Not All Homeowner Insurance Policies Are Equal

As I’ve mentioned before in previous articles, I find it sad that personal insurance has gotten commoditized to the point where many consumers buy based upon funny commercials and/or cheapest price. However, it’s a battle that agents like me face every day and all we can ask for is the opportunity to educate our clients on why the programs we propose are in the best interest of our clients.

Case in point: I recently had a client who was building a very nice home and reached out to me for a homeowners insurance quote. Our agency provided him with an option that was on-par for a home this size and included many of the bells and whistles that aren’t found in other insurance policies.

He also obtained a quote from a competitor and reached out to me because he couldn’t understand why the competitor’s quote was cheaper.

I certainly don’t expect clients to understand all of the different coverages that are included with homeowners policies, so I appreciated the opportunity to go through the quote and outline the differences for him – some of which were major.

For instance, the competitor’s quote didn’t include special perils coverage for his contents; mine did. This is huge difference! This means that if he were to suffer a loss to his home caused by a peril that isn’t specifically listed, under the competitor’s program the claim would be denied. On the other hand, a special perils form, which we always include automatically provides coverage unless the peril is specifically excluded (e.g. wear and tear, intentional loss, neglect, war, etc.). I always recommend that homeowners cover their dwelling as well as their contents under a special perils form whenever they can.

In addition, the deductible on the competitor’s quote was higher than what was on mine. That certainly makes a difference in cost, as did a large difference in water backup coverage that was on my quote versus the competitor’s.

While there were a few other differences, another big one was that my quote included a cash out settlement option that allows the insured to receive a check for the full replacement value of the house, even if he chooses not to rebuild his home after a loss. The competitor’s option didn’t include that, either.

Homeowners insurance can be tricky, so be sure to speak to your agent about your available options so that he or she can customize a program that provides the protection you need at a price you can afford. Shopping for insurance on price alone can be dangerous, so trust a professional to assist you with this process.

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