How to Compare Property Insurance Quotes

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By Tidbits .
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Property Insurance Policy

While it seems easy enough to get a property insurance quote, don’t let the premium alone be your determining factor on which property policy to choose.. If you only compare price, you're shortchanging yourself. Here are a few things to consider when shopping for and comparing property insurance coverages.

Difficulty: Moderate

Instructions

Step 1

Look at the valuation clause. The valuation clause is the basis for how the claims adjuster determines the amount of the claim. The two most frequently used valuations are actual cash value and replacement cost. Actual cash value is the replacement cost of the property less depreciation. Replacement cost, on the other hand, is the actual cost to repair or replace the property (no deduction for depreciation). Therefore, a property policy written on an actual cash value basis will make the policy holder whole after a loss if they have to come out of pocket for the deprecation value.
Step 2

Review the deductibles. It goes without saying that there is an inverse relationship between the size of a deductible and the amount of premium. The higher the deductible, the more of a premium credit applied to the insurance policy, therefore the cost is lower. A lower deductibles means that the insurance company pays out more per claim therefore, they charge a higher premium.
Step 3

Compare the limits. When comparing two or more property insurance policies be sure to double-check the policy limits and coinsurance requirement. If the policy carries an 80% coinsurance requirement, then you must insure your property up to 80% of the full value. Carrying inadequate amounts of insurance will only serve to penalize you when it comes time to pay a claim. If you only insure 2/3 of the amount required by the coinsurance clause, at the time of a loss you’ll only receive 2/3 of the claim amount.
Step 4

Evaluate the insured perils. Some policies are written on a named peril bases versus an all risk basis. The difference between the two will make a difference in the property insurance premium. Named peril bases means that an insurance company will only respond if the loss occurred as a result of the perils named in the policy. All risk policy on the other hand will respond in the event that any loss occurring except for those excluded from the policy. An all risk property policy is broader than a named peril policy and thus more expensive because the insurance company is actually providing more coverage.
Step 5

Shop around. When shopping around for property insurance quotes, make sure you do and apples to apples comparison. Comparing an all risk policy to a named peril policy is like comparing apples and oranges, so don’t let the premium alone drive your decision.

Comments

deepthinkin said

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on 11/10/2008 Valuable information here. It's too easy to be swayed by low prices, only to find that you don't have the coverage you need when you need it.