Home Insurance Buyers Guide Hub

Everything you need to know about comparing home insurance policies.

How to Compare Home Insurance Policies


Graphic of house, a family and a checklist

Location, square footage, condition—buying a new home involves a lot of comparison shopping and careful thought. However, when it comes to protecting that investment with homeowners insurance, people tend not to use the same level of consideration when policy shopping. After dealing with closing, a mortgage, and actually moving in, many homeowners understandably take the easy route of simply looking for the cheapest quotes without comparing the content of those policies or the companies offering them.

But finding the "right" insurance for you boils down to more than just the lowest price. And if you take the time to do your research, the resulting peace-of-mind you get will be worth the while. When comparing home insurance policies, take these factors into consideration:

Value

The value of a homeowners insurance policy is a mix of what it costs and how much coverage it has. Many home insurance companies can quickly and easily provide you with rate quotes, so you'll have no shortage of those. But comparing the level of coverage between policies can be a bit more complex. Some insurance companies offer a single cookie-cutter policy that lacks personalization, while others offer standard home insurance policies, basic named perils policies, and add-on protection like flood insurance.

For starters, conducting a home inventory to estimate the value of your home and its contents can help you figure out the policy limit you'd need in the event of a total loss. For policies that meet that requirement, look at what perils are excluded from coverage and make sure you're comfortable with them. The last thing you want is to file an insurance claim, only to find out it's not covered by your policy.

Finally, review policies for any added value benefits. For example, an Additional Living Expenses benefit pays for reasonable additional living expenses you may incur while your home is being repaired for covered damages. Other policies may offer a managed repair process, which means that the insurance company takes the hassle out of you having to find and coordinate contractors to make repairs on your home in the event of a claim. If two policies cost the same and cover the same perils, added value benefits like these can help you decide between them. Because “easy” is not a word we’d use to describe sifting through all the legalese in a homeowner’s insurance policy, we recommend working directly with an agent to streamline this process. Talking to an agent can also help you gauge…

Customer Service

It’s important that your insurance company is there for you whenever you need them, whether you need to file a claim or just ask a question. Is it easy to get in touch with a customer service representative? Do they have online bill pay and easy policy access? How quickly do agents respond to your questions? These are all important indicators of the insurance company’s availability.

You can also check user reviews of insurance companies you are considering on sites like Google or the Better Business Bureau. Keep in mind that every company gets a bad review at some point—so it’s important to consider how the company has handled dissatisfied customers. Have they responded to negative reviews promptly and tried to help the customer?

Financial Strength

You deserve peace of mind knowing that your home insurance company is financially stable enough to protect your home and belongings if a widespread disaster strikes. Demotech Inc., an independent financial analysis firm, evaluates the financial performance of insurance companies and their ability to pay claims. Review your insurance company’s Demotech rating and only consider insurance companies with a Financial Stability Rating® of A, Exceptional.

Once you’ve compared insurance companies and their policies against your insurance needs, you’ll be ready to make a smart buying decision. Don’t forget to consult with your insurance agent if you have questions benefits, coverage, or cost—that’s what they are there for!