How to save money on home insurance
Updated: Feb 17, 2022
by Nate Jones, CPCU - Owner of Wexford Insurance
Let's be honest, we didn't pay attention to insurance in school or how our parents bought it. Now that you are a first time home buyer looking for insurance, you are probably confused on where and how to get free home insurance quotes. Also, if you get quotes, what home insurance coverage should you have?
I love Tik Tok because I have learned a decent amount about real estate. There is always a helpful influencer talking about investment properties, or flipping houses. However, I have never seen an influencer talking about how to get fast quotes for home insurance. The reason is because it probably wouldn't get that many views. We all know, it's all about dem views!
We only care about home insurance when we have to buy it. We get excited about buying our first house and then the realtor mentioned home insurance....
I am going to explain everything you need to know about buying home insurance for the first time.
An independent local agent has access to numerous home insurance companies. The reason you should use an "independent" agent is so they can get the cheapest home insurance quote possible for you.
If you reach out to an insurance agent, but you don't know if they are independent, just ask them if they have access to multiple insurance companies.
Use an insurance expert.
Let's be honest. We all know someone who sells insurance. We may know them, but do we trust them? Insuring one largest assets in a home, should not be a "let's wing it" transaction. Uses an insurance agent who insures homes a regular basis is important.
A good home insurance agent should be able to explain all the coverages you are purchasing and why you need those coverages.
Make sure you get multiple quotes.
I would love to say that the insurance industry is 100% trustworthy, but it is not. Some insurance agents will give you a quote to the insurance company that pays them the highest commission with no regard to it being the cheapest home insurance quote.
Quotes should always be free! Insurance agents make their money off a % of the premium when the policy is bound. If you are only given one quote, push back and ask for more.
What home insurance coverage do you need?
Coverage A - Dwelling Coverage. This covers the cost to rebuild or repair the structure of your home. Ask your agent for a replacement cost estimator (RCE). An RCE uses today's lumber and rebuilding costs to determine the estimated cost to rebuild your house. The cost to rebuild your house could be more or less than your purchase. Insurance does not cover the market value of your house. It covers the cost to rebuild it.
Coverage B - Other Structures. This covers the cost to rebuild or repair other structures that are detached from your home. This can be barns, sheds, detached garages, etc. If your property has substantial other structures, make sure you let your home insurance agent know.
Coverage C - Personal Property Insurance. This covers the cost to replace your belongings. To better explain this, let's say you ripped the roof off your house and flipped it upside down. Anything that falls out, is considered personal property. This can be clothing, furniture, tv's, etc.
Coverage D - Loss of Use. This coverage provides living expenses while your home is being repaired. This includes: hotel expenses, some food expenses, and any additional relocation fees.
Coverage E - Home Liability Insurance. This provides coverage for bodily injury and property damage sustained by others or their property where you are responsible. An example of a possible home insurance claim: Your tree falls onto your neighbors house causing property damage.
Coverage F - Medical Payments. This provides coverage for medical expenses sustained by others where you are responsible.
Provisions to make sure you note on your home insurance quote:
Deductible. Your deductible is the amount you will pay if a covered claim occurs. When you are reviewing your home insurance quote, the deductible impacts the pricing of your policy. The higher the deductible the lower the premium goes. Make sure your deductible is not super high (Less than or equal to $1K). Some agents put your deductible super high so their quote looks the best.
Wind/Hail Deductible. This is the amount you will pay if a covered claim occurs that is caused by wind or hail. Sometimes this deductible amount is higher than your normal deductible. Make sure this deductible matches your normal deductible. Having this deductible higher can lower your cost which some agents do to make their quote look more attractive.
Roof Settlement Type. This is how your roof repair or replacement is handled for a covered claim. This is a HUGE provision to pay attention to. There are 2 different settlement types: Actual Cash Value and Replacement Cost. Unless your roof is very old, you will always want to have replacement cost on your roof. Let me provide an example. Joe puts a 30 year roof on his house for $30K. 15 years later a storm occurs damaging and destroying his roof. Actual Cash Value only pays out a claim amount for $15K since the roof life is 50%. Joe will need to pay the other $15K to replace the roof out of his own pocket. If he had replacement cost, the insurance company would pay the full $30K amount.
Earthquake. This provides coverage for loss caused due to an earthquake, including shock waves and tremors. If your hours is in an earthquake prone zone, it is important to make sure you have this coverage. The standard home insurance policy does not cover the earthquake exposure.
Water Back-Up. This provides coverage for damage caused by water entering the home through a sewer or drain or resulting from a backed-up drain or sump pump. Please note this! If your house is built on a crawl space or has a basement, you will need to make sure you have this coverage.
High Value Belongings - Wedding Rings. A lot of people don't realize you can actually schedule your wedding ring on your home insurance policy. The cost to insure your wedding ring on your home policy is usually very inexpensive. This covers loss of your ring due to theft as well as normal home insurance losses.
I am sure I just overloaded you with a ton of home insurance information. If you have any specific questions, please do not hesitate to give us a call.