When you’re shopping for home insurance, do you need to find the best home insurance company? Or can you just find the best price? Is there even a difference between the best and the cheapest? Keep reading to find out.
Every Insurance Company May Be Cheapest at Different Times
Homeowners insurance companies don’t have fixed prices as you’d see in a retail store or on a restaurant menu. They use complex models based on various factors, including where you live, what your home’s made out of, how old your home is, your claims history, and the number of claims in your area. Every insurance company is trying to figure out what to charge so that they can cover your claims and their expenses. They each have their own formulas, and they each have different risk exposures depending on who they’re insuring at that specific time.
It’s possible that one insurance company may charge you more for your old roof than another. You might find an even better price from someone else after you replace your roof. And the insurance company that’s been cheapest for the last five years might turn to the most expensive after a run of claims by other homeowners.
Qualifications May Vary
Just as insurance companies charge different prices, they also can have different qualifications. Some may require a roof replacement to insure you, while others may not. You may also get different answers based on a gap in coverage, a criminal history, or working out of your home. You may decide to just go with the highest reviewed insurance company that will accept you, but don’t forget that pricing still may not be equal.
Not All Coverages Are Equal
Every home insurance company offers the same basic coverages (if you select them): damage to your house, damage to other structures, personal property, additional living expenses, personal liability, and medical expenses. Where they differ is what happens when you dig into the fine print. Each insurance company may have a different set of exclusions or charge extra for covering specific incidents or types of property.
To compare policies, you need to read the details carefully rather than just looking at the total coverage limits.
Financial Strength Matters, Too
You should also check the financial strength of a potential insurance company using ratings such as the AM Best Rating. If your insurance company fails and can’t pay your claim, state-run guaranty associations will almost always cover it. The real trouble is that your policy could get taken over by a new insurance company. That could come with a change in terms of pricing either immediately or at renewal. To avoid having to deal with that or scrambling to find new insurance, go with a financially stable home insurance company.
Work With Your Insurance Agent
The question you may be asking is, how do you figure out which home insurance company to use without spending days reading fine print from dozens of companies? The best answer is working with an independent insurance agent. Independent insurance agents work with many different insurance companies, but their real job is to work in your best interests. That means finding you the coverage you need from the insurance company that works best for you.