A list of things to look at while comparing home insurance policies
A home is the most precious asset that you own. It takes a considerable time, money and planning to buy a house and then make it home. For you, it might be a once in a lifetime option and you want to ensure that all your assets are completely secure.
A home insurance is the best instrument to safeguard your home and its contents. However, choosing the appropriate home insurance policy can be overwhelming and difficult. The best way, to begin with, is to compare various policies and here is a list of important aspects that must be considered while making a comparison.
Coverage
Insurers provide varying coverage based on your home's location and construction. A home insurance policy usually includes the following essential coverage:
- Liability protection
- Coverage for your home's structure
- Coverage for your personal belongings
- Additional expenses if you are unable to live temporarily during a disaster
Talk to your agent and read through each policy document carefully to see what each of them would protect you against.
Additional Coverage
Many insurance companies only provide protection against natural disasters but do not cover mould problems or sewage backups. Some insurers might cover them but will provide a coverage only up to a certain amount. While sewage repair might not be expensive, mould problems and other structural problems can be a financial burden.
You can ask your insurer if adding a specialised coverage for such problems is possible or not. Also, you can assess your geographical location to determine whether any such problem can arise in future. If you can foresee a problem, it is advisable to get the coverage beforehand.
Exclusions
Certain natural disasters like flood and earthquake are not covered in a standard home insurance policy. Sometimes insurers do provide coverage against them, but only for the structure and not the belongings. A standard home insurance policy usually has the following exclusions:
- Loss of cash
- Loss or damage due to depreciation
- Loss or damage due to electronic equipment over-running
- Loss or damage due to war, invasion and act of foreign country
For the exact list of exclusions for your policy, talk to your agent and read the policy documents carefully.
Cost Comparison
While comparing costs of various policies check the premium and deductibles. Often these are balanced but some policies have a high premium and low deductible and vice versa. Look at the personal liability coverage limit and the list of exclusions that can result in the denial of coverage.
Although insurance rates are not flexible, they are not fixed either. A little negotiation can always be done to get an appropriate rate. You can also look out for exciting discounts that most insurers provide if you bundle policies from them, e.g, buying car and home insurance from the same insurer.
Company Performance
While buying an insurance make sure that your insurer has a proven track record of claim settlement. You can look into a company's financial rating to get an idea about whether they have the ability to pay claims to their customers in a reasonable time frame.
Look at the complaint data for the company and see their claim settlement ratio. If you are buying a policy through an agent, beware of insurance fraud and misselling of policy. An agent might trick you into buying a policy that might not be the best for you but for him.
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