When buying a house, home insurance (also sometimes called homeowner's insurance) is one of the most important decisions that you will need to make. Home insurance protects one of your biggest investments from unexpected damages such as fire, flooding, earthquakes, and vandalism. Home insurance also provides liability coverage if an individual gets hurt while on your property and decides to sue you.
Home insurance may also be required by some lenders when purchasing a mortgage. In some cases, you may combine the home insurance bill with your mortgage payments. Hence, you do not have to pay separate fees.
The bundles provided by some insurers allow you to combine auto, home, and life insurance into one policy, allowing you to get your automotive and home insurance from a single company. If you already have auto insurance, you may reach out to your auto insurance provider to find out what deals they can offer to you. In some cases, insurance providers will offer discounts when you choose to bundle different policies, especially if you are an existing policyholder. In addition to the convenience of a single policy, if your car and house get damaged at the same time due to one common event, you may be able to file a single claim for both. With different plans for your auto and house, you will need to file separate claims with different companies.
Most major insurance providers offer some form of bundling or multi-plan. When shopping for home insurance always make sure to shop around as different insurers may offer drastically different quotes. Just like shopping for auto insurance, home insurance quotes will be specific to your house and your coverage needs.
When shopping for an insurance provider, you will want to consider three main factors: customer service, financial strength ratings, and endorsements.
Choose an insurance provider with a highly rated customer service. When disaster strikes, you want to have peace of mind that the insurance provider you chose will respond to your needs promptly. J D Power (found online at www.jdpower.com) offers customer service ratings for many popular insurance providers.
Financial strength ratings (FSR)
The financial strength rating, or FSR, of an insurer is a measure of the company's financial health and ability to meet the ongoing coverage needs of its clients. Knowing the rating of your insurer provides some peace of mind that the company will still be there when you need them.
There are five independent agencies that provide ratings for insurance companies. They are Moody's, Standard & Poor's, A.M. Best, Kroll Bond Rating Agency, Inc, and Fitch. The ratings from the different independent agencies will differ. This is because different rating agencies have different rating methods in place. This may mean that an insurance provider may have an excellent score from one rating company, but a lower score from another. Therefore, it is important to compare the Financial Strength Rating (FSR) with different rating agencies.
Endorsements, also known as policy riders, are amendments, additions, or alterations to your original insurance coverage. Endorsements are usually purchased when opening your policy, but you also have the option to add an endorsement when you renew your home insurance later. Check with your insurance provider to determine if you can add endorsements at other times. Endorsements are usually optional, but some states may have mandatory endorsement requirements. Endorsements allow you to itemize certain valuable items in your home or provide other coverage specific to your needs.