Shopping for insurance when you are buying a home or moving apartments can be a huge source of stress and frustration. If you are like most people, it’s hard to know even where to begin. A light Google search quickly turns into a cluttered mess of industry jargon, endless confusing forms, offers you can’t differentiate between, and ruthless ad retargeting. Most of those ads will feature cute animals, sports stars, or promises of cheap prices (how can they all promise to offer you a cheaper price?), sothey aren’t super helpful for determining who is actually offering what you need. You end up just choosing the cheapest offer, or going with whoever your friends or parents went with.
The 3 Best Practices for Buying with Confidence
It does not have to be that way. Insurance is a pretty standardized product — most policies the big insurers will sell you are very similar, with fairly standard pricing. But that does not mean that every offer you get will be the same. Usually your cheapest offer will have a huge hole in coverage, and your most expensive is offering you way more than you need. To buy with confidence, do these 3 things:
#1: Make sure you provide the same information to each insurer.
Every insurance company has different forms, asks different questions, and has different back-end data sources. This often results in you unintentionally providing different insurers with different information. The problem is, it is very hard to know what you need to have ready going in to ask for a quote — it’s not something you do every day.
The general list of information you should have ready is:
Details on property including your Mortgage Company details.
Your current or old insurance policy documents, if you have one.
A list of your top 10 most expensive things. This is typically jewelry, electronics, art, specialist sports equipment, home office equipment — you get the idea. All standard policies limit the amount they will pay for such things and the kinds of loss or damage they will pay for. Most online quote forms will ask about the value of such things, and any good agent will ask so they can offer you what’s called a “Rider” or “Floater” — i.e. an up-sell that will protect these items properly (you should at least get a quote!). If you have anything worth over $1,000, consider telling the insurer about it. For jewelry or art, you may need appraisals or receipts to substantiate values, so if you have them it is worth getting them together in advance.
An idea about how much the rest of your stuff would cost to replace after those top 10 items, or at least how much you would want to be paid if you lost everything in a fire. This will be your “Personal Property Limit.” Many people routinely underestimate this number, and one of the easiest ways for insurers to win the sale with a lower price is by shortchanging this amount.
If you use this bank of information to fill in quote forms or provide it to agents, you should get offers that are all starting with the same inputs.
#2: Get at least 3 quotes
This is an important best practice. If you are armed with the standardized information from #1 above, then you are ready to breeze through online forms and agent’s questions.
Can’t decide who to pick? Here’s a list of big players in the market you could consider. Ask a friend or family member who they are with and put that company on the list. You could also consider some of the start-ups in this space, such as Hippo, Lemonade and Jetty. They are all backed by long established financial partners, and State Governments have licensed and vetted them.
#3: Make an apples-to-apples comparison
Why is one offer so much more expensive (or cheaper!) than the others? If two offers are basically the same price, how do you chose between them? Making sense of the offers you have in hand is the hardest part, and unfortunately it is the part insurance companies are the worst at helping you with. Instead they ruthlessly retarget you with ads or bombard you with calls until you get fed up and choose one.
Fortunately you can make and apples-to-apples comparison and make an educated, confident choice. Our Insurance Buyer’s Checklist will make sure you are looking at the right variables to check which offer works best for you.
The Checklist is a spreadsheet that walks you through evaluating:
Building Property Limit This is the maximum your insurer will pay to replace your building if it burned down or you had another type of “total loss”. It is important to make sure the numbers match on your quotes. Differences there will have a big impact on cover quality and price. Note for Condo Owners: this is typically “walls in” coverage, since your HOA has a policy for the main building that covers things like roofs etc, but may change if your HOA has a more comprehensive policy that covers some things for you. Ask them about the type of policy they have. Note for Renters: Even renters policies provide some coverage for property features that you solely own such as built ins you installed.
Personal Property (Stuff) Limit If you were specific with insurers about how much you wanted, it should more or less be the same unless they have minimums (for instance, some just set your PP limit at 50% of the building’s limit). Your other limits such as “Loss of Use” (i.e. paying for a temporary place if a loss means you need to move for a while) will normally be relative to this number.
Loss Settlement Type — “ACV” or Replacement Cost? A big difference in premiums may be due to a difference in the “Loss Settlement Type.” This is essentially how insurers decide how much to pay you. If you have “Replacement Cost”, they’ll pay to rebuild your house (up to the limit) or replace your stuff retail, without deductions for depreciation. If you have “Actual Cash Value” or “Depreciated” coverage, you’ll get the amount you could replace your stuff for through Craigslist. Many cheap policies use this so watch out.
Deductibles For an apples to apples comparison, the key is to make sure each company offers you the same value.
Liability Limit This coverage protects you if you are sued for injuries or damage resulting from your negligence. The key here is to make sure they are all offering the same amount. In general Liability coverage is cheap, and won’t make much difference to the overall price.
Coverage for your expensive items If all the big limits noted on your quote are the same, the next thing to check is how your specific expensive items will be covered. First thing to check is if you were offered a “Floater” or “Rider” that provides quality coverage for the amount you need. If you weren’t offered one, it is worth asking the agent how you will be covered for them. Computers are a great example — many policies cover them up to $5,000 per loss, but only on your own property or if they are out for repair. Some don’t cover them at all. Some provide great cover. It’s worth knowing, since these items will be your most likely reasons to claim, and it’s worth knowing what you are covered for.
Service Records Insurance company service is all pretty similar — JD Power does an annual ranking. But even so, among the companies they rank, no companies are more than about 10% better or worse than the average. Another way of looking at it is how many justified complaints are filed against them. In California (where we are building Goodcover), the state publishes a handy ranking (companies with fewer complaints are at the top).
Price If you have gone through and are comparing insurance offers apples to apples, then now it’s time to consider price.
If you have the info you need all together, get at least 3 quotes, and compare insurance offers apples to apples, you’ve done what you can to do make sure know what you’re buying, and that it will perform as expected should you need it!
Goodcover Insurance Solutions, LLC (Goodcover) is an insurance agency licensed to sell property-casualty insurance products. Goodcover will receive compensation from insurance carrier partners for such sales. Refer to the Legal Notices section for additional information.
Issuance of coverage is subject to underwriting review and approval. Coverage may not be available in all states. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of the insurance carrier listed in your Policy Declarations. Coverage scenarios are hypothetical and shown for illustrative purposes only. Coverage is dependent on the actual facts and circumstances giving rise to a claim.