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Step 1
Compare financial ratings. An insurance company with poor financial stability is less attractive than a financially stable company. Ask your broker or agent to provide you with the company's A.M. Best Rating when you compare homeowners insurance policies.
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Step 2
Look at the valuation clauses. Your homeowners insurance company will use one of two valuation clauses: replacement cost, which is the cost to repair or replace the damaged property, or actual cash value, which is the replacement cost less depreciation.
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Step 3
Review the perils covered. An all-risk policy, which responds to loss or damage as a result of any peril as long as it is not specifically excluded in the policy, will offer more insurance protection than a named peril policy. Named peril policies will only respond to losses arising from specific perils named in the policy.
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Step 4
Test the claims handling procedures. Call each homeowners insurance company as if you were going to report a claim. Compare how each responds.
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Step 5
Analyze the premium differences. The premium should be the last factor to consider when comparing homeowners policies. A low premium from a financially unsound company may be the equivalent of no insurance at all if the company is not around when it comes time to pay a claim.
