Donavan Insurance Group: How to Find Cheap Home Insurance in 2017

Finding cheap home insurance should be easy. Just call up some insurance providers, compare prices and choose the lowest one. However, with the importance of proper homeowners insurance price isn’t always the best comparison point. After all, home insurance doesn’t just protect the structure of your house. It also protects your belongings and covers you in case you’re liable for someone else’s injuries or property damage while they’re at your home.

Though a number of factors that determine your home insurance rates are beyond your control, in this article I’ll outline several strategies that will help you find cheap home insurance. You can start using one crucial strategy — shop around — with the online quote tool below. All you have to do is enter your zip code and you will be presented with a number of options from top home insurance companies in your area.

What Home Insurance Covers

There are several types of homeowners insurance, but they all protect your home from “perils,” which is just a fancy way of referring to something bad that damages your property. Homeowners insurance policies are denoted by numbers: HO-1, HO-2, HO-3, and so on. HO-1 policies are so basic that most insurance companies have stopped selling them, so I won’t cover that type in depth.

Both HO-2 and HO-3 policies protect your house and its contents in the event of these 16 perils, according to the Insurance Information Institute (III):

• Fire or lightning

• Windstorm or hail

• Explosion

• Riot or civil commotion

• Damage caused by aircraft

• Damage caused by vehicles

• Smoke

• Vandalism or malicious mischief

• Theft

• Volcanic eruption

• Falling objects

• Weight of ice, snow, or sleet which causes damage to a building

• Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system or from a household appliance

• Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system or an air conditioning or automatic fire-protective system

• Freezing of a plumbing, heating, air conditioning or automatic fire-protective system or of a household appliance

• Sudden and accidental damage from an artificially generated electric current

The difference between HO-2, also called “broad form” policies, and HO-3, called “special form,” is that HO-2 policies specify everything they cover, and HO-3 policies don’t. In other words, if you have an HO-2 policy and something happens to your home that isn’t on the list above, you’re out of luck. HO-3 policies, on the other hand, cover everything that could possibly happen to your home except for what they specifically exclude. Standard exclusions include earthquakes, floods, war, nuclear disasters, neglect, and pests. HO-3 policies are the most popular, according to the III.

HO-5 policies are just like HO-3 policies, but protect your personal belongings, too. There are other types of homeowners insurance for special circumstances: HO-4 policies protect renters, and HO-6 policies protect condo owners. HO-7 policies are for mobile or manufactured homes, and HO-8 policies are specifically for older homes.

What Home Insurance Doesn’t Cover

No matter what kind of homeowners insurance policy you buy, there are some important things that won’t be covered. Floods aren’t covered — you’ll need a separate policy for that (and it’s federally required if you’re in a high-risk area). Earthquakes or other “earth movements” such as landslides or sinkholes also require separate coverage. Sewer backups, mold damage, and problems resulting from neglect are also excluded from standard policies. Make sure you ask your insurer for a full list of exclusions — some may surprise you.

How Much Home Insurance Do I Need?

First, you’ll need to calculate the full cost of replacing your home in the event of a total loss. This is the amount it would cost to rebuild your home in the same location using similar materials to what you currently have at prevailing labor costs. This number could be vastly different than your home’s market value, experts warn. A professional estimate can help if you’re unsure.

Second, you need enough to cover your possessions. A rule of thumb is a dollar amount equal to 50-75% of what it would cost to replace the structure of your home, discussed above. So, if you figure on a rebuilding cost of $250,000, you’ll want at least $125,000 to cover your belongings. Conducting a home inventory by listing important items and their values can help you arrive at a more exact number. Expensive possessions such as jewelry and fine art may require add-on coverage.

Third, you’ll need to think about liability — that is, what you’ll be responsible for if someone is hurt on your property. The minimum typically included in a standard policy is $100,000, but experts often recommend $300,000 to $500,000, according to the III.

Finally, think about special situations, like where you would live if a disaster destroys your home. A standard policy may provide 20% of the cost to rebuild for you to use in this situation, but you may have an option to add coverage. Also consider whether your home is at risk for disasters not covered by standard home insurance, such as floods or earthquakes. In these cases, you’ll need separate policies to protect your home.

Picking a coverage level

Even after you’ve determined a dollar amount for coverage, you’ll need to choose between three standard coverage levels for your home insurance policy:

• Actual cash value: This is the least expensive level of home insurance because it factors in the depreciation of your home and belongings, paying for only what these things would be worth today.

• Replacement cost: This type of home insurance doesn’t factor in depreciation, but payouts are subject to policy limits.

• Guaranteed replacement cost: Like replacement-cost insurance, guaranteed replacement doesn’t factor in depreciation. However, it also allows you to exceed your policy limits, paying whatever it takes to replace your home and belongings. These policies are the most expensive and might be hard to find. Some insurers offer extended replacement cost policies instead. These typically pay up to 120% or 125% of your coverage amount.

Our mission is to protect and enhance the financial resources of our clients, thus ensuring their security and quality of life, by providing sound professional management service.

Donavan Insurance Group Services Inc. was established in 1986 as an independent insurance agency with a reputation for Superior Service. Donna Martin-Boseker, who has been in this industry since 1976, had previously worked in the agency when it was known as Domex Insurance. She purchased the business in 1986 and renamed it Donavan Insurance Services Inc. We represent the best interests of our clients and tailor solutions for their specific insurance needs. We offer a broad portfolio of insurance carriers with highly competitive rates. Our coverages include all forms of business and personal insurance.