Quotes for homeowners insurance are not hard to get and are free, so the best practice is to gather several when you are looking for the best rates. You might be surprised at how much the estimates vary from company to company for the same property.
Understanding home insurance quotes
What is a homeowners insurance quote? It is an estimate of what your premiums will be for a particular property. You can collect home insurance quotes online, over the phone, or through an agent or broker. Your quote will be based on a broad range of factors related to you and your property and home, so each quote is unique.
Every company uses its own formula to determine your quote based on what that company sees as the level of risk you will be. The less likely you are to file a claim, in the company’s opinion, the cheaper your quote.
It’s worth noting that home insurance quotes are only an estimate of your final premium costs. You will not know your actual rate until you apply for a policy and your application is reviewed and approved.
Parts of home insurance
There are several different parts, or coverage options, to choose from when you apply for home insurance. These parts combine to create a homeowners insurance package to cover your home and property while providing important financial protections against certain events:
- Dwelling (Coverage A): One of the most important coverages you can have is dwelling or structure coverage. The amount listed for the dwelling is how much the insurance company will pay to rebuild the structure of your home after a covered loss.
- Other structure (Coverage B): Some companies offer this coverage as a percentage of coverage A. If you have anything not directly attached or considered part of the home, like a shed, barn, deck, or pool, you may want other structure coverage. Depending on the value of these other structures, it might be a good idea to increase this above the base amount.
- Personal property (Coverage C): This coverage is for all your belongings in your home and other structures. Also typically offered as a percentage of coverage A, you can often increase this individually as well. Ask if coverage C is based on actual cash value or replacement cost, which would replace your older items with new rather than give you the actual value of older belongings.
- Additional living expenses (Coverage D): If you are displaced from the home because of a covered claim, coverage D will pay for you to stay somewhere else temporarily. You can also use this coverage to pay for incidentals to help you maintain your lifestyle such as food, transportation costs, and laundry fees while you are living outside your home and the damage is being fixed.
- Personal liability (Coverage E): This important coverage protects you in case you are sued by another person. Whether they got hurt on your property or are accusing you of harming them some other way, coverage E will help you fight the lawsuit and pay for attorneys fees.
- Medical payments (Coverage F): If someone gets hurt on your property, whether invited or not, coverage F will pay for their incurred medical costs.
Home insurance policy types
While some may think there is only one type of home policy, there are several policy types of home insurance to choose from. It’s important to know the difference in case you are asked to choose which policy type you want to protect your home. The more coverage you want, the more the homeowner’s insurance will cost:
- HO-1: This limited policy type is called the basic form and only provides coverage for 10 named perils, including fire or lightning, windstorm or hail, smoke, vandalism, theft, and falling objects. Belongings are covered under an actual cash value basis.
- HO-2: The broad form offers more coverage than the basic form, with six additional named perils, including backup of sewer or drains, freezing, and weight of ice or snow damage. The dwelling provides replacement cost while personal property is still covered under actual cash value.
- HO-3: The special form is the one most commonly used today for a single-family, townhome, or row home not considered a condo. It provides coverage for “all-risk”, also called open-perils for the dwelling, and named perils for belongings. On this form, if coverage is not excluded, it is included as a claimable event.
- HO-4: This policy is considered a contents broad form and is more commonly known as renters insurance. There is no coverage for the structure, but there is coverage for personal property, liability, additional living expenses, and some other optional coverages.
- HO-5: The comprehensive form is very similar to the HO-3 but offers broader coverage. The dwelling and personal property are both covered with replacement cost and have all-risks coverage. This policy is typically used for high-value homes and also broadens the standard coverage under HO-3 for items like furs, fine arts, and jewelry.
How much does a homeowners insurance quote cost?
You should never have to pay to receive a quote – most insurance companies offer them free of charge. The price you are quoted is based on multiple factors, including the following:
- Age of your home: Older homes are often more expensive to insure. Your insurer reasons that older homes have older systems – like electrical, plumbing, and HVAC – that are more likely to break or damage in a disaster. That generally translates into a higher premium.
- Home improvements: If you decide to do a major renovation of your kitchen and dining room, your insurance rates will increase because your home is now, in theory, worth more and will require a greater investment to repair if it is damaged.
- Location: If you live in a higher-crime area, your coverage will usually cost more because of the higher possibility of theft or vandalism. Your location impacts your rates positively if your home is near a fire hydrant, police precinct, or another safety facility. On the flip side, if your home is in a region that is prone to flooding, hurricanes, or other natural disasters, your rates will be higher.
- Personal details: Your insurer will want to know who you are and what your insurance history is. Do you tend to file multiple claims? Do you work from home? What is your credit rating? All that will be factored into your quote.
- Pets: Many insurers raise your rates if you own a type of dog that is considered aggressive, such as Pit Bulls or Dobermans. Your insurer is looking at the statistics for the breed, not your particular pet.
- Property risks: If you own property that could cause an injury or fire, such as a wood-burning stove to a pool or trampoline, your rates will probably increase. Also, if you own expensive collections, jewelry, electronics, or any other item of great value, you may want to add a rider, or endorsement, to cover these items at an additional cost.
- Materials: Houses built of stone, masonry, or brick are more durable than wood homes, which can be damaged by fire. In general, a brick home will cost less to insure than a wood-frame home for that reason.
- Rebuilding cost: Insurers consider how much the construction rates are in your area. If it costs SGD125 per foot to rebuild, you will pay more than if it’s SGD80 per foot.
- Security features: If your home is well-equipped with smoke detectors and a security system that’s wired to your local police precinct, you will probably pay less for insurance coverage. Many insurers reward security features with an insurance discount.
- Size of your home: Generally, the larger a home is, the more expensive it would be to rebuild in the event of a disaster. The more it will cost to repair or rebuild, the higher your premium cost.
Needed items to get a quote
Getting a quote, whether online or from an agent, is not difficult. it does take a little time, however, and there are several pieces of information that you will need to provide to get the most accurate quote possible.
You will need to provide basic information about yourself: your age, birth date, and marital status, for example. Your insurer will want to know how long you have lived in this house, whether you have pets, roommates, a spouse, or children, and whether you use your home for business. The company will look up your credit score before approving your application, and they may check information regarding other insurance policies you have, such as auto or life.
Your insurer will need to know the address of the property you would like to insure. The provider will access public information about the house, such as how old it is, how big it is, what it is made of, and how many rooms it has. Some insurers may ask you if there are attached (such as a garage) or detached (such as a storage shed) structures on the property and when the roof was most recently replaced. If you have done any renovations on the property, disclose them to ensure you have adequate coverage for improvements.
Finally, your insurer will review your history as the owner of a home, including your most recent insurer was, if you had one, and the details of that policy. Although you are free to change your coverage options, providers will want to know what they are starting from with your previous policy, including what sort of endorsements you had and about any claims on your record.
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