10 steps to find the right home insurance

Shopping for insurance is like shopping for any major item. It's a good idea to shop around to find the policy that best meets your needs and pocketbook.

1 Decide what kind of coverage you need.

There are different types of home insurance policies. Most mortgage companies will require that you have a replacement cost policy, which will pay to repair or rebuild your home based on current construction costs. There are also actual cash value policies that pay to repair or rebuild your home, minus depreciation. Your agent can help you find the policy that’s best for you.

2 Decide how much coverage you need.

Make sure you have enough coverage to replace your house if it’s destroyed. Your agent can help you determine the cost to rebuild your home. You’ll also want to make sure you have enough coverage for your personal property. You can use TDI's Home inventory checklist or search for home inventory apps. There are several free options available, including one from the National Association of Insurance Commissioners.

3 Get price quotes from several companies.

Use an independent insurance agent who has access to multiple carriers to help you with options.

4 Look at a company’s complaint record.

A good way to assess a company’s customer service is to look at its complaint record, which is measured by a complaint index. A value of 1 is average. Less than 1 means it gets fewer complaints than the average, and a number higher than 1 means the company gets more complaints than average. You can check complaint indexes on HelpInsure or on the TDI website.

5 Decide on a deductible.

A deductible is the amount you have to pay before the insurance company will pay. For example, if you have a claim for $1,800 and a deductible of $1,000, the insurance company will deduct $1,000 and pay you $800. The higher your deductibles, the lower your premium. If a policy has a deductible that’s a percentage, make sure you know how that translates to a dollar amount.

6 Ask about discounts.

Most companies offer discounts if you reduce the chances of a loss. Common discounts include having an alarm system, having fire alarms or sprinkler system, having other policies with the same company, being over 65, and being claim free for three years in a row.

7 Verify the company’s license.

Once you decide on a company, check to make sure its license is up to date. You can get this information by calling TDI's Consumer Help Line at 1-800-252-3439 or by checking TDI’s Company Lookup feature.

8 Avoid gaps in coverage.

Never cancel a policy until you get your new policy or a written statement that proves you have coverage. Keep shopping if a company turns you down.

9 Review other types of insurance for your home.

Depending on where you live and what you’re insuring, you might need more coverage than a standard home insurance policy to be fully covered.

Flood insurance. Home insurance policies don't cover flood damage. You need flood insurance for that. If your property is in a flood zone, your lender will require you to have flood insurance. But don’t rule out flood insurance just because it isn’t required for your home. More than 20 percent of flood claims are from outside of flood zones.
Extra coverage. You can get extra coverage for jewelry, fine arts, electronics, or other expensive items. You can also buy coverage for damage caused by backup of sewers or drains, mold, and leaks from plumbing, heating, or air conditioning systems.
Liability insurance.If you want more liability coverage than a home insurance policy provides, you can buy a separate umbrella policy. Make sure the agent or company explains the coverage because policies vary.