Comparing home insurance quotes is key to getting a good price when protecting your home. We asked an expert what we need to know about shopping around.
Comparing home insurance quotes is key to getting a good price when protecting your home. We asked an expert what we need to know about shopping around.
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Home insurance is important, but no one loves paying for it. That’s why “cheap home insurance” and “how to save on home insurance” rank among Google’s most-searched home insurance terms. Any insurance expert will tell you that there’s no easy answer for where to find the best plan for your needs. 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. We asked Tara Laidman, associate vice president of the national product portfolio at The Co-operators, for her expertise on how to compare home insurance. Here’s what we found out.
While you don’t need home insurance by law, like car insurance, your 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: The most inclusive type of policy, covering sudden and accidental occurrences on buildings and personal property, as well as liability. This covers everything except the exclusions specified in your policy.
Broad: It’s more affordable, but it comes with even more exclusions and restrictions, especially on your home’s contents.
Basic: It’s the most limited, covering only basic perils that are named in the policy, such as fire, wind and theft.
Getting an accurate comparison between providers can be tricky, considering that all policies aren’t the same. Laidman adds that common differences to watch for include perils offered, limitations for big-ticket items such as jewellery and additional coverages, like identity fraud. Here are some quick tips for comparison shopping for home insurance policies:
When comparing home insurance quotes, there are a number of additional factors to consider. It’s important to understand the implications of your policy decisions, like choosing replacement cost or actual cash value (ACV). Laidman shares down the pros and cons of each, outlining the short-term and long-term implications.
With replacement cost insurance, your claim will cover the lesser cost of restoring items to their original condition or buying new items of similar quality to the ones lost; there will be no deduction for depreciation. In other words, if your four-year-old TV is stolen, the claims payment you receive will allow you to buy a new TV with features as similar as possible to the stolen model. The payment you receive may not be the same as you originally paid, as a similar model is likely cheaper now.
Pro: Your claims payment will allow you to adequately replace your lost items, says Laidman.
Con: Your premium will be significantly higher.
With an actual cash value policy, your claims payment will be based on the cost of buying items in similar condition to the ones you 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 machine in its used condition and pay you that amount.
Pro: You’re likely to be charged a lower premium.
Con: Know that you’ll be on the hook for the difference between the insurance payout and the cost of a brand-new item, says Laidman.
When comparing home insurance quotes, know there are a lot of factors that affect the cost no matter what company you choose. These are some of the major general and geographic details that will be considered in your quote.
It is possible to get a better deal on home insurance. Laidman gives insider scoop on what can cuts costs on premiums.
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