Choosing the Best Home Insurance
You’ve reached the point in your life where buying home insurance finally makes sense, but you have no idea where to start.
If this sounds familiar, don’t worry! Below are five things anyone can do to find the best possible home insurance for their specific needs.
Explored in detail below are the following five suggestions:
- Choose a provider that takes your individual needs into account
- Choose a provider with accreditations and transparency
- Choose a provider that offers as many different kinds of coverage as possible
- Choose a provider that offers discounts in exchange for preventative measures
- Choose a provider that builds fast and reliable claim payouts into their business structure
Choose a provider that takes your individual needs into accounts
Everyone’s home insurance needs are different. To make sure your specific home insurance needs are met, choose a provider that offers individualized plans.
Fortunately, many home insurance providers now offer individualized plans based on information you provide them in a simple questionnaire.
For example, when deciding your coverage plan, Hippo Insurance asks you to fill in a 60-second questionnaire consisting of the following:
1) Choosing what kind of house you have (house, condo, etc.).
2) Confirming the information automatically filled in by Hippo.
The information includes:
- Square footage
- Roof type
- Roof constructed/replaced (year)
- Family units
- Swimming pool
- Construction type of home (example – “Frame”)
3) Elaborating on your home’s fixtures and finishes. This allows Hippo to estimate rebuilding costs in the event of damage.
The options include:
- Just the basics (example – medium grade flooring, carpeting, or cabinets, and other common details)
- A few extras (example – high-grade siding or roofing, built-in bookshelves, bay windows, marble/granite counters, above-average appliances)
- Top of the line (example – marble flooring, crystal chandeliers, commercial or built-in appliances, ornate finishes)
4) Telling Hippo if you qualify for any discounts.
The options include:
- Early bird (start your policy in 8 or more days for a discount)
- Recent home purchase (you’re buying a new home, or have owned your home for less than a year)
- No mortgage (there is no existing mortgage on the property and you are not presently seeking one)
- Homeowner’s association (you’re a member of a homeowner’s association)
5) Telling Hippo whose name will be on policy.
With this information, Hippo then offers you three potential policies to choose from.
Choose a provider with accreditations and transparency
If you take time to research a restaurant’s menu and rating score before trying it, you can also take the time to research a home insurance provider’s background, experience, and accreditations.
As a starting point, look for home insurance providers with at least one of the following three accreditations:
- “A-Rating” by A.M. Best (the home insurance industry’s gold standard)
- “Financial Stability Rating® of A-Exceptional” from Demotech Inc.
- “B-Corp®” Certification from B Lab (granted to for-profit companies that meet rigorous standards of social and environmental performance, accountability, and transparency)
In addition to this, prioritize providers that make it clear who their insurance partners are, what the combined asset value of those partners is (among other things, asset value can indicate how capable the provider is of paying out claims), and what experience the provider has (such as how many years they’ve been in operation, how many claims they’ve paid out, their average payout time, and so on).
Choose a provider that offers as many different kinds of coverage as possible
Generally speaking, the more kinds of coverage a provider offers, the more protected you and your home are.
Here’s an example list of a thorough coverage menu:
- Fire and Smoke.
- Bad Weather
- Crime and Vandalism
- Liability (if someone injures themselves at or around your house and accrues medical bills and/or decides to sue you)
- Loss of use (if, due to repairs, you have to temporarily relocate)
- Water Damage
- Dog Attacks
Keep in mind that some providers may require you to pay extra to get specific kinds of coverage.
For example, a provider might offer the following coverage for a standard policy:
- Reconstruction Costs
- Personal Property
- Portable Electronics
- Personal Liability
- Loss of Use
- Medical Payments to Others
However, they might also offer the following kinds of extra coverage for additional fees:
- Fine Art
- Musical Instruments
If it’s not obvious, be sure to ask your provider what kinds of extra coverage they offer and what it would cost to add them to your policy.
Likewise, if it’s not obvious (many providers list on their site what kinds of coverage aren’t available), make sure you also understand what’s not included in your policy.
For this, it can be helpful to think of specific situations that might happen in your life and ask your provider if you would be covered in the event that any of those situations happen.
Choose a provider that offers discounts in exchange for preventative measures
Some providers will reward you for taking certain preventative measures, such as adding security devices and features to your home (such as alarm and monitoring systems).
In most cases, these “rewards” translate to paying a cheaper premium.
For example, Lemonade Home Insurance has built discounting right into their questionnaire process.
They automatically apply discounts to your premium based on how you answer the following questions:
- Have you undergone any renovations recently?
- What your home is made of (wood frame or masonry)?
- Do you have any safety devices installed (wind protection, theft protection, fire protection, etc.)?
- Which specific devices do you have installed?
- Do you live in a gated community?
Some providers, like Hippo Insurance, even offer complimentary home monitoring systems with every policy.
If you use these home monitoring systems, you benefit from an immediate discount on your premium for protecting your home against common risks from fire, water damage and break-ins.
Choose a provider that builds fast and reliable claim payouts into their business structure
A home insurance provider’s business structure can affect how quickly they pay out their claims.
For example, some more traditional home insurance providers make money by keeping the money they don’t pay out in claims. This technically means that whenever they do pay out a claim, they lose profit. While not always the case, this can sometimes explain why getting your claims paid quickly and in full is sometimes difficult.
However, other providers, like Lemonade Home Insurance, for example, take a fixed fee out of your monthly payments, pay “reinsurance” (basically insurance for insurance companies so they always have money to pay out claims), and use the rest for paying out claims.
This system allows them to pay out your claims as quickly and reliably as possible (as quickly as three minutes, as documented on their site).
Alright, pencils and papers down! Time to take the suggestions above and start narrowing down your best options for home insurance coverage.
After narrowing down your options, if you’re having difficulty choosing the best possible option, you can use a tool like Young Alfred to easily compare all the different providers and what they offer.