Natural catastrophes such as wildfires, floods, hurricanes, and earthquakes are frequent in the U.S., causing extensive property damage. For example, in 2020 alone, more than 48,800 fires have destroyed over 8.6 million acres of land in the U.S., as reported by the National Interagency Fire Center (NIFC). The good news is that a homeowners insurance policy can cover the damages caused to your home by such perils. Since homeowner insurance costs depend on factors such as the size of coverage, location, and value of the home, as per the National Association of Insurance Commissioners (NAIC), conduct a home insurance rates comparison before purchasing the right home insurance.
Here are five important things you need to remember while comparing home insurance rates.
A Home Insurance Policy Has Exclusions
As much as home insurance coverage is meant to help you bounce back after a named peril, there are exceptions in which it won’t cover you. For example, a home insurance policy will not cover losses caused by:
• Intentional property damage
• Wear and tear
• A home business
• Poor maintenance
• Nuclear war
It is worth noting that home insurance exclusions typically vary from one insurance carrier to another. For example, some insurance companies do not cover aggressive pets, while others may provide coverage at higher premiums, as per the Insurance Information Institute (III).
Some Insurance Companies Offer Discounts
Although the cost of home insurance varies from one insurance provider to another, some carriers offer discounts on their prices. However, most insurance companies will only give you discounts if you purchase other insurance policies from them. Even so, you can take advantage of other discounts, including claims-free discounts, group discounts, mature homeowners discounts, multi-location discounts, and mortgage-free discounts.
You Can Save On Your Home Insurance Costs
Apart from discounts, you can still reduce your home insurance premiums by mitigating the risks and notifying your insurance carrier. Some of the effective risk mitigation strategies include:
• Installing an alarm system to prevent burglary
• Installing smoke detectors and fire extinguishers to prevent fire damage
• Having an automatic pressure release system in your plumbing system to prevent bursting of water pipes
• Installing a backwater valve to prevent sewer backup
• Training an aggressive dog breed to prevent dog bites
You can also lower the costs by performing regular maintenance on your home to avoid frequent claims and possibly earn a discount.
Your CLUE Report May Affect Insurance Costs
Whether you’re buying or renting a previously occupied home, your homeowners insurance costs will depend on the number of claims made by the previous occupant. This is what the Comprehensive Loss Underwriting Exchange (CLUE) report outlines. It contains a claim history of up to seven years, as reported by the U.S. Department of Commerce and Insurance. This means that if the CLUE report on your house shows many claims made within a short time, your premium costs will be higher and vice versa.
The Cost Depends on the Type of Coverage
Home insurance coverages come in three flavors, including replacement costs, actual cash value coverage, and extended replacement costs. The replacement costs policy pays for the actual costs of replacing the damaged property and is usually expensive. On the other hand, the actual cash value coverage covers the market value of your home by the time of damage. Finally, the insurance company can pay extended replacement costs above the coverage limits making it even more expensive.
Keep these five things in mind when looking for the best home insurance rates. For more questions related to home insurance coverage, contact our experts at Pittman Insurance Group, LLC. Our dedicated team is eager to assist you with all your coverage questions and needs.