Is the Cheapest Home Insurance Policy Really the Best Deal?

When shopping for homeowners insurance, it’s natural to focus on price. Everyone wants to save money, and with insurance premiums increasing in recent years, finding an affordable policy is more important than ever.

But the lowest premium doesn’t always mean the best value.

The real test of an insurance policy comes when you have a claim. That’s why homeowners should look beyond the annual premium and understand what they’re actually buying.

Pay Close Attention to Your Deductibles

One of the first things to compare is the deductible.

A policy with a higher deductible may have a lower premium, but that also means more money out of your pocket when you have a covered claim.

This can be especially important in Texas, where wind and hail deductibles are often based on a percentage of the insured value of your home. A 2% deductible may sound small, but on a home insured for $400,000, that could mean an $8,000 deductible.

When comparing policies, don’t just ask, “What is my premium?” Also ask, “How much will I have to pay if I have a claim?”

How Is Your Roof Covered?

Roof coverage can vary significantly between insurance companies and policies.

Some policies may provide replacement cost coverage on an eligible roof, while others may settle certain roof claims based on the roof’s age and depreciated value. There may also be restrictions based on the age, condition or type of roof.

Understanding this before a storm occurs can prevent an unpleasant surprise afterward.

Look at Water Coverage and Other Limitations

Water damage is another area where policies can differ.

Depending on the policy and carrier, there may be different limits, exclusions or optional coverages involving water damage, plumbing leaks, water backup and other losses.

The important thing is to understand what your particular policy covers rather than assuming every homeowners policy is the same.

Replacement Cost Matters

The cost to rebuild a home can be very different from its market value.

Construction costs, labor, materials and other expenses can change considerably over time. Your dwelling coverage should reflect an appropriate estimated rebuilding cost, not simply what you paid for the house or what you believe you could sell it for today.

Compare Coverage — Not Just Price

Saving money on insurance is important, but coverage matters too.

Before choosing a policy simply because the premium is lower, compare:

• Deductibles
• Dwelling coverage
• Roof coverage
• Water-related coverage
• Personal property coverage
• Liability limits
• Important exclusions and endorsements

Sometimes paying a little more for a policy that better fits your needs can make a significant difference when you actually need to use it.

Let an Independent Insurance Agency Help You Compare

One advantage of working with an independent insurance agency is the ability to compare options from multiple insurance companies.

Our goal isn’t simply to find a low price. It’s to help you understand the differences between your options so you can make an informed decision about the coverage that fits your home, budget and needs.

A good insurance policy shouldn’t just look good when you buy it. It should make sense when you need it.