The prices and fees in California can make even some of the wealthiest people pause to consider whether or not they should seal the deal when it comes to buying a home. The insurance companies themselves in the Golden State have seen big bills piling in from claims in the recent past, and their rates have gone up accordingly. No matter where you’re buying or what you’re planning to do with the property, you need to take into account homeowners insurance California. Movoto is happy to show you a few tips for getting a better deal.
How Should I Approach This?
If you’re hoping to see a large range of prices in homeowners insurance then you should probably temper those expectations now. You will likely only see marginal differences from one policy to the next, and it’s not uncommon for new homeowners to be so overwhelmed with the rest of the process that they simply choose to go with the devil they know. Whether that’s the same company who insured their last home or just bundling with their auto insurance coverage for a small discount, it’s hard to ask someone to go through the process of getting quotes from a number of companies. What you should be doing is calculating your risks, back-up plans and how much time you have to devote to looking for a policy. It’s difficult to think about insurance when you’re already thinking about closing costs and property taxes, but it can pay to get advice when and where you can because it does add up. Talk to your real estate agent about their experience or you can even contact a broker to see what they recommend based on your particular situation.
What Kind of Insurance Do You Want?
Not everyone wants to pay for the maximum coverage, regardless of the consequences. One study found that up to 60 percent of people are underinsured without even realizing it, and that makes sense when you think of how many situations can happen that we don’t think about on a daily basis. If your home is filled with mainly hand-me-downs or Ikea furniture, you may feel comfortable opting out of protecting its contents. You’re not required to purchase a rider (or add-on) to your policy to cover them. However, you’ll need to buy the minimum to protect your property against unforeseen events like floods and fires. Do you have reason to purchase the variety of ‘endorsements’ available that cover anything from sewage overflow, to the inflation of rebuilding materials, to the dreaded terror of California: earthquakes? You may also want to take into account litigation-happy neighbors and thieves. Generally the cost to insure your home with earthquake insurance (which is optional) will be considerably higher — about $875 extra a year for a half million dollar home. Average cost of insurance in California is only about $1,000 for reference. Considering everything else you’ll be paying, it’s a lot to ask you to shell out. Plus, you might actually be smarter to remodel or retrofit your home so that it’s more likely to sustain major earthquake damage, but of course that will mean nothing should the earth swallow your house whole. Your deductible on earthquake insurance can be as high as 15 percent of the damage price though. More than 4 out of 5 homes on a block won’t have earthquake insurance, and that’s not merely stupidity on the homeowner’s part. Even those who assess the risks of earthquake damage will sometimes avoid insurance in favor of strengthening their foundation.
What Should I Highlight?
There are a multitude of ways to stand out to insurance companies when you’re shopping around. If you’re a first time home buyer or have an energy-efficient structure (LEED-Certified), then you may qualify for additional discounts depending on who you contract with. If you’re a non-smoker and have perfect wiring, then you’re far less likely to have any type of fire which can also bring your rates down. Newer homes and even remodeling can mean lower rates because your home is less likely to malfunction any time soon. If you live in a safe area (think gated community or HOA neighborhood), then your odds of being a target of theft go down as well. Anywhere you can drive the point home that you’re less likely to file a claim will work to your advantage.
Are You Prepared?
Your rates will also depend on your history with insurance companies, so expect higher costs if you’ve filed several claims in the past on other homes. If you’re paying less than 20 percent for a down payment on your home, then you’re also going to need to tack on mortgage insurance which can really add up. Whichever company you choose should make it a point to offer excellent educational tools both online and off, so you can keep up with any changes to federal laws that affect homeowners insurance California. You also need to consider a company’s satisfaction ratings, as paying a cut-throat rate now can really come back to haunt you should you need something. You may not be prepared to deal with unresponsive staff members, the amount of forms you’ll need to fill out or waiting months on end for your money. A home is a very emotional place for people, so watching it and your property go up smoke (whether literal or figurative) will be difficult even when you have the best coverage.
2 Point Highlight
Newer homes and even remodeling can mean lower rates because your home is less likely to malfunction for a considerable length of time.
If you’re a first time home buyer or have an energy-efficient structure (LEED-Certified), then you may qualify for additional discounts depending on who you contract with.
