Following a year of record breaking disasters, many homeowners are wondering how they can find lower and more affordable rates for their insurance policies.
Even those with experience in shopping around for the best price for a policy are discovering that the process is becoming much more complex. Many insurance companies have now implemented a number of different types of exemptions for various forms of damage from storms and other natural events. Some are also assigning lower values to a home’s replacement cost.
According to the Consumer Federation of America’s director of insurance, Robert Hunter, there are some techniques that can be used in order to judge various homeowners policies. Hunter explained that the base question that should be asked ahead of any research is how much coverage is actually required.
The answer to that question depends heavily on the replacement value of your home, where you live, and how much you are willing or able to pay in premiums.
To start, the higher the deductible for a policy, the lower the premium will be. However, you need to make sure that you will be able to afford to pay the amount of the deductable should your home or its contents ever be damaged in a catastrophe.
Hunter also warns consumers to be cautious of the language used in policies, as many insurers use “anti-concurrent causation clauses” which can be very costly in situations where there is damage as a result of multiple causes, such as water and wind at the same time. He said that policies that include these clauses should simply be avoided.