Talking With Insurance Companies

If you are shopping for homeowners insurance, you may be wondering whether it matters which company sells you coverage. Well, you shouldn't just fixate on rates and coverage when buying home insurance; you should also compare insurance companies because they have different features. Here are some of the areas in which home insurance companies differ:

Covered Risks

Although home insurance companies have more or less similar policies (for the standard coverage), they aren't exactly similar. There are usually small variations between different companies that you should scrutinize to determine what suits you best. Insurance companies use these small differences to differentiate their businesses since market differentiation is a form of marketing.

Coverage Limits

All insurance carriers have limits on their coverage, but the limits also vary by company. For example, contents insurance is typically represented as a percentage of structure coverage; it typically ranges from 50% to 70%. Therefore, if you have considerable contents in your home, then you may be better off with a policy that will give you contents coverage at 70% rather than 50%. Other limits that may differ by company include limits on additional living expenses (ALE), electronics coverage, and coverage of expensive items such as artwork and jewelry.

Rates

Home insurance companies rely on a variety of factors, which they give different weights, to determine premiums. Some of the factors considered include the location, the value of the home, the age of the home, and the number of people in the household, among other factors. Though the insurance companies use more or less the same factors to determine premiums, they place different weights on these factors. This is why you will end up with different rates when you request quotes from different companies for the same house.

Rating

Lastly, insurance companies are also rated just like other businesses. In fact, there are professional organizations, such as Weiss Ratings, A.M. Best, and Demotech, whose main jobs are to provide professional ratings of insurance companies. The rating organizations consider different factors such as the number of claims paid in a given period, the focus of the insurance company, and the performance of the insurance company as compared to its competitors. Understanding how these ratings are given will help you identify insurance companies with good performance since performance differs by company.

Therefore, do your research well to get the best home insurance company for your home. Consider working with an agent who can help you understand all the offers available in the market for a good comparison.