When should you shop for homeowners insurance?
You'll likely need to start shopping for homeowners insurance before you buy a house. That's because most mortgage lenders require you to buy some type of homeowners coverage before closing.
But buying a new home isn't the only time you might shop around for home insurance. There are also major life changes or purchases that call for revisiting your coverage. Here are some other instances when you might want to weigh your options.
You're remodeling or renovating your home
Even if you're just updating the bathroom, new building materials and added square footage may call for increased coverage limits. If your home remodel or renovation includes new safety features — say, a hail-resistant roof — you might even qualify for a discount. While you're revisiting your current coverages, you might also get quotes with other insurers for your new home value. Who knows? Another company might be a better fit, and offer a better price, for your remodeled home.
You paid off your mortgage
Your lender may have required you to get certain homeowners coverages or set certain limits. Once you've paid off your mortgage, though ... you're free to reassess those coverages and limits. Since you have more flexibility insurance-wise, you might see if you can't find a policy that aligns more with your needs. Just be careful not to skimp on important coverages to save a few dollars. Remember, your lender-required coverages were designed to protect their investment. Now that the investment is solely yours, you'll want to make sure your finances are just as well protected. Our home insurance calculator can help you determine which coverages are most suited to your needs.
You're getting a pool, trampoline, or tree house
These 3 items are called "attractive nuisances." They're attractive because they're fun. But yhey're considered nuisances because, they can hold extra risks. Because of this, they often result in higher homeowners insurance rates. And when it comes to trampolines, in particular, many companies won't even insure them.
This is not to discourage you from making your yard a fun place for the kids. Just be aware of the risks, and check with your insurer to see if these are covered. If something's not included in your policy, now's a good time to shop around. It's also worth noting that a few safety measures — like having a gate around your pool — could help with your rates. Not to mention help prevent any accidents.
You're blending households
Whether it's with your S.O. or extended family — merging households almost always means you'll have more stuff under your roof. More clothes, more electronics, more furniture. Since you may want to update your personal property coverage, you might also see about other prospects in the way of coverages and discounts.
You're shopping for car insurance
Whether you're buying a new car or just shopping around for better rates on your car insurance, insuring your car and home with the same insurance company can land you a Multi-Policy discount. See if your insurer offers this. If they do, compare your home and auto bundle quote with other companies to see if it's a good deal.
Your policy is renewing
Homeowners policy terms typically last for a year and renewal letters are issued before the term is set to expire. This gives you a chance to review your policy, to see if you need to make any adjustments. Your renewal statement will also include any rate changes. If rates will be going up, comparing quotes with other companies will help you gauge whether you're still getting the best deal you can.
How to shop for homeowners insurance
When shopping around for homeowners insurance, it's important that you compare quotes apples to apples. If, say, one quote has lower coverage limits than another quote ... well, then you're looking at apples to oranges, which is no help to you. That said, here are a few things to keep in mind when shopping around.
How much it would cost to rebuild your home? Check sites like Zillow or Trulia. An appraiser is also a great resource — especially if you've had work done to the house.
How much it would cost to replace your personal belongings? Creating a home inventory is easier than you might think. Bust out the smartphone and video all of your stuff. If you don't have receipts for your items, check your bank statements. It's okay if it's not exact — any estimate is better than no estimate at all.
How much liability coverage do you need? Liability claims can be the heftiest. If a guest is injured on your property, you might be liable for medical fees, court fees, and more. If a claim exceeds your coverage limits, then things like your investments, savings, and assets could be at stake. The sum value of those things make up your net worth. Your net worth is therefore a great way to gauge your liability limits. Check out our home insurance calculator to help you figure out which coverages and limits are right for you.
How can you save? See if you can land discounts right off the bat. As an example, Esurance offers home insurance discounts for doing things like beefing up security, making payments on time, and doing a DIY home inspection.
How dependable is the insurance company? Check your state department to confirm a company is licensed. Also, A.M. Best measures the financial strength of insurance companies. It's a way to gauge how well they pay out claims. VERY important!
Make the switch — then cancel your old policy
Make sure your new policy is active before canceling the old one. Why? This helps you avoid a lapse in coverage. The cancellation date should be on or after your new policy's start date. Also, you might be eligible for a refund, like if you paid for your premium in advance but cancelled before the term was up.