If this is your first time shopping for home insurance, or you are out of practice, it can be a good idea to review what it means to get a home insurance quote and what you can expect from the process.
Quotes for homeowners insurance are not hard to get and are free, so 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 coverage you can have is dwelling or structure coverage. The amount listed for 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 provides protection 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 homeowners 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 for home insurance 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 other 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 about 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 possibly 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 region. If it costs $125 per foot to rebuild, you will pay more than if it’s $80 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 in order 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 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.
How to compare quotes from home insurance companies
Even if you have an insurance company in mind that you like to work with, it is never a bad idea to get several quotes to see if you might be able to save money with another insurer. There are other factors to consider besides premium cost, but that is a good place to start. Here’s how to compare them besides just the cost:
- Get the quotes: Many top insurers, such as Allstate and State Farm, will give you an instant quote online with free quote tools. If you prefer to talk to a live agent, you can call either an insurance broker who represents multiple companies or a captive agent who works for just one company.
- Check comparable information: Make sure you are giving each provider the same information and asking for the same coverage limits so you can do an apples-to-apples comparison.
- Consider customer service: If you spoke to an agent, were they friendly and professional? Check out online consumer advocate groups like J.D. Power and the Better Business Bureau to get a sense of what other policyholders think about the company.
- Check company ratings: Finally, look at companies like AM Best and Standard & Poors who assess the financial stability of insurance companies. Usually, you can find their ratings on each insurer’s website — look for companies that score at least an “A-.”
With all this information you should be able to make the best decision possible on a company that offers great rates, excellent service, and financial stability.
How to save on homeowners insurance quotes
If you’re trying to save money you want to keep your premiums as low as possible. Fortunately, there are a few things you may be able to do to lower the premium.
Increase your deductible
Your premium rate is inversely proportional to your deductible. In other words, the higher your deductible, the lower your premium. Most homeowner deductibles are between $500-$2,000, but you may go higher or lower. The caveat is that you do not want to set your deductible so high that you would struggle to pay it if you had a claim. Talk to an insurance agent about the advantage and disadvantages of doing this.
Bundle your policies
Most insurers offer a discount ranging from 5-30% if you purchase more than one policy from them. If you have your homeowner, car and even a life insurance policy with the same company, you may be able to save.
Make your home safer
Another common homeowners insurance discount is related to safety features in your home, which could be smoke or fire detectors, a burglar alarm system, storm shutters or deadbolt locks. Review the possibilities with your agent, and you may find that investing a small amount of money in, say, new locks, could reap big benefits.
Ask for other discounts
Insurers offer a variety of other discounts. Some will reduce your premium if you are a senior citizen; others offer discounts for using green building materials. Do not assume that you have automatically been given all possible discounts: talk to your agent to be sure you are not missing out on a possible reduction. Some discounts may be as simple as paying your bill online or using an EFT withdrawal to pay your bill.
Reconsider your coverage
Any element at your home that has even a small possibility of causing injury may increase your rates. Commonly, this includes swimming pools, trampolines and tree houses and more. If your children are grown and you still have that old trampoline in the backyard, it might be time to clean house and see if it can earn you some savings. Also look at your endorsements, if you have any, and decide if you still need the extra coverage they offer.
Frequently asked questions
What is the best home insurance company?
Since every homeowner has unique insurance needs, there is no one company that is right for everyone. When searching for the company that is best for you, a good place to start is at Bankrate’s Best Homeowners Insurance Companies of 2021.
Will a homeowners insurance quote impact my credit score?
No, a simple free quote from an insurance company will not impact your credit score. When you ask for a quote, the company will do what is called a “soft pull” to review your credit score. They need this information to give you an accurate quote, but it will not lower your credit score.
Can I get a home insurance quote before purchasing my new home?
Yes, you can. In fact, some mortgage companies will require you to have your homeowners insurance policy in place before you close on your home. Once you know the address of the home you’re thinking of buying, there is nothing to prevent you from asking for insurance quotes and beginning the process of applying for a policy.
How much home insurance do I need?
There are a number of factors that go into deciding how much home insurance you need. The first is the cost per foot to rebuild or repair in your region. A good insurance agent can tell you this information, as can an experienced construction professional. Your dwelling coverage should be enough to cover rebuild costs if your home were damaged or destroyed.