Homeowners Insurance Arkansas: How to Find the Best Deal

If you’re thinking about buying a home in Arkansas, you have probably already started looking into home insurance. Good home insurance is an essential part of protecting the financial investment of your house. In case of fire, natural disasters, or theft your home insurance is the safety net that helps cover the costs and damages of repair or replacement.

Homeowners insurance is not mandatory in Arkansas. However, most lenders will require it as a part of your mortgage agreement.

What most homeowners don’t know is that good home insurance doesn’t have to be jaw-droppingly expensive. There are ways to educate yourself and shop around that can help lower the cost of your home insurance significantly. Answer these questions to help you get the best coverage available for the lowest cost.

Do You Understand the Different Types of Homeowners Insurance?

Homeowners insurance typically comes in one of these packages:

1. HO-1: This homeowners insurance is a basic package that offers protection against events like fire, theft and certain types of liability.
2. HO-2: This is a more comprehensive homeowners insurance package that protects against 16 specific events: windstorm and hail, explosion, aircraft, vehicles, smoke damage, vandalism or malicious mischief, fire or lightning theft, falling objects, riot or civil commotion, the weight of ice and snow or sleet, accidental discharge or overflow of water or a stream, and volcanic eruption. Sudden and accidental tearing apart, cracking, burning, or bulging, freezing, and sudden or accidental damage from artificially generated electric currents.
3. HO-3: This level of homeowners insurance is the highest possible level of coverage and it covers just about everything. The only exclusions to the HO-3 plan are earthquakes and floods, which have to be purchased separately, and acts of war or government action.
4. HO-6: This homeowners insurance policy is designed for condos and co-ops and it covers contents, liability, and issues with your unit. Usually, with condos and co-ops, you will be paying for insurance on the actual structure of your home through your Homeowners Association (HOA) fees.
5. HO-8: This lesser known insurance package is typically used for older homes and covers the same 16 policies as the HO-2 policy. However, if you have to file a claim, instead of the replacement cost, you’ll only get the actual cash value of the items damaged.

You should discuss your homeowners insurance options with your lender and financial advisor to help you pick an insurance policy that covers all your bases without making you carry more coverage than you need. Understanding what your policy does and does not cover, and whether you may need that coverage in the future, will help keep you from overspending or underspending to your detriment later on.

Have You Shopped Around?

Now that you are familiar with the basic packages available to you, you should start reaching out to your local Arkansas homeowner insurance agencies. Be sure that the agencies you choose are licensed – if their quotes sound too good to be true, they most likely are. Do your research and choose companies that have good reviews and are known for their quick response time during emergencies. You don’t want to be left waiting when your home has been damaged or burglarized.

Choose at least three separate insurance carriers and then compare their coverage options and pricing.

Do You Know How Much Coverage You Need?

Once you’ve chosen an insurance carrier, you’ll be assigned to an insurance agent. You Arkansas home insurance agent will be able to help you determine how much coverage you need for your home and family situation. Usually, you’ll need enough coverage to replace your home and all of your belongings in case of a natural disaster or other catastrophe. To calculate this number, your agent will need the following information:

• Square footage of your home
• Type of roof on your home
• The age of your home
• Number of bathrooms
• Type of exterior
• The condition of any outbuildings
• A copy of your inspection report
• A copy of the current appraisal
• A detailed inventory of the contents of your home (your personal belongings and furniture)
• A statement about whether you home is built on a floodplain

Review your information as well as what’s covered in each policy and decide if you can go with a standardized package, or if you’ll need to add on customized coverage for an additional cost. Knowing exactly what’s being covered helps you save money now by keeping you from buying coverage you don’t need. It also helps you save money in the long run by ensuring that you have enough coverage to repair or replace your most valued possessions.

Are You Asking the Right Questions?

Before you sit down with your insurance agent or broker, create a list of questions that will help you determine the perfect amount of coverage for you and your home.

• How much personal liability coverage does this policy provide?

This is important because if a workman or other person is injured on your property and decides to sue you, liability coverage is what keeps you from paying out of pocket.

• In case of a catastrophe, does this policy offer cash value or replacement costs?

Replacement costs pay to have the damage completely repaired or your items replaced. Cash value pays you the current market value of the item damaged. In most cases, getting replacement costs is the more attractive option because it guarantees that you’ll be made whole despite any depreciation in value over time.

• What is the policy deductible (the amount you pay before insurance kicks in)?

Often, the higher your deductible, the lower your monthly premiums will be. You don’t want to raise your deductible so high that you can’t afford to pay it, but keeping it as high as your household budget allows can save you money in the long run. In Arkansas there are often separate deductibles for tornados, so be sure to inquire if you have multiple deductibles and calculate that into your costs.

• Are there bundling options?

Often, insurance companies will offer discounts for customers who purchase their home and auto insurance through the same company.

• What home improvements can I make to lower my premiums?

Oftentimes, repairs like replacing out-of-date electrical or plumbing can lessen the possibility of an accident occurring, which makes you more attractive to home insurance companies. Putting in a high-quality security system to deter theft can also help lower premiums.

• Is my land included in the premium rate?

The value of your land is often included in the cost of your homeowners insurance. Unless you use your land for your livelihood, you can most likely safely remove it from your policy and focus on protecting your actual home and belongings to save money.

2 Point Highlight

What most homeowners don’t know is that good home insurance doesn’t have to be jaw-droppingly expensive. There are ways to educate yourself and shop around that can help lower the cost of your home insurance significantly. Use these tips and tricks to help you get the best coverage available for the lowest cost.