Home All OthersLegal Homeowners Insurance Explained: Claim Tips, Coverage, Quotes, Companies

Homeowners Insurance Explained: Claim Tips, Coverage, Quotes, Companies

by Delarno D.
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In this article, you will learn all the basics of homeowners insurance, costs, techniques to compare quotes, claim tips, 10 best reliable companies and simple tips to help you save 100s of dollars on your homeowner’s insurance policy.

Before we go further, what is Homeowner Insurance exactly?

Homeowners insurance, commonly known as home insurance, is a type of property insurance that protects your home and personal property against damage or loss. It combines various personal insurance protections, which can include losses occurring to the home, its contents, loss of use (additional living expenses), or loss of other personal possessions of the homeowner.

The Insurance also includes liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory. In short, homeowner’s insurance provides financial protection against accidental damages, disasters and theft. A standard home insurance policy insures the home itself along with the things kept inside.

History of Homeowner Insurance

The first homeowner’s policy per se in the United States was introduced in September 1950, but similar policies had already existed in Great Britain and certain areas of the US. In the late 1940s, the United States insurance law was reformed and during this process multiple line statutes were written, allowing homeowner’s insurance to become legal.

During the 1950s policy forms were developed allowing homeowners to purchase all the insurance they needed on one complete policy. However, these policies varied by insurance company, and were difficult to comprehend.

The need for standardization grew so great that a private company based in Jersey City, New Jersey, called Insurance Services Office, also known as the ISO, was formed in 1971 to provide risk information. ISO also issued simplified homeowner’s policy forms for reselling to insurance companies.

Types of homeowners insurance

A homeowner’s policy is usually a set of insurance coverages. Each policy provides specific protections, which combined help guard against substantial financial loss due to fire, storms, theft, vandalism and legal liability.

Here are the 4 most common types of home insurance policies:

  • Dwelling insurance: This policy covers damages to your home’s primary structure and attached structures such as carports or garages.
  • Personal property insurance: This coverage protects the contents of your home, including clothing, furniture and electronics.
  • Personal liability insurance: This pays for medical expenses or property damage if a court rules you are financially responsible for an incident involving your home or the property it occupies.
  • Medical payments insurance: This covers the medical expenses of someone outside your household who sustains an injury on your property, regardless of who is at fault.

Homeowners Insurance CostHomeowners Insurance Cost

Homeowners Insurance Costs vary by city, state and other criteria. For instance, Average annual premiums for homes in Oklahoma and Kansas are respectively $4,445 and $3,931. While in Hawaii it is much lower than that, $499 on average; 78 Percentage difference from national average.

On a national level, Average monthly homeonwers insurance cost is $35 for every $100,000 of home value. In addition, the cost varies by companies. It is therefore smart to shop around for coverage before buying if you want to save.

Types of Home Insurance Coverage

Home insurance offers coverage on a “named perils” and “open perils” basis. A “named perils” policy is one that provides coverage for a loss specifically listed on the policy; if it’s not listed, then it’s not covered. An “open perils” policy is broader in the sense that it will provide coverage for all losses except those specifically excluded on your policy.

Basic “named perils” – this is the least comprehensive of the three coverage options. It provides protection against perils most likely to result in a total loss. If something happens to your home that’s not on the list below, you are not covered. This type of policy is most common in countries with developing insurance markets and as protection for vacant or unoccupied buildings.

Basic-form covered perils:

  • Fire
  • Lightning
  • Windstorm or hail
  • Explosion
  • Smoke
  • Vandalism
  • Aircraft or vehicle collision
  • Riot or civil commotion.

Broad “named perils” – this type expands on the “basic form” by adding 6 more covered perils. Again, this is a “named perils” policy. The loss must specifically be listed to receive coverage. Fortunately, the “broad form” is designed to cover the most common forms of property damage.

Broad-form covered perils:

  • All basic-form perils
  • Burglary, break-in damage
  • Falling objects (e.g. tree limbs)
  • Weight of ice and snow
  • Freezing of plumbing
  • Accidental water damage
  • Artificially generated electricity.

Special “all risk” – special-form coverage is the most inclusive of the three options. The difference with “special form” policies is that they provide coverage to all losses unless specifically excluded. Unlike the prior forms, all unlisted perils are covered. However, if something happens to your home, and the event is on the exclusions list, the policy will not provide coverage.

Special-form excluded perils:

  • Ordinance of law
  • Earthquake
  • Flood
  • Power failure
  • Neglect
  • War
  • Nuclear hazard
  • Intentional acts.

 Is Home Insurance Mandatory?

Unlike auto insurance, which is required by law in most states, homeowners insurance is not legally mandatory. Most states do not mandate homeowners to have insurance if they legally own a home. But you still might need it.

In the United States, most home buyers borrow money in the form of a mortgage loan, and the mortgage lender often requires that the buyer purchase homeowner’s insurance as a condition of the loan, in order to protect the bank if the home is destroyed.

Anyone with an insurable interest in the property should be listed on the policy. In some cases, the mortgagee will waive the need for the mortgagor to carry homeowner’s insurance if the value of the land exceeds the amount of the mortgage balance. In such a case even the total destruction of any buildings would not affect the ability of the lender to be able to foreclose and recover the full amount of the loan.

Homeowners Insurance Claim Tips

If you believe you have a homeowners insurance claim, you should review your policy and immediately contact your agent to file and discuss the details of your claim.

Homeowner’s Insurance Claim following theft
  • Immediately call the police and be sure to file a police report.
  • Itemize everything that is missing, referencing your home inventory if you have one.
  • Once you have a police report number, call your insurance company or agent to file your claim.
Homeowner’s Insurance Claim following damage
  • Immediately report your claim to your insurance company or your local agent. Have a copy of your policy and home inventory on hand. If you cannot find the company or agent’s number, call the Division of Insurance.
  • A policy provision requires that you prevent further damage or theft. Make temporary repairs or arrange for a licensed professional to do so. Save all receipts for your repairs.
  • Take photos of the damage and remove undamaged personal property if your home cannot be secured.
  • Do not dispose of property until an insurance adjuster has reviewed it for your claim.
  • If you need to find other lodging, keep records of expenses and all receipts. Homeowners and renter’s insurance generally provide coverage for expenses like meals, rent and transportation.
  • If you do not have a home inventory, begin making a list of items going room by room from memory. Include as much detail as possible, like where and when the item was purchased, the cost, brand name and model.
What to expect from your homeowners insurance company after the claim?
  • Your insurance company will send an insurance adjuster to survey the damage at no cost to you.
  • Do not feel rushed or pushed to agree on a settlement. If there are disagreements, try to resolve them with your insurer. If you cannot reach an agreement or have questions about the settlement being offered, contact the Division for assistance.
  • Your full claim may come in multiple payments. The first will likely be an emergency advance and may include additional living expenses. The payment for your personal property and any additional living expenses will be made out to you. Payments for the structure may be payable to you and your lien holder if there is a mortgage on your home.
Be Careful After the Insurance Payment
  • Fraudsters take advantage of the chaos following a disaster. When choosing a contractor to make repairs, check licensing and references before hiring. Always insist on a written estimate before repairs begin and do not sign any contracts before the adjuster has examined the damage. The adjuster may want to see the estimate before you begin making repairs.
  • Do not pay a contractor the full amount up front or sign over your insurance settlement payment. A contractor should expect a down payment when the contract is signed and the remainder when the work is completed.
  • If the contractor finds hidden damage that was not discovered in the original assessment by the adjuster, contact your insurance company to resolve the difference. For any disagreements that cannot be resolved, contact the Division for assistance with your claim.
Additional Information on Homeowners Insurance Claims You Need to Know
  • If your insurance company delays in responding to your claim, call the claims department to find out if an adjuster has been assigned. Verify your contact details, especially if you have evacuated your home. Call the Division for assistance if the delay is unreasonable.
  • Even after settling your claim, if you think of items that were not in your initial loss list, contact your insurance company. Unless the company has paid the entire limit for the coverage of those types of items, the company may make an additional payment.
  • If your damages exceed the amount of your coverage, federal agencies will occasionally provide grants or low-interest loans to assist with recovery following major disasters. Check with your local disaster center or the Division for more information.
After You Have Rebuilt or Relocated
  • Once you have re-established your home, take time to do a new home inventory.
  • Once you have completed the home inventory, talk with your agent to make sure your home or renter insurance policy is adequate to cover your new home or the contents at your new location.

Homeowner’s Insurance Quotes Online

You can get your homeowners insurance quote online without living the comfort of your home. But it is very important to know how to search and compare different homeowners insurance quotes from different companies before you make a selection.  The price you pay for your policy can vary by hundreds of dollars, depending on the provider you buy your policy from.

Here are some tips to consider when buying homeowner’s insurance in order to save on your premium:

1. Shop around and compare

Searching around and compare different policies before you decide. This can help you save a good sum of money. Search Google Reviews, ask your friends and family, check the Yellow Pages or contact your state insurance department. In addition, check consumer guides, insurance agents, companies and online insurance quote services.

2. Raise your deductible

Raise your deductible is the amount of money you have to pay toward a loss before your insurance company starts to pay a claim. You can use to lower your premium. The higher your deductible, the more money you can save on your premium.

3. Don’t Include the Value of The Land

Do not make mistake cover the land under your house. It is not at risk from theft, windstorm, fire and the other perils covered in your homeowners insurance policy. Including it to the properties to cover will result in paying higher premium than you should.

4. Remember to Bundle from the same insurer

Ensure your home and vehicle policies from the same insurer can save you money, up to 15%. Some homeowners insurance companies also sell auto and liability coverage. You can save up to 15 percent off your premium if you buy two or more policies from the same insurer.

5.  Add More Protection to Your Home

Adding storm shutters to protect your home and other structures from damage caused by storms can reduce your premium. You may be able to save on your policy by adding storm shutters, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes.

6. Improve your home security

You can get up to 20 percent discount of your homeowners insurance by adding smoke detector, dead-bolt locks, sophisticated sprinkler system, fire and burglar alarm that rings at the police, fire or other monitoring stations.

7.  Inquire about other discounts

Homeowner insurance companies offer several types of discounts, which vary by state, city, lifestyle and age.  For instance, if you are 55 or older and retired, you may qualify for a discount of up to 10 percent at some companies.

8. Maintain a good credit record

Having a good credit score can cut your insurance rates greatly. Insurers are increasingly using credit information to price vehicle and homeowners insurance policies. So, build your credit first, if possible, if you are planning to buy a policy to protect your home.

9.     Keep the Same Insurance Company

Stay with the same insurer can help you save money. If you keep your coverage with the same company for several years, you may receive a special discount for being a long-term policyholder.

10.  Avoid Coverage You Don’t Need

One of the simplest ways to avoid paying unnecessary coverage is to review the limits in your policy and the value of your possessions at least once a year and remove devalued items from the policy. Your insurance is to cover your home and other valuable properties; you don’t have to spend money for coverage you don’t need.

11.  Consider Private Insurance if you are in a government plan

Depending on your location, private insurers can be better when it comes homeowner insurance. If you are in government homeowner’s insurance plan, consider comparing quotes from private insurers; you may find a policy at a lower price in the private market.

12. Take advantage of Fire Hydrant

You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. Installation of a fire hydrant within 100 feet of the home, or opening of a fire substation within close proximity to the property may lower the homeowner’s annual premiums.

13. Upgrade Your Home

You may also pay cheaper homeowners insurance premium if your home’s electrical, heating and plumbing systems are less than 10 years old. If you live in the East, consider a brick home because it’s more wind resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. Choosing wisely could cut your premiums by 5 to 15 percent.

Reliable Homeowners Insurance Companies

Here are 10 best homeowners insurance companies in the United States:

Auto-Owners Homeowners Insurance – This insurer has an excellent financial rating and customer service, but it is only available in 26 states. It has a network of 37,000 independent insurance agents and 93 claims offices.

Auto-owners is best for Old-school shoppers looking for the personal touch.

Amica Homeowners Insurance – Amica started selling homeowners insurance since 1956. Today it gets some of the highest financial and customer satisfaction ratings in the country.

Amica is best for All-around service.

Liberty Mutual Homeowners Insurance – This is the third largest homeowner insurance company in the country, available in every state except Florida.

Liberty Mutual is best for Affinity program members.

USAA Homeowners Insurance – USAA restricts coverage to members of the military, veterans, and their family members. It offers excellent customer service and rates to its members.

USAA is best for Active service members, veterans and military families.

Allstate Homeowners Insurance – As the name says it, Allstate covers all the 50 states in the US. It is the largest publicly held personal property and casualty insurer the country.

Allstate is best for Personalized service from local agents.

Farmers Homeowners Insurance – Although this company covers all 50 states, it sells homeowners insurance in 42 states only. You can buy a policy either online or through its network of 48,000 agents.

Farmers is best for Flexible purchasing, claims and coverage.

State Farm Homeowners Insurance – This insurer is one of the top homeowners insurance companies in the United States. It has excellent financial scores, and its customer rating are slightly above average.

State Farm is best for most policies written.

MetLife Homeowners Insurance – This is one of the few homeowners insurance companies to provide guaranteed replacement cost coverage for your home and its contents. That is, the company will cover the real cost to replace or repair an insured damaged home, even if the cost is higher than the policy limit.

Metlife is best for people who are looking for guaranteed replacement cost coverage.

Travelers Homeowners Insurance – Travelers is the fifth largest homeowners insurance company in the country. It has excellent financial ratings, and its customer satisfaction scores are just average.

Travelers is best for eco-friendly home owners. 

Nationwide Homeowners Insurance – If you are looking for an insurer that prioritize the safety of its policyholders, and especially their children, Nationwide is your ideal choice. It is one of the world’s biggest insurance and financial services companies.

Nationwide is best for Parents of young kids. 

If you have a suggestion, comment or question regarding homeowners insurance, kindly comment below.

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