Financing & Insuring

How to Choose an Insurance Company

May 27, 2020

Homeowner’s insurance is a critical aspect of owning a home, but with so many options to choose from, selecting an insurance provider can be daunting. In addition to standard coverage, following are some helpful hints to consider when you choose an insurance provider.

Coverage is the biggest factor to keep in mind when it comes to insurance. It’s important to research what situations a policy covers so you can compare apples to apples in terms of:

  • Price
  • The assistance you would receive in an emergency
  • Being properly insured for the size and location of your home.

The liability portion of your homeowner’s insurance policy provides protection against lawsuits for property damage and/or injury you or your family members cause to other people. You have the option of selecting which coverage is right for you. 

A good rule of thumb is to have enough liability coverage to protect both your home and your assets. A home is typically your most valuable asset, so your liability coverage should be greater than the value of your home. For example, if you purchase a home for $430,000, it may be worthwhile to carry a $500,000 policy. On average, there is about a $10 a year premium difference between $300,000 and $500,000 liability coverage.

The minimal savings likely doesn’t justify missing out on $200,000 of coverage. Please note, the highest amount of liability coverage that is typically offered on a homeowner’s insurance policy is $500,000. If you’d like more coverage, you may want to think about purchasing an umbrella policy.

There are some valuable, optional coverages that should also be considered when purchasing homeowner’s insurance:

  • Dwelling Replacement Cost: This provides a layer of protection in the event that it costs more to rebuild your home than the amount it is insured for.
  • Personal Property Replacement Cost: In the event of a covered loss, the replacement cost for personal property will be paid without depreciation. 

Service is another important factor to research when choosing an insurance company. Are you looking for an organization that uses a mobile application and/or website to manage your account, or would you prefer to speak directly with a dedicated insurance agent? Since the type of available assistance may vary by agency, it’s worth looking into this aspect of an insurance provider’s services prior to committing.

Learn more about what homeowner’s insurance covers here.

Have additional questions about selecting an insurance provider? Contact our affiliate, American Home Insurance Agency, Inc., for more information!

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