Homeowners Insurance – Balancing Low Cost and Best Coverage

For most people, purchasing homeowners insurance is a necessary evil.  Since, in many cases, our homes represent our most valuable asset, it is very important that we balance our need to properly insure that asset with our desire to save money.  Simply put, most folks just want to make sure they get the best combination of Price, Protection, and Service.  Here are a few ways that we can help you be sure:

Price

Homeowners insurance can be expensive, especially in high-risk areas that are exposed to hurricanes, tornadoes, earthquakes, etc.  Fortuantely, most of our clients are in portions of Virginia that are not overly exposed to the types of catastrophies.  As a result, our rates are low compared to many other parts of the country.  Beyond locating in a geographically protected area, there are a few other things to consider in order to control costs.

Maximize your discounts.  Taking advantage of discounts for having security alarms, smoke detectors, and new construction can have a major impact.  Perhaps the biggest discount is given for packaging your home and auto insurance with the same carrier.  If you have those with different companies, we would love to shop them together to see if you can save.

Purchase the right deductible amount.  We are often asked what is the best deductible to carry.  The answer can vary.  In general, most of our clients carry a $500 to $1000 deductible.  However, raising the deductible can save big bucks.  When considering whether or not to go with a higher deductible, you have to do the math.  As an example, if you currently carry a $500 deductible and bumping it up to $1000 will save $75 a year, it will take you a little less than 7 years to recoup the additional deductible that you will be responsible for if you have a claim.  Our experience is that most clients will not have a claim every 7 years.  So, this may be a good bet for you.  However, if the savings is only $25 a year, it will take you 20 years to recover the difference in deductible and you may not want to take that risk.

Know the score.  Credit based insurance scoring is a major factor in the cost of homeowners insurance.  According to one survey, 92 of the top 100 insurers use some form of credit scoring.  An insurance score results from a credit-based statistical analysis of a consumer’s likelihood of filing an insurance claim within a given period of time in the future.  However, having a solid credit score may or may not result in a favorable insurance score.  Some of the information that can affect your insurance score are number of late paid accounts, liens, judgments, bankruptcies, total number of accounts on file, consumer inquiries, and bank installment accounts paid late.

Protection

Most people think that homeowners policies are all the same.  That simply is not true.  Some policies offer much broader coverage while others are more basic.  Be sure you know which you have before you need to file a claim.  In general, you should talk to one of our qualified agents to be sure that you have the coverage you need.  However, there are a few things you can look out for.  If possible, buy a policy that has guaranteed replacement cost coverage.  Most companies, including many of the most well known, do not offer a true guaranteed replacement cost policy.  Ask us for an in-depth description of the difference and click this link to see an example of what that can cost you.  Some other items to consider are sewer and drain backup coverage, replacement cost for personal property, coverage for other structures on your premises, flood, earthquake coverage, and increased coverage for things such as jewelry, furs, fine arts, guns, and collectibles.  Many of these are not covered under a standard homeowners policy, but can be added to the policy by endorsement.  Personal Liability coverage is also included in standard homeowners policies.  It is usually a great buy and you should consider buying a high limit.

Service

An insurance contract is basically a promise of service.  The insurance company promises to give you service at the time of a loss in exchange for your premium dollars.  Nearly everyone thinks that they will receive good service from their insurance agency or company.  The real proof is how they handle your claims.  Ask your friends and neighbors for recommendations (or check out Our Clients Say It Best).  Also, check out the financial ratings of companies through A.M. Best, Standard & Poor’s, or the state insurance bureau.  You can also get information about customer satisfaction from J.D. Power as well.

Finally, getting personal service from an independent agency like Holley Insurance can be a huge plus.  Rather, than calling a faceless call center, you can get service from someone you know, perhaps even someone who lives in your community.  Also, by representing many different companies, they can separate the good from the bad and connect you with companies that deliver the best combination of PRICE, PROTECTION, and SERVICE for you.