If you’ve shopped for home insurance recently, you might be wondering something…
Why are homeowners insurance quotes so different between carriers?
It’s great to get several quotes for home insurance from multiple companies before settling on one. After all, isn’t that how you get the best value on your insurance?
But it begs the question,” why do homeowners insurance quotes differ so much?”
In our “How Does Insurance Work?” post, we discuss how certain risk factors (or liabilities) can increase the amount you have to pay toward your premium or deductible. This helps explain why insurance on your three-bedroom ranch is so different from your sister’s McMansion, but what about when your single house received four completely different quotes from four different companies?
Turns out, there is a good explanation for that! Read on to find out.
Why Do Home Insurance Quotes Differ?
Insurance premiums and quotes are determined by looking at certain aspects of your home (its location, size, and age, how old the roof is, whether or not you have a pool, etc.) and making calculated estimates of how much your home insurance coverage is going to cost the insurance company in the event of a potential claim. They can vary by state, your age, the crime rate, and more.
It makes logical sense, really. Before the insurance company can decide how much a homeowners policy is going to cost you, the insurance agencies first have to decide how much it’s going to cost them to replace and/or repair your unique home. Because each company has a unique way of determining risk factors and calculating that number, it creates opportunities for quotes to vary.
One carrier may have found that the homeowners in your zip code have filed more claims—and thus cost them more money—than the ones in the neighboring zip code. One carrier might find your home’s square footage to be more indicative of your level of risk, while another might place more emphasis on your marital status.
Another factor that comes into play is the amount of coverage some insurance companies might require you to have. Because of your home’s location and history, one insurance carrier might require a higher level of flood insurance or dwelling coverage in the event of natural disasters. Another carrier might leave that level of coverage up to you which could result in a lower premium.
Why is this lucky for you? Because it means you have a choice!
If your family needs space for a home office and at least four bedrooms or your commutes to work and school make a certain zip code more appealing, you don’t have to resign yourself to a lifetime of high premiums. You can (and should!) get a cluster of home insurance quotes and pick the one that fits your needs, both in premium cost and coverage.
Find the Home Insurance Policy That Fits You
Like with auto insurance, life insurance, or any insurance policy, your homeowners policy is specific to you and your needs. When going over your coverage options, think about your personal belongings you’d want replaced in the event of a fire or theft as well as the monetary value of expensive family heirlooms that maybe couldn’t be replaced.
If you’re living in an area, like Florida, that’s prone to severe thunderstorms, make sure your insurance quote has enough property damage coverage to protect you. It’s better to worry about potential claims when you’re sorting through insurance quotes rather than after the disaster has struck.
And don’t forget about liability insurance when deciding between home insurance quotes. If you have stairs in your home, pets, or kids who might wreak havoc from time to time—even in someone else’s home— be sure to take that into consideration before settling on a policy.
The Downside to Cheap Homeowners Insurance
So once all of those home insurance quotes come in, you can just pick the cheapest one your mortgage lenders and budget will allow and be on your merry way, right?
Not so fast.
While there’s nothing inherently wrong with having affordable homeowners insurance (you certainly want a policy you can afford!), there is a problem with buying your insurance policies based solely on cost.
Think about the last thing you called “cheap.” There’s a good chance it wasn’t used as a compliment! In fact, you probably threw in a few four-letter words to communicate exactly how poorly made the item was.
When it comes to insurance, “cheap policies” usually come with higher deductibles, less coverage, more restrictions, and bad customer service. Selecting the cheapest policy will likely mean less liability coverage, less personal property coverage and less chance that your policy covers losses of personal belongings. You don’t want to protect your home with cheap coverage.
Rather than looking solely at your cost upfront, the amount of coverage you’re getting should always be your first consideration when shopping for homeowners insurance. After all, in the end, your home insurance coverage should give you peace of mind in the event of an accident, not leave you worrying after a disaster has rolled through.
Insurance Coverage Matters
Insurance policies are essentially contracts. And you’d better believe that when an insurance company draws up a contract, they’ve done a lot of strategic math to ensure they don’t end up with less money than they started with.
What does this mean for you? It means that, in the unfortunate event that you need to file a claim, you will end up paying your share—either through a higher premium or a higher deductible.
When those homeowners insurance quotes first come in, you might be tempted to just pick the cheapest one, (after all, that super low premium from Company A will save you a pretty penny right now!) but it’s crucial that you compare coverage limits. Company B may be offering a slightly higher premium with a drastically lower deductible, higher coverage amounts, fewer exclusions, and better customer satisfaction. Cheaper premiums now doesn’t always translate to more money in the long run.
Don’t undervalue good customer service either. Think about when it comes time to file a claim. Which company will you be happiest working with during your time of need?
The Best Home Insurance Quotes…FAST
Having more options is the best way to get the best deal on homeowners insurance, but how many options are you supposed to have? How do you know how much coverage you actually need? And how do you possibly choose between them?
Take a deep breath. There’s an easy way to gather up a nice selection of home insurance quotes from reliable companies without making yourself insane: work with a local independent insurance agent.
Captive insurance agents work for a single insurance carrier and can only offer policies offered by that carrier. If you call a State Farm agent, for example, they can only offer you a State Farm policy. Independent agents, on the other hand, work for themselves and can offer insurance coverage from a number of different companies.
Because they work with a greater portion of the insurance market, you not only have more choice, you also have the benefit of an insurance expert on your side. An independent agent can advise you on the types of coverage you might need, inform you of areas where you’re exposed to greater risk, and update you on policy changes or other things that may affect you.
And the best part? You get all this at no cost to you!
Looking For a Home Insurance Quote?
If you live in Florida and you’re looking for homeowners coverage, renter’s insurance, personal liability coverage, or any other type of policy, the friendly agents at Harry Levine Insurance can help find a policy that fits your risk profile as well as your budget.
At Harry Levine Insurance, we believe in protecting and educating our clients. If you ever have a question about your policy or claim, give us a call. We’re always happy to help.
Call today for your free homeowners insurance quote.
Surrey Small Business InsuranceMay 19, 2023
Home insurance quotes can vary significantly, leaving many homeowners puzzled. This article provides a comprehensive explanation for the differences in pricing. It highlights the various factors that insurers consider when calculating premiums, such as the property’s location, age, size, and construction type. It also emphasizes the significance of coverage limits, deductibles, and additional endorsements. By shedding light on these factors, the article helps homeowners understand why quotes differ and enable them to make informed decisions when selecting a policy. Overall, it’s a valuable resource for those seeking clarity on home insurance pricing and empowers them to secure the best coverage at a competitive rate.
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Auto Insurance Warwick NYJanuary 26, 2023
Insurance quotes can vary due to a variety of factors, but getting a solid policy is a must. Thanks for sharing!
Eli RichardsonDecember 6, 2022
It’s great that you talked about insurance quotes and how they’re determined by your home’s features. My wife and I are buying a house next month, and we’re interested in getting it insured before moving into it, so we’ll read your article’s insight very carefully. Thanks for the tips on helping us understand how a home insurance quote gets calculated by our zone and construction age.
instant home insurance quoteSeptember 23, 2022
Hello Jason, thank you for sharing this information, as it is one of the tough decision to get the best home insurance because insurance coverage matters. Not all insurance covers everything, so people should take out insurance, depending on their requirements. Keep blogging.
Henry KillingsworthMay 3, 2022
It really stood out to me when you talked about how it is important to compare coverage limits when you are purchasing home insurance. I would think that it would be a good idea to purchase the exact amount of insurance you need or even a little bit more. It seems like it would be better to be prepared rather than unprepared.
jeff carbineApril 2, 2022
It’s good to know that insurance companies must first determine how much it will cost them to rebuild and/or repair your particular property before they can determine how much a homeowners policy will cost you. My wife and I had recently completed the construction of our new house. We’ll make certain to locate the best home insurance supplier for our residence. Thank you for the suggestions. It will point us in the proper direction.
Olivia SmartFebruary 28, 2022
Thank you for explaining why some home insurance quotes differ between carriers. My daughter has gotten a few quotes now and has been wondering this very thing. I’ll share your observations to her so that she can choose the best quote with the right amount of coverage.
Rick JonesFebruary 9, 2022
I get that the insurance company has to find out how much a policy will cost them before they see how much it costs you. I would like to find a company that is upfront about this. That would make me feel better about dealing with them and getting a policy of my own.