When you’re buying a home, there’s a seemingly never-ending list of tasks to get through in a short period of time; one of them is choosing a homeowners insurance policy. Considering the overwhelming nature of the home-buying process, it might be tempting to pick the first policy you get a quote for so you can cross it off your list, but this won’t do you any favors down the line when you actually need to use it.
Take it from a roofing contractor that’s helped countless homeowners get the most from their claims – here are five factors you’ll want to consider before you sign off on your insurance policy.
1. Cost and Coverage
If you don’t like the price of a homeowners policy, then there isn’t much else to discuss. Whether you use an online price comparison tool or you find an insurance company through word of mouth, it’s important to lock down a premium you’re comfortable with. It’s a good idea to compare at least three quotes from different insurance providers so you can feel confident you’re getting the best price.
At the same time, it’s critical to understand the level of coverage you’ll be getting for that price. From the most basic coverage to a comprehensive or condo policy, you’ll want to evaluate all levels of coverage available with an insurance agent to establish which one is best for you. Lastly, to prepare for conversations about policies, be sure to familiarize yourself with common insurance terms like the ones below:
- Premium – The amount of money an insurance company charges to provide coverage, typically on a monthly or annual basis.
- Deductible – The amount of the damage or loss that you’re responsible for before your company pays the balance on a claim.
- Liability coverage – A part of your homeowners insurance that helps pay for damages owed for bodily injury or property damage that occurs on your property, or that from your activities. For example, someone slipping and falling on your stairs.
- Actual cash value (ACV) – An estimate of the fair market value of your property (e.g. home, roof, belongings in your home) was before the loss occurred. Technically, ACV is what it would cost to replace your property minus depreciation, which is how much value the property has lost due to age and wear and tear since you bought it.
- Replacement cost value (RCV) – Coverage that pays the replacement cost to restore or replace the damaged or destroyed property back to the condition it was in before the damage happened.
Of course, you can always ask an agent to clarify, or do your own research, if you’re ever confused by the language used in home insurance policies.
2. Discounts and Bundling
Whether they advertise it or not, insurance companies offer certain discounts on their policies, so don’t be afraid to ask your agent what you need to do to get the maximum discount(s). For example, you’re likely eligible for discounts if you:
- Live in a low-crime neighborhood
- Have a great credit score
- Have few (or zero) claims filed in the past
- Have a home security system
- Have a new roof
- Have a low risk of home fires
Another great way to save money on your policy is to bundle your homeowners insurance with your auto or other insurance, so that’s something to consider when doing your comparison shopping. Of course, bundling isn’t for everyone, so do what works best for your unique situation.
3. Transparency and Access to Claims Department
While cost is undoubtedly a leading factor for home insurance policyholders, there are also more obscure factors that are just as important – one of these is the transparency of your agent and the company’s claims department.
While you might have great rapport with your insurance agent, it’s still their job to act in the best interest of the company (and their paycheck, for that matter). That being said, it’s possible your agent could earn a bonus if they’re able to mitigate your claim, meaning reduce the value of your claim or even do away with it altogether. Consider doing a bit of research on how other homeowners feel their claims have been handled by an agent – if you come across an alarming number of unsatisfied customers, you may want to steer clear of that company. You might even ask an agent directly if they have incentives to mitigate your claims.
At Indy Roof Company, we recommend contacting the claims department directly to file a claim, avoiding any bottlenecks an agent could potentially create. This is why it’s a good idea to see how easy it is to get ahold of a company’s claims department while doing your policy comparison shopping. Transparency and easy access to information are always good signs for any customer-facing establishment. If you see a phone number on the company’s website, great; if you have to do a lot of digging and you aren’t getting the answers you ask for, you may want to rule them out as a potential insurance provider.
4. Actual Cash Value (ACV) vs Replacement Cost Value (RCV)
You might recognize these terms from the insurance definitions we mentioned above, and it’s important to understand the difference between them. If you make a home insurance claim because of, say, storm damage to your roof, your coverage will kick in based on either ACV or RCV.
With RCV, your insurance company is required to pay you to restore or replace the damaged or destroyed property back to the condition it was in before the damage happened; in other words, they have to pay to replace everything listed in your contractor’s estimate.
ACV, on the other hand, means the insurance company only pays the appraised value of your roof or property depending on the current value of the listed items. Although insurance companies should write most homeowners’ insurance policies for damage as an RCV, some do write ACV policies, typically when they have older roofs. This is undoubtedly something you should ask an agent about to be sure you’re getting the best coverage.
5. Roof-Specific Discounts
If you’re planning to install a new roof on your house, be sure to ask your agent about a new-roof discount for your home insurance policy. Depending on the company you’re working with, you could trim 20% or more off of your premium, because new roofs are less likely to experience leaks and other damage that would prompt homeowners to file claims.
You could also qualify for a discount if you install a roof made of impact-resistant materials such as composition shingles, rubber shingles or metal. Impact-resistant roofs cost more to install, but that cost may be offset by the discount on your insurance premium. Before you choose a roofing material, you’ll want to consult with your insurance agent to find out which roofing material qualifies for an impact-resistant discount. Generally, insurance companies will offer discounts between 5% and 20% because you’re significantly lowering the risk of filing a claim.
Roof Experts in Indianapolis
Whether you’re considering installing a new roof or you have questions about proper homeowners insurance coverage for your roof, call Indy Roof Company today!