9 Ways To Shop for Home Insurance and Get the Best Rates
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You should compare quotes from multiple homeowners insurance companies in order to find out which carrier can offer you the best deal on a policy that meets your coverage needs. Whether you are insuring a new home for the first time or your current policy is up for renewal, it’s always helpful to shop around before settling on a home insurance policy.
Keep reading for an overview of the steps you need to take as you shop for home insurance and when you should begin the insurance shopping process.
Why Should I Shop Around for Home Insurance?
You should always shop around before committing to a homeowners insurance provider because every insurer has its own formula for evaluating how likely you are to file a claim and how much you should have to pay for coverage. As a result, one insurance company could view your circumstances more favorably and offer you a better rate than another company.
When you’re shopping for home insurance, make sure you only make direct comparisons between similar policies. Homeowners insurance policies can come with different coverage limits and coverage types, so a cheaper policy is not necessarily better if it comes with substantially less coverage.
How To Get the Best Rates When You Shop for Home Insurance
You should follow these nine steps to improve your odds of finding a suitable policy at the best rate available when you shop for homeowners insurance.
1. Gather All of Your Information and Documentation
Insurance carriers will need information about you and your home anytime you request a home insurance quote. To get the most accurate quote possible, you should be prepared to provide information such as the following:
- Name and date of birth
- Email address
- Insurance coverage and claims history
- How many people live in the home full-time
- Home address
- Age and size of the home
- What safety features you have installed
- Whether the house is your primary residence or second home
- Whether you operate a home-based business
- Whether there are any detached structures on the property
- How accessible the home is to firefighters
- Whether you have expensive items like jewelry that you will need extra coverage for
- When you would like your coverage to begin
In addition, a prospective insurer may access your credit report in order to assign you an insurance score that will influence your quote since people with poor credit tend to file insurance claims more often. However, you likely won’t have to provide this credit information yourself.
2. Determine How Much Home Insurance You Actually Need
Ideally, you should know the amount of coverage you want in advance so you can receive quotes for similar policies from the insurance carriers you contact. While home insurance isn’t required by law, it is typically required by mortgage lenders. Even if you don’t need to take out a mortgage, it may still be worth purchasing an insurance policy to protect yourself from a major financial loss due to a damaging peril or liability risk.
The below table goes over the types of coverage that are included in a standard homeowners insurance policy and what coverage limits you may want to set for each coverage type.
Recommended Coverage Limit
Insures your home and attached structures like patios
Enough to completely rebuild your home after a covered loss
Insures outbuildings and other detached structures on your property like sheds and fences
10% of your dwelling coverage limit
Insures your belongings like electronics, furniture and clothing
50% to 70% of your dwelling coverage limit or more depending on the value of your possessions
Covers additional living expenses or lost rent payments if you or your tenants are unable to return home due to a covered peril
20% of your dwelling coverage limit, although some policies may provide an unlimited amount of money for a limited amount of time
Covers medical bills, property repairs and legal expenses if you are held liable for another person’s injury or damage to their property
$300,000 to $500,000
Covers medical expenses after someone incurs a minor injury on your property regardless of who was at fault
$1,000 to $5,000
Consider hiring an appraiser to get an accurate assessment of the amount of money it would take to rebuild your home before setting your dwelling coverage limit. You could also create a home inventory to determine how much your most valuable items are worth and whether you need a higher coverage limit for your personal property insurance.
3. Compare Multiple Home Insurance Quotes
You should request quotes from at least three to five home insurance companies so you can compare them and see which insurer best matches your coverage needs and budget. Keep in mind that you will most likely need to shop for home insurance during escrow because lenders will usually require you to show proof of insurance three to 15 business days before closing.
4. Research Home Insurance Carriers
To narrow down which home insurance carriers you would like to contact for quotes, you could look up their customer satisfaction ratings on a third-party platform like J.D. Power or research their financial strength ratings, which measure the ability of insurers to consistently pay out claims.
For example, if your home is aging and structurally insecure or if you live in a region that is prone to natural disasters like hurricanes, you may want to search for companies that specialize in high-risk homeowners insurance.
5. Ask for Home Insurance Discounts
You should also ask prospective home insurers about the kinds of discounts they offer. Even if an insurance company sells coverage at a higher base rate, it could still end up being the most cost-effective option if it also offers a number of discounts that you are eligible for.
Actions you can take to potentially qualify for home insurance discounts include the following:
- Bundle your home and auto insurance policies
- Pay your premiums for the entire coverage period up front
- Go an extended period of time without filing a claim
- Install smart home technology, weather-proofing materials and other anti-theft, security or fire protection devices that can make your home safer
- Stay with an insurer for a set period of time to earn a loyalty discount
- Work less than 24 hours per week to qualify for a retiree discount
- Sign up for a new policy or renew your current one before it expires
- Use sustainable materials and energy-efficient features to earn a Leadership in Energy and Environmental Design (LEED) certification
- Buy or build a new house or roof
- Pay your premiums using the insurer’s preferred payment method
- Join an approved credit union, company, organization or homeowners association to get an affinity discount
6. Consider Working With a Home Insurance Agent
If you would like for someone to guide you through how to shop for home insurance, you could consider reaching out to a captive agent who works for a single homeowners insurance company or an independent agent who sells insurance products from multiple insurers.
However, you should keep in mind that there are pros and cons to working with both types of agents. Although a captive agent may be an expert on their company’s insurance products, they won’t be able to help you compare quotes.
Meanwhile, an independent agent may be able to provide you with quotes from multiple companies. However, their income may come entirely from commissions, which means they may have an incentive to push you toward buying a more expensive policy than you need.
7. Choose the Right Home Insurance Policy
There are numerous other details to consider before you pick a policy to purchase. For example, you will need to select a deductible, which is the minimum amount you are responsible for covering out of pocket on every claim. The higher you set your deductible, the lower your regular premium payments will be.
If you live in an area that is prone to flooding or earthquakes, you may need to add flood insurance or earthquake insurance to your policy since standard policies don’t cover these perils. You’ll also need to decide whether you want to insure both your home and belongings on an open peril basis, which means they would be insured against any peril the policy doesn’t name as an exclusion.
Finally, consider whether you want to insure your belongings at their actual cash value (ACV), which is their depreciated value due to factors like age or wear and tear, or their replacement cost value (RCV), which is the cost to replace them with comparable items. You may also be able to better protect your home with extended replacement cost coverage or guaranteed replacement cost coverage, which can raise your dwelling coverage limit if necessary to cover extra rebuilding costs caused by inflation.
8. Remember That You Can Always Change Your Policy Later
While it’s important to consider all of your options when shopping for home insurance, don’t stress too much about the policy you ultimately settle on since you won’t be locked into it forever. Homeowners insurance policies typically last for one year and you will likely have the option to cancel your policy early if you so choose. You may have to pay a cancellation fee if you cancel early, although you may also be entitled to a prorated refund.
You can even switch policies if you pay for homeowners insurance through an escrow account. Simply let your lender know that you have changed policies and they will use the money you have paid into your escrow account to start making payments to your new home insurance company.
9. Be Honest When You Apply
Lying to your insurance company is considered insurance fraud and is illegal. While you may be able to get lower premiums by concealing information like the high number of claims you’ve filed in the past or the poor condition of your roof, insurance fraud will cost you greatly if you are caught. Your insurance company could cancel your policy and you could face potential criminal punishments like fines or jail time.
In addition, withholding information from your insurance provider could lead to certain claims being denied. For example, if you don’t tell your insurance company that you bought a trampoline, the company could refuse to pay out a liability claim after a visitor gets hurt while jumping on the trampoline.
How Often Should I Shop for Home Insurance?
It’s recommended that you compare homeowners insurance quotes at least once per year. A convenient time to do this may be whenever your current policy is up for renewal. In addition, you should shop around anytime you experience a major life event that will change your coverage needs such as getting married or buying a new house.
When Is the Best Time To Shop for Home Insurance?
When you need to shop for homeowners insurance for a new home, you should start looking for coverage as soon as you begin the closing process. This should give you about a month to collect multiple quotes, weigh the pros and cons of each and purchase a policy in time to show proof of insurance to your lender prior to closing.
How To Buy Insurance for Your Home
The best way to shop for home insurance is to take advantage of an online insurance marketplace like SmartFinancial. Answer a few questions for us and we can connect you with agents in your area who can offer you personalized homeowners insurance policies. Type your zip code below to start the process and we’ll help you get home insurance quotes for free.