For homeowners, home insurance is a necessary expense. But insurance can be confusing. Common FAQs include:
- What company should I use?
- What policy is best?
- How are prices determined?
Patrick Kelly from Wexford Harbour Insurance is here to answer some of these frequently asked questions:
Are all home insurance policies built the same?
There can be major differences between each carrier’s home insurance policy, and it is a common mistake by homeowners to assume that each policy is the same. Carriers are consistently striving to stay competitive by finding creative ways to improve their loss ratios by adjusting limits of coverage, excluding certain losses, or mandating certain deductibles based on the home’s characteristics. Each of these may lower the premium that you pay but may also result in an unexpected “gap in coverage” at the time of claim. Many of these gaps can be remedied by adding an endorsement to the policy that specifically adds the desired coverage back. These endorsements will add a premium to the policy but may be well worth the extra premium paid at the time of claim.
Should my insurance plan cost the same amount as my neighbor’s?
Insurance carriers’ pricing models have become extremely specific to the individual. There can be a wide variance in the cost of insurance between two people, even if they are neighbors. Insurance companies use your age, loss history, the home’s characteristics, security devices, and credit history for pricing purposes, just to name a few.
The level of coverage purchased and the deductible selected will also drive the premium higher or lower. And lastly, insurance carriers will offer discounts on home insurance policies for recent updates to roofing materials, electrical systems, plumbing systems, and heating systems. Depending on the carrier, some of these discounts can be substantial.
Should I buy the cheapest plan?
Home insurance is no different than any other commodity that you purchase. If you are finding the cheapest priced policy, then you may also be finding the product that has the least amount of value. We have found that many of the frustrations that take place during a claim could have been avoided if the buying decision was based on coverage, not on price. Granted, insurance agents need to search for the most competitively priced product for you, but a professional agent should never sacrifice coverage in that process.
Do insurance companies want to pay claims?
Insurance companies absolutely want to pay claims! They will be creative in ways to find coverage within the policy that the client has secured. But insurance companies are bound by the language of the policy that the client has purchased. The claim experience will be reflective of the policy and endorsements that the client purchases. The more robust the coverage, the better the claims experience will be.
Are all insurance agencies the same?
There are many different types of insurance agencies, and you should interview multiple types to make sure that you find the one that fits your ideals best. The most important difference between agency types is a captive insurance agency vs. an independent insurance agency. A captive insurance agency only sells and services the products from a single insurance carrier. An independent insurance agency is contracted with many different insurance carriers. There are agencies that specialize in a certain line of insurance, such as commercial, personal lines, or life insurance, but will write the other lines of business when the opportunity presents itself. There are large, corporate agencies that have many employees and lots of different support areas. And lastly, there are small, boutique agencies that have more of a family feel to them.
Each of these types of agencies work well for their clients, but they all have very different feels to them. When you are deciding on which agency will be the best fit for you, you should consider what your expectations are:
- Do you want a personal relationship with their insurance agent and their staff?
- Do you want a corporate feel with many different people to help you in your time of need?
- How do you feel about having only one option for insurance, but knowing that option has the backing of a large insurance company?
- Do you expect your agent to remarket your coverage every year to make sure that you have the best value in your insurance package?
Finding an agency that will advise you in your purchasing process is the most important step in feeling confident that the coverage secured will cover the unexpected loss. Find that agency!
Patrick Kelly