How To Buy Homeowners Insurance Directly

Knowing how to buy homeowners insurance directly can save you money on agency commissions. Insurance agents can assist you by shopping around for quotes, negotiating coverage and handling your claims. However, they charge a commission, typically based on the total premium they place for you. Going straight to the insurance company is more direct and will save you money. You will only achieve these benefits if you have the knowledge to do it right.

Consider the Coverage You Need

The type of home you live in, your geographical area of residence, your possessions and your family will affect the coverage you need. For example, old homes typically need more insurance than new homes because home standards have increased. Living in an area prone to flood or hurricane means you need higher coverage on these lines. Owning expensive electronics puts you at a greater risk of loss due to burglary or fire. Having a dog puts you at risk for liability lawsuit if the dog attacks or bites someone else. These are just a few of the factors determining your risk. Take a risk inventory to understand your needs.

Determine What You Can Afford to Pay

When you purchased your home, you likely budgeted for mortgage, property taxes and insurance. If you did not do this, do it now. Of course, everyone will budget differently. This rule of thumb generally assures you will have enough for incidental spending and saving. Start with your monthly income, divide it in two, and subtract your mortgage, taxes, car payment and utilities. The remaining amount represents what you can feasibly afford for insurance.

Determine What You Can Afford to Lose

Having a lot in savings means you can afford to lose more assets before facing financial troubles. You may opt for a higher deductible in this case.  Your deductible is how much you will pay out of pocket for any claim; it is usually expressed per occurrence and per policy. A higher deductible will usually lower your premium.

Shop Around

When you are buying homeowners insurance directly, you have to do the grunt work. Consider preparing a "request for proposal" for different insurance companies. This will be your wish list for coverage, limits and deductibles. You should receive a fairly standard proposal in return. The uniform approach makes it easier to compare multiple quotes.

Ask Detailed Questions

Look over any proposal carefully, and ask questions. Pay particular attention to the end of the policy which will likely hold exclusions. Exclusions are those items or claims which will not be covered. For example, if you live in Florida, you may have a hurricane exclusion. Most homes in Florida are required to carry hurricane coverage. Ask about adding on this line. Ask questions about how raising or lowering your deductible and limits will change your monthly premium.

Check Ratings and Reviews

If you think you have found the best quote, remember it is not premium alone that factors into your decision. You want to work with a company that is financially viable, responsive to claims and maintains a high level of customer satisfaction. Rating's bureaus, such as A.M. Best, will have reports on financial liability for insurance companies. The State Department of Insurance will also have a list of approved service providers. Do your research before signing a contract.

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