Homeowners:

Low rates for home insurance are always appreciated- however- homeowners should be wary of a home insurance quote that seems too low.  One reason why shopping around for home insurance is so important is because homeowners can see how the different rates vary from company to company.  Often, one company will offer a rate much lower than the others. While paying a cheap home insurance premium might sound desireable- homeowners should be wary of what they are giving up in order to secure that low rate.

Oftentimes a home insurance company will under-insure a home in order to qualify that homeowners for a lower rate. While the reduced cost might seem nice, what would happen to that same homeowner in the event that their home was destroyed due to a  covered peril?  While the peril may be covered under their home insurance policy, the replacement value of the home may be listed too low on their policy.  In this case, the insurance company would not pay out enough money to rebuild the home to it’s previous condition.  (This of course is not an issue of the homeowner has a guaranteed replacement cost policy- but these are not very common anymore).

Another way that a company might be calculating a super low rate is by figuring in a really high deductible.  This will also make your home insurance premium much lower. However, it can also leave you in a financial bind if you needed to file a claim and do not have the cash to meet your deductible.

Moral of the story- As a home insurance consumer always make sure you are comparing apples to apples when it comes to home insurance rates. Ask for quotes using the same set of requirments such as deductibles, replacement values, etc.

Your Agent@HomeInsurance.com