insurance

How to find affordable homeowners insurance?

Jack HungelmannDear Insurance Adviser,
My homeowners insurance expires very soon (my agent no longer represents the insurer) and we are shopping around for a good rate on our own. I have been calling places, but the rates are sky-high compared to my current one. Some say rates have skyrocketed due to wind and hail claims in our area (in northeastern Ohio), but I'm not sure if that is true. How can I get an affordable rate?
-- Penny Wise

Dear Penny,
It's a fact that most of the U.S. has been experiencing serious storm losses at a far greater clip than had been forecast. Insurance companies have been reeling. Losses have been piling up. And, as a result, rates on homeowners insurance have been increasing dramatically.

Even if your current insurance company had agreed to continue your coverage, your rates probably would have increased by 30 percent or more. That's reality.

One thing you may need to understand is that the cost of insurance is not only what you pay upfront in premiums. It's also what you pay out of pocket at claim time because you either are underinsured or have a coverage gap with no coverage at all.

You can minimize those out-of-pocket surprises at claim time by shopping not only for a good rate but also for an agent with expertise. What your agent knows or doesn't know can make or break you financially.

The agent quoting you the price may not be highly knowledgeable about coverages, exclusions and limitations. And if you buy insurance without an agent at all, your financial well-being will be in completely unskilled hands: your own. Big mistake.

Now, here is the best news of all. When you shop for an agent and find one with great expertise, it won't cost you a dime more than an agent with little expertise! How is that possible? All insurance agents, regardless of expertise, get paid exactly the same!

For homeowners policies, for example, agents typically get paid 15 percent of your premium, no matter how skilled or unskilled they are. So spend your 15 percent wisely on the most knowledgeable agent you can find. Check credentials and get referrals from friends. Then your expert agent can help you design a homeowners insurance plan with the coverages you need and can shop around for the right coverages for you with the knowledge to truly make an apples-to-apples comparison.

Be happy. Follow this advice, and you'll never have to shop for insurance again!

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To ask a question of the Insurance Adviser, go to the"Ask the Experts" page and select "Insurance" from the drop-down box. Read more Insurance Adviser columns.

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