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How to Compare Homeowners Insurance Rates & Policies

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With all the options and tools available online, choosing a homeowners insurance policy can seem like a daunting task. Here’s a guide for what you need to know when comparing homeowners insurance rates.

How to Compare Homeowners Insurance Rates & Policies

When comparing homeowners insurance policies, you should get multiple quotes — which is easier than ever when using Clovered. The cheapest option isn’t always the best option, and it’s important to understand all aspects of your policy to know you’re getting the right coverage before you sign on the dotted line.

You may already be familiar with the different aspects of coverage included in a homeowners insurance policy, but we’ll recap them briefly and explain what to look at in each category of coverage when comparing policies to know you’re getting what you need in your plan.

Dwelling Coverage

Dwelling coverage is probably the first thing that comes to mind when you think about homeowners insurance. Dwelling coverage protects the primary structure of your house — including the floor, walls, roof, windows and attached decks and porches — from covered perils.

When comparing homeowners insurance rates, you’ll have the option to choose how much dwelling coverage you want. Generally, the less dwelling coverage you have, the less you’ll pay. But you should never opt for less coverage for your house less than its replacement cost. For example, if your home is worth $200,000, you need at least $200,000 worth of dwelling coverage, if not a little more, to account for the fluctuating cost of labor and building materials, as well as its increase in value.

Skimping on dwelling coverage almost defeats the purpose of getting insurance in the first place. You want your policy to work for you, not come up short when you need it most. When comparing home insurance, be sure to get a sufficient amount of dwelling coverage.

Other Structures

Your other structures coverage protects structures on your property not connected to your house. This includes fences, sheds, detached garages, driveways and more. Usually, the other structures part of your plan is at least 10% of your dwelling coverage.

If you don’t think you have a lot of other structures on your property, you may be wondering if you can delete this part of your plan altogether to save money. Unfortunately, you usually can’t. It’s a part of policies for a reason; you usually have more other structures than you realize. 

Personal Property Coverage

Personal property coverage is for your belongings in your house like furniture, electronics, and more. Like other structures coverage, the personal property part of your plan is also usually based on a percentage of your dwelling coverage — generally between 25% and 50%. 

The less personal property protection you have, the cheaper your insurance will be. The best way to determine how much you need is to create a home inventory list

When comparing home insurance quotes, play with the amount of coverage you want. If you don’t have a lot of stuff, you may feel comfortable getting a smaller amount. If you have a lot of precious valuables, like expensive art or jewelry, you may need to add extra endorsements to your policy, which will increase your rate.

Another very important part of choosing personal property protection is to determine whether actual cash value or replacement cost coverage of your items is suitable. Actual cash value will cost less than replacement cost coverage, but offers less financial reimbursement because it factors depreciation into the value of your belongings.

Liability Coverage

Liability coverage safeguards you in case someone gets hurt on your property or someone sues you. The minimum amount you’ll find on a home insurance plan is $100,000, but you may need more. You should have enough to protect all of your financial assets or you’re risking financial ruin if someone gets hurt on your property and sues you.

When comparing home insurance policies, you’ll find companies have different maximum coverage limits for liability. If you need more than $1 million, you’ll likely have to add an endorsement or look into an umbrella policy.

Additional Living Expenses

Also known as loss of use coverage, this area of home insurance reimburses you in case your home becomes temporarily uninhabitable and you need to move into a hotel or rent another place while your house is being repaired or rebuilt. It’ll cover bills for lodging, gas, food and more. 

Most providers base ALE coverage on a percentage of your dwelling, too; typically, about 20%. When comparing home insurance plans, you’ll find different companies have different limits for ALE coverage. Adjust the amount you think you need and understand how they payout when choosing a policy.

Medical Payments

Of the main categories of your homeowners policy, medical payments coverage is typically the smallest. It provides reimbursement for guests who sustain minor injuries you may be liable for. You’ll find options between $1,000 and $5,000 of coverage when comparing home insurance quotes. 

If you’re trying to save money, skimping on medical payments coverage probably isn’t your best move since it’s such a small part of your plan, and the cost difference between the maximum and minimum coverage is relatively tiny compared to the other parts of your plan. You’re better off looking elsewhere to save.

Comparing Homeowners Insurance Companies

A typical homeowners insurance policy offers those same categories of coverage from every provider. But, each company has different ways they determine rates, and they have different ways of handling claims. So when comparing home insurance quotes, you shouldn’t only look at the cost of a plan, but also the financial stability and reputation of the company. 

Insurance providers need to have enough money to be able to pay for all of the claims they receive. There are a few companies that monitor and assess insurance companies to make sure they’re financially solvent. Moody’s, S&P, and the A.M Best Company are some leading agencies that provide financial stability ratings for insurance companies. To check most of their ratings, though, you need to make an account on their website or pay to access all the information you want.

Demotech is a company that specializes in assessing the financial stability of property and casualty insurers specifically. The higher the rating, the more likely a company is to be able to pay claims despite an economic downturn and the more surplus money they have. 

For example, Universal Property and Casualty Company, one of the longest-standing property insurers in Florida, has an A rating from Demotech. This means Demotech believes UPCIC has an exceptional ability to maintain surpluses for policyholders. 

The Best Way to Compare Home Insurance

Now that you know what to look for when comparing home insurance rates, it’s time to start looking. Clovered has an online quoting platform and an extensive bank of information that breaks down insurance to help you make the right decision about choosing a policy.

It’s crucial to find the amount of coverage you need at the price you want from a company you trust. Clovered can help you do this.

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The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.