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Finding the Holy Grail of Insurance Quotes
When you obtain several quotes from several different insurance companies, there is a very good chance that whether the prices are exactly the same or vastly different there is a good chance that the coverage is not the same across any of the quotes. This is because insurance companies usually use their own policy provisions and languages. Although insurance companies tend to stick to common policy forms, there are thousands of forms with thousands of edition dates. An insurance policy using an identical form number with a different addition date can have vastly different insurance provisions.
That being said, there will come a point where you are able to take all of your quotes, sit down, and compare them to each one by one.
One important consideration when comparing insurance companies is financial stability. Using an unstable insurance company to provide your insurance adds an additional level of risk. Using A.M. Best to review an insurance company's rating is the best way to ensure you will be doing business a financially stable insurance company.
The next thing to compare across your quotes is the amount of coverage provided. Typically, you will find that your quotes have varying degrees of coverage levels for buildings, personal property, additional living expenses, and liability coverage. Compare all of these and determine which of those items are most important to you and how accurate that item is.
Be sure to check the deductible on your policy. A policy may be more competitively priced than another simply because of a lower deductible. A higher deductible means that you will have to pay more in the event of a claim so be sure that you are comfortable with the choice of deductible that the insurance company has provided in their quote. If you later have to decrease the deductible, you may find that your premium will increase to an uncomfortable level.
The next thing to consider is the type of losses that are covered. In insurance jargon, these are called perils. Some policies name specific perils that are covered, and only those perils are covered. Other policies cover almost everything as long as it is not specifically excluded. The second example is a policy that provides a broader coverage and will typically cost more.
Another important consideration is the valuation of a loss. Insurance claims will be paid on a replacement cost or actual cash value basis. Actual cash value is defined as a replacement cost less depreciation. For instance if you suffer a loss to your entire home, a replacement cost policy will pay for its complete replacement up to the policy limit. An actual cash value policy will only pay the essential market value of the home. Depreciation is a deduction for age and obsolescence. For instance, black and white television sets are obsolete and are therefore worth far less than a modern LCD television.
Another provision common to all insurance policies is a co-insurance clause. This clause requires that a certain level of insurance be maintained on the property. Insurance companies enforce this provision by applying a penalty for claims if it is found that the property is underinsured at the time of the claim.
Be sure to also compare quotes in terms of each policy's non-renewal provision. A non-renewal clause will refer to the period that the insurance company has to warn you that they are going to non-renew your policy. A longer non-renewal term is better because it gives you a longer period to replace your insurance.
A final item to look at is the cost of the policy. After reviewing all of the previous items, the cost of each policy will be put into context for you and you will be able to actually see what you are getting for your money. The less expensive policy may have far less coverage and you may find that dollar for dollar the least expensive option is not worth your while.