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A Guide for How to Choose Homeowner's Insurance
Tuesday, 02 March 2021

Choosing insurance can be a daunting task with more questions than answers. Here's how to choose homeowner's insurance.

After you've found the home of your dreams, before moving in there is one important step left...choosing your homeowners policy. Most lenders require that you have a policy in place before you can even close on your home, making this an essential step in the home buying process.

When you first start looking into insurance policies, take a hard look at your needs. Not all policies are created equal. While you may be in a hurry to protect your investment, make sure that you weigh all the pros and cons.

Learn how to choose homeowners insurance with these tips, so you can get your policy started and get on your way to moving into your new home.
Before Learning How to Choose Homeowners Insurance: Why Do You Need It?

While not required by law, your mortgage lender will require you purchase a homeowners policy before they will let you sign those papers and close on your home. After all, they want to make sure yours (and their) investment is protected.
Here's what it protects against:

Rebuilding Costs

Let's say your home is badly damaged during a storm or fire. Would you be able to rebuild out of pocket? The answer is probably no. Your homeowner's insurance is going to cover these costs to help you get back into your home as quickly as possible. Property Returns Quantity Surveyors Brisbane advises that is common for home owners to be under insured and getting a professional valuation can help you get the appropriate cover to ensure you aren’t at a financial loss after storm or fire damage.
Personal Belongings

Many policies will cover your personal belongings not just within your home, but regardless of where you are. So that ring you lost on your vacation? Covered. It will also cover any belongings within the home that are damaged or lost due to natural disasters or theft.
Personal Liability

If someone gets hurt in your home, your homeowner's policy will cover your legal costs and any medical bills. It will also cover you if you accidentally hurt someone outside your home. How's that for protection?
Now that you know what most policies cover, let's look into how to choose home insurance that's right for you and exactly what to look for in homeowners insurance.


Number one and probably the most obvious of the considerations. You want to make sure you're getting a good rate. You also don't want to pay more than you need to for insurance.

To do so you're going to have to shop around for the best rate that's going to fit all your needs. Look into different companies and compare quotes before you make your decision, this will save you money in the long run.

Company Ratings

Before choosing homeowners insurance, make sure you find out what people are saying about the company you're considering first. Everything will tout their benefits so don't believe all you read on their websites. You'll want to make sure the company you choose to protect your home has great ratings from third parties. Ratings will also tell you about the company's willingness to meet its customer's obligations as far as paying claims. According to Clearsurance, here are the top insurance companies for claims service.

Your Location

If you're in a flood zone, or in an area susceptible to natural disasters such as hurricanes, earthquakes or even tornados, you may need to pay more to insure your home. Most policies do not cover damage from natural disasters so you'll need to make sure you add on the additional coverage you'll need to make sure your home is fully protected.

Make Sure You're Not Underinsured

Another thing to consider is that you have enough coverage. More than 60 percent of US homes are underinsured. That's a huge chunk of the population that is not covered the way it should be.

Consider that if you ever do need to rebuild, the materials and costs of labor are typically higher than the house's market price.

Efficiency in Handling Claims

You'll want to get information on how well an insurance company handles it's client's claims, as well as how quickly. The last thing you need is to sit around waiting on your claim to be resolved. You may be able to get some information on how well a company handles its client's claims. You could also get referrals from friends and family and base your decision on their experiences with certain companies.

Deductible Cost

A high deductible will reduce your annual premium. However, consider how much money you have available to pay if anything does happen to your home. If this amount is simply not a lot, you'll want to set your premium to an amount that you'll be able to cover without breaking the bank. Staying at $1000 or below is a good benchmark.

Know Your Home Really Well

If you're in the process of buying a home, see if you can get a claims report from the seller. This will provide major clues into any events to watch out for. For example, you'll be able to see the home's insurance history and whether it was covered against an event like flooding. If you know the home flooded before, you'll be in a better position to know whether you'll be paying more for home insurance.

More Money Saving Tips

Now you know to look for a policy that has excellent third-party reviews, covers your location and meets your budget. But you can also save money by bundling your car insurance with home insurance, ensuring that fire and burglar alarms are installed and in working condition, and installing new plumbing and electrical units if they're more than 10 years old.

If you follow these tips on how to choose homeowners insurance, you'll be in a better position to find a policy that works for you and your budget.
Get even more tips to make your life easier by checking out our life hacks blog.
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