Most Puget Sound area homeowners will save more than $300 a year by switching
from their current insurance company to a lower-priced company. Some will
save more than $1,000.
Our Ratings Tables report annual premiums we collected for the companies
that write almost all of the homeowners insurance business in the Puget
Sound area. Costs vary significantly from company to company. For example
For a sample frame house in Seattle, rates range from $593 with Nationwide,
$620 with American Family, and $623 with Travelers to $1,173 with Liberty
Mutual. The premiums for Farmers and State Farm, the states largest writers
of homeowners insurance policies, are both more than $1,000.
For a sample frame home in Pierce County, rates range from $593 with Nationwide,
$656 with Travelers, and $696 with both Homesite and Mutual of Enumclaw
to more than $1,600 with either Farmers or Liberty Mutual.
Which companies will offer you the lowest rates depends on several factors
discussed in this article. Since your home, its characteristics, and your
insurance needs likely differ from those of the sample profiles we used
for our comparisons, do some shopping on your own before you choose an
You dont have to wait until the end of your policy term to switch to a
company that offers a lower rate. Although you might have to pay a fee
to cancel your current policy, the fee is small compared to the savings
you can get with a lower-cost carrier.
Although rates for homeowners insurance depend in large part on variables
you cant control, there are steps you can takein addition to shopping
for the best rateto minimize costs:
Choose a high deductible.
Obtain an accurate estimate of what it will take to replace your home.
Insurance agents often try to sell excessive coverage by providing inflated
estimates of replacement costs.
Consider declining earthquake coverage, which usually adds from $250 to
over $750 to a typical homeowners policy for a house with frame construction
and even more for a masonry house. Since earthquake policies usually include
a hefty 15 percent deductible, think about whether the added cost is worth
the protection offered. Few homeowners in Washington bother buying it.
Limit the number of claims you make. Filing a claim will result in higher
premiums from most insurers and may cause an insurer to drop youwhich
will make it difficult and more expensive to get insurance elsewhere.
Consider buying your homeowners and auto policies from the same company.
Many companies offer dual-policy discounts to customers who insure both
their homes and cars with them. But keep in mind that such discounts are
usually small and wont make a high-priced company a good deal. Click here for our ratings of auto insurance companies.
Fortunately, it is possible to choose a low-priced company and still get
good claims service. Our Ratings Tables provide insight on companies
Keep your insurance policy up to date. Many homeowners do not maintain
adequate insurance coverage, leaving themselves financially vulnerable
in the event of a total loss. Dont assume your insurer will take the initiative
in keeping your homeowners policy up to date. Every few years have your
insurer re-estimate your homes replacement cost, and then adjust your
coverage as needed.
Insurance companies have for years used credit scoring to set their rates.
With many companies, your credit score influences the rates youre offered
more than any other factor: The prices most companies offer customers with
poor credit are double what they offer customers with excellent creditwith
some companies, the poor-credit penalty triples their rates. Companies
increasingly use other secretive and opaque methods to calculate their
rates. Because pricing methods and premiums can dramatically change over
time, shop around for a better rate every other year or so.
Youre probably paying too much for homeowners insurance coverage.
Each year, most Puget Sound area consumers let hundreds of dollarsand,
for some, over $1,000slip through their fingers because they buy coverage
with high-priced companies. Our Ratings Tables report homeowners insurance
rates CHECKBOOK collected for several illustrative area homes and families.
As you can see, each year our hypothetical family living in a frame home
in suburban King County would pay $587 with Nationwide, $635 with Homesite,
$646 with PEMCO, or $648 with Mutual of Enumclaw, compared to $1,231 with
Liberty Mutual. The premiums for Farmers and State Farm, the states largest
writers of homeowners insurance policies, are both more than $1,000.
Even among homeowners who select low-priced companies, many waste hundreds
of dollars a year buying excessive coverage and optional coverage that
isnt worth much.
Here is our guide to homeowners insurance. We describe how rates are determined,
which companies are most likely to charge the lowest rates, how much coverage
to buy, which insurance options to consider and which to skip, and how
to get good service when you file a claim.
If youre considering an insurance switcheroo, you dont have to wait until
your policy term ends to sign on with a lower-priced company: Although
you might have to pay a small administrative fee to cancel your current
insurance, this fee is usually much less than the savings you get from
a lower cost carrier.
Although homeowners insurance companies often claim their offerings are
superior to their competitors, the coverage available from any company
can be categorized into a handful of industry-standard policy types that
offer roughly comparable coverage.
Although often marketed under other names, insurers for the most part offer
only four types of policies for single-family homes: HO-2, HO-3, HO-5,
and HO-8. By using standard policy language that has been tested in the
courts, companies limit the risk of surprise interpretations.
HO-3 policies are by far the biggest seller. They cover your house against
all types of risks except those that are specifically excluded. Most cover
fire, windstorms, theft, vandalism, frozen pipes, and accidental damage.
The risks most companies exclude are floods; sewer backups; earthquakes;
damage from termites, pets, or other animals; damage from mold, mildew,
dry rot, and wet rot (unless the damage was the result of a covered peril
such as a water-pipe burst); war; and nuclear accidents and explosions.
HO-5 policies provide the same coverage as HO-3 policies but also include
replacement cost coverage for personal property. We discuss personal property
coverage options below.
HO-2 policies, which were developed and used for many years before the
HO-3 and HO-5 forms were developed, cover only named risks, but the list
of risks is long. As a practical matter, the main difference from the HO-3
and HO-5 forms is that HO-2 policies dont cover damage from accidental
lossesfor example, if you drop a ladder through your bay window or spill
a bucket of paint onto your new carpet. Most companies no longer offer
HO-8 policies take into account the fact that older homes often have ornate
woodwork and other features that are very expensive to replace and make
the cost of rebuilding the home exceed its market value. HO-8 policies
promise to repair or replace what is damaged, but not for an exact replica
of what was lost. Another difference is that HO-8 policies cover only named
risks, which do not include certain risks of which older homes are vulnerable
such as sudden bursting of pipes.
Renter and condominium policies dont include full coverage for the dwelling
itself, which is the responsibility of the landlord or covered by the condo
associations insurance. Instead, these policies insure the tenants belongings
and provide liability coverage. Condominium owners can buy coverage for
damage to portions of the dwellingsuch as carpeting, cabinets, and other
improvements they have made to the premises. See our section Insurance
for Renters and Condominium Owners for more information.
All homeowners insurance policies provide compensation for damage to, or
Your dwelling (your homes structure).
Other structures on your property (detached garages, toolsheds, gazebos,
etc.). Most policies insure these structures for up to 10 percent of the
amount for which the dwelling is insured. For example, if your dwelling
is insured for up to $400,000, other structures are insured up to $40,000.
Most kinds of personal property (furniture, clothing, appliances, etc.)
owned by you and located on or away from your premises. Most homeowners
policies include personal property coverage for 50 or 75 percent of the
Increased living expenses coverage, which pays for hotel rooms or a furnished
apartment if your family is forced to move out of your house due to an
insured loss. Policies typically offer coverage for up to 30 percent of
the dwelling coverage, but some companies instead promise to reimburse
you for all increased living expenses incurred for up to one year.
Liability coverage, which pays for injuries or damages to others caused
by any member of your family residing in your home, a pet, or some dangerous
feature of your property itself. The most common limits in homeowners policies
are $300,000 or $500,000 per incident.
Medical payments to others. Most policies include this coverage with a
$1,000 to $2,000 limit.
Although we have reported the most typical amounts of coverage, you usually
can arrange higher coverage limits for an additional premium. This figure
illustrates the costs of raising the limits on a few aspects of coverage.
All policies have deductibles, an amount you have to pay for a loss before
the company pays anything. You can choose from a range of possible deductible
amounts, with lower premiums for higher deductibles.
While none of the standard policies covers certain risks, such as damage
from termites or other animals, war, earthquakes, sewer or drain backups,
or floods, you can buy special coverage for some of these risks.
See the section below for information on earthquake coverage.
With most companies, you can add coverage for sewer or drain backups for
$40 to $80 per year. Thats a reasonable price for insurance that will
pay for expensive cleanup and repairs.
If you want flood insurance, ask your agent for information or contact
the FEMA National Flood Insurance Program. Flood insurance is available
only for houses in qualifying flood plain areas and only in communities
that have chosen to participate in the National Flood Insurance Program.
Almost all eligible communities in the area participate. To get maps showing
flood plain areas, visit www.floodsmart.gov.
Your homeowners policy will not cover damage to your home and belongings
in the event of an earthquake. To be insured for earthquake losses, youll
have to buy an earthquake coverage endorsement separately, and for some
Puget Sound area homes this coverage can be extremely expensive. In most
communities an endorsement for $350,000 of earthquake coverage can cost,
depending on the company, your location, and the age of your home, between
$300 to more than $750 per year for a frame house and between $1,000 to
more than $3,000 per year for a masonry house.
Despite these high premiums, most earthquake insurance policies impose
a hefty deductible before coverage takes over. Most companies earthquake
policies have a 10 to 25 percent deductible (15 percent is most common)
for each category of coverage: With $350,000 of coverage and a 15 percent
deductible, the first $52,500 of damage will come out of your own pocket.
Even with the high premiums charged by insurers, many Puget Sound area
homeowners will have trouble finding a company that will sell them an earthquake
insurance policy. We found that only about half of the areas largest insurers
would write an earthquake policy for a masonry home, and most insurers
wont write an earthquake policy for either a masonry or a frame home unless
the house is bolted to its foundationa practice that was not required
by local building codes until the early 1960s.
If your house qualifies for earthquake insurance, consider the cost of
both the basic homeowners policy and the earthquake endorsement when choosing
a company. Companies that offer the best rates for earthquake coverage
dont necessarily offer the least expensive basic homeowners policies.
Because the earthquake endorsement can be very expensiveparticularly if
you own a masonry homefocus first on finding insurers that offer low-cost
earthquake coverage; then, as a second shopping step, compare their premiums
for basic non-earthquake policies.
Earthquake coverage for condominium owners and renters is considerably
less expensive than homeowners coverage because insuring the buildings
structure is the responsibility of the condominium association or the landlord.
When you buy homeowners insurance, you will probably be forced to purchase
a certain amount of insurance (which may actually be more coverage than
Insurers bundle into their standard policy forms minimum insurance amounts
for various coveragesfor example, personal property is almost always insured
up to an amount equal to 50 or 75 percent of the dwelling insurance amount.
You wont be able to simply decline coverage for certain options or lower
coverage below these preset limits. Also, if you have a mortgage your lender
will likely require you to maintain a certain amount of insurance on your
Although the preset, bundled amounts of coverage prescribed by the standard
insurance forms or required by mortgage lenders will meet the needs of
most homeowners, your home and other financial characteristics may warrant
purchasing insurance with higher limits for certain aspects of coverage.
It is important to obtain an accurate estimate of your homes replacement
cost, which will be used to determine how much dwelling insurance you need
to buy. The replacement value of your home is not the same as its market
value. Your homes market value includes the value of the land the home
sits on and the cost of your homes foundationtwo expensive components
of your homes market value that dont need to be insured since a fire
or windstorm is unlikely to ruin your lot or your foundation.
Instead, replacement value is calculated using construction costs; its
an estimate of what it would cost to rebuild your house completely on the
land that you own. Make sure that insurance quotes you receive from agents
are based on replacement cost; many unscrupulous insurance agents try to
sell customers too much insurance by basing dwelling coverage on their
homes full market value.
To determine replacement cost, most insurance companies provide an appraisal
when you take out your policy. Replacement costs are usually estimated
by multiplying the square footage of your house by the average construction
costs per square foot in your area, and then factoring in features of your
home that may be costly to replacetop-of-the-line appliances, wood flooring,
or marble tile, for example. Some companies routinely dispatch appraisers
for on-site inspections; others calculate replacement costs based on surveys
and tax records.
Unfortunately, it appears that it is a challenge for many insurance companies
to estimate replacement costs accurately. CHECKBOOKs shoppers were regularly
quoted widely disparate replacement costs for the same housefrom under
$300,000 to more than $550,000 for one sample home.
This imprecision is troubling for two reasons: When you overinsure your
house, you pay for coverage you dont need and could never make claims
on; worse, if you underinsure, you will not be fully covered in the event
of a total loss. If, for example, your home is insured for $300,000 and
burns to the ground and it costs $400,000 to rebuild it, the most you will
receive from your insurer is $300,000even if the insurer estimated your
replacement cost at $400,000.
Because in the last few decades construction costs have risen far faster
than the rate of inflation, and because neither insurance companies nor
policyholders have kept replacement costs up to date, far too many U.S.
policyholders maintain too little insurance for their homes. It is estimated
that over half of U.S. homes are underinsured, by an average of more than
But you can take steps to ensure your home isnt underinsured
Purchase a guaranteed replacement cost provision. Under this provision,
the insurance company agrees to rebuild or replace your dwelling regardless
of the expense, even if it exceeds the limit of your policy. To get this
guarantee, you must accept annual premium hikes that account for increased
Purchase extended dwelling coverage. Rather than offering guaranteed replacement
cost provisions, most insurers now offer extended replacement cost or
additional replacement cost limits, which provide a cushion by increasing
dwelling coverage by 20 or 25 percent above the dwelling coverage limit
on the policy. Some insurers automatically include a certain level of extended
dwelling coverage; others allow their customers to decide how much extra
coverage to buy. Usually, if your policy has an extended dwelling coverage
provision, youll have to accept annual dwelling coverage increasesand
Sign up for an inflation-guard endorsement. All insurers offer an inflation
provision that automatically increases dwelling coverage each year based
on inflation or increases in construction costs. Some insurers include
this provision at no cost, some offer a discount if you take it, and some
charge a $10 to $30 annual fee.
Have your home regularly appraised. Although it is ultimately your responsibility
to buy enough insurance to fully cover your home, you will at least be
in a position to argue for proper compensation in the event of a total
loss if your home is appraised on a regular basisespecially if the insurer
conducts the appraisal. Every few years, ask your insurer to re-estimate
your homes replacement cost and adjust your dwelling coverage accordingly.
You may as well ask several other companies to provide appraisals and quote
insurance rates to make sure you cant save significantly by switching.
Promptly report improvements you make to your home. If you add a room or
a deck, remodel a bathroom or kitchen, or finish your basement, increase
your dwelling coverage accordingly.
Even if you do what is necessary to cover your house for full replacement
cost there is, unfortunately, still a loophole. Many insurance policies
stipulate that coverage is for rebuilding the home exactly as it was, not
as it should be. This stipulation may be a problem if codes for proper
plumbing and electrical fixtures, roofing materials, or stairway construction
have changed since your home was built. Depending on your policy, and whether
you can get a waiver from your local government, your insurance company
may not be responsible for covering the cost of rebuilding your home to
the standards required by current codes.
To close this loophole, insurance companies offer clients ordinance and
law coverage, which calls for the insurance company to pay more than the
cost of replacement if complying with current codes makes such expense
necessary. This coverage usually is limited to an increase in the companys
liability by 10 percent above what it otherwise would be. Some companies
include this coverage for no additional premium; others charge about $10
to $60 for it.
Homeowners insurance policies typically cover your belongings for 50 or
75 percent of the amount for which you insure your dwelling. If your dwelling
coverage compensates you for losses up to $400,000, and your personal property
coverage is for 50 percent, you will be covered for personal property losses
up to $200,000. Even if your possessions are worth considerably less than
$200,000, you probably wont be able to purchase personal property coverage
below the 50 percent level of coverage.
Personal property insurance covers your possessions, whether they are at
home or away. In most cases, the only specifically excluded items are pets,
cars, and airplanes, but check what is excluded under any policy you are
Personal property is protected against only named perils. Earthquakes,
war, floods, and other perils excluded from coverage on your dwelling are
also excluded from personal property coverage. In addition, accidental
losses that would be covered on your dwelling under the popular HO-3 policy
form are not covered for personal property. For example, if you accidentally
spill paint on your brand-new leather sofa, or drop your fancy flat-screen
TV while trying to mount it on the wall, the loss is not covered. Nor are
you covered if you drop your wedding ring in a lake or a power surge knocks
out your computer. You can insure your personal property against accidental
losses by buying a special provision to an HO-3 policy or buying an HO-5
policy, but these policies are more expensive.
Another difference between personal property coverage and coverage on the
dwelling structure is in the way your reimbursement is calculated. Standard
homeowners policies cover personal property at actual cash valuereplacement
cost minus depreciation. If a bike you bought six years ago for $400 is
stolen, you might be reimbursed only $200, not the $500 youd pay for a
comparable new model. If you were to lose several items in a burglary or
fire, your disappointment in your insurance companys payout might be rather
For an extra premium, most insurance companies offer a special provision
that will change your policy to cover full replacement cost of personal
property. If your bicycle will cost $500 to replace, thats what youll
get (less your deductible) to replace it. Policies written under the HO-5
policy form automatically include replacement cost provisions for personal
property. This extra coverage usually adds 10 to 15 percent to the cost
of the policyalthough a few companies provide this enhanced coverage for
no extra fee.
All policies limit payouts for certain categories of personal property
losses. Typical limits include:
$1,000 to $1,500 for jewelry, watches, furs, and precious and semiprecious
$1,000 to $5,000 for computers.
$200 for money, bank notes, bullion, gold other than goldware, silver other
than silverware, platinum, and coins.
$1,000 to $1,500 for securities, accounts, deeds, evidences of debt, letters
of credit, notes other than bank notes, manuscripts, passports, tickets,
$1,000 to $1,500 for watercraft, including their trailers, furnishings,
equipment, and outboard motors.
$1,000 to $1,500 for trailers not used with watercraft.
$2,000 to $2,500 for firearms.
$2,500 for silverware, silver-plated ware, goldware, gold-plated ware,
$2,500 for property used for business purposes.
Companies sometimes impose similar coverage limits on works of art, antiques,
musical instruments, and cameras. Carefully review policies for any limits
that may leave your coverage short.
To insure items worth more than these special limits, consider buying additional
coverage either by paying to increase the category limit or buying a personal-articles
floater for them.
To determine how much coverage you needand to create a record of what
you owntake an inventory of all your possessions. Go room by room and
through each drawer, recording each item individually, making note of prices
paid, approximate dates of purchase, and model numbers. To aid you in this
task, most insurance agents will provide an inventory form. It is also
a good idea to take pictures or videos of each room in your house from
different angles to capture every item. Lay drawers out on the floor and
take a picture of the contents. When you have finished your inventory,
store a copy in a safe place away from your house.
As mentioned previously, standard homeowners insurance policies automatically
include coverage for several other loss categories
Other structures coverage insures all structures on your property that
are not attached to your house, such as gazebos or freestanding garages.
Policies usually include coverage limits for an amount equal to 10 to 30
percent of your dwelling coverage. The coverage does not apply to structures
used for business purposes.
Loss of use coverage pays for extra living expenses you incur as a result
of being forced out of your house by a covered peril. Many policies include
loss of use coverage for up to 30 percent of the value of the dwelling
coverage, but some insurers have higher, or even unlimited, loss of use
coverage built into their basic policies.
Liability coverage protects you from claims by others for injuries or property
damage for which you, members of your family, your pets, or hazards on
your property are at fault. Under this coverage, your insurance company
will hire legal representation to defend you and pay damages if you are
found liable. Your policy wont cover injuries or property damage caused
by business pursuits or automobile accidents (the liability coverage in
your automobile policy covers this). Without adequate liability coverage,
your home, savings, and future income are vulnerable.
The basic liability insurance limit in most policies is $300,000, but you
can purchase additional coverage inexpensively. Most insurers offer increased
liability coverage at $500,000 for an additional premium of only about
$10 to $25 per year. Most consumers consider these extra costs a bargain
for increased peace of mind.
If you want to protect yourself from claims in excess of $500,000, consider
an umbrella policy, which provides liability protection in addition to
what your homeowners and automobile insurance provide. Umbrella policies
are generally available in million-dollar increments; they typically cost
about $100 for the first million dollars in coverage, then less for additional
In addition to protecting you from liability claims, an umbrella policy
protects you against suits for libel, slander, defamation of character,
false arrest, invasion of privacy, and other claims not covered by your
homeowners policy. Before selling an umbrella policy, many insurance companies
require you to increase the liability coverage in your homeowners and automobile
policies to the maximum amount offered.
In addition to general liability coverage, homeowners policies include
provisions for payment of medical expenses incurred by people outside your
family for injuries that occur on your property or are caused by members
of your family residing with you, your pets, or your domestic employees.
Unlike liability claims, claims under the medical payments provision will
be paid even if you would not be legally liable. If a guest drops an object
and injures his or her foot while in your home, for example, medical payments
will be provided, even though the injury is the guests fault. Keep in
mind that medical payments coverage is usually limited to $1,000 or $2,000
per person unless you pay extra for an increased limit.
Most insurers now offer identity theft coverage. Some include coverage
with their standard homeowners insurance policies, but most charge extra
Unless your insurer includes identity theft coverage in its standard policy
for free, we do not generally recommend purchasing it, since the premiums
for these policies are high compared to the potential losses.
It is important to recognize that identity theft insurance does not promise
to clear your credit history and record for you; it merely covers the expenses
you incur to do so on your own. Although millions of Americans are victims
of identity theft each year, the average out-of-pocket cost to remedy the
effects of the crime is well under $1,000, and many pay nothing.
Most of the damages inflicted by identity theft are not out-of-pocket,
measurable costs, but rather the time and effort you have to devote to
repairing the damage. Although some identity theft policies compensate
policyholders for lost wages (with claims usually limited to $2,000), in
reality most consumers cant take unpaid leave to clear up their credit
record and dont file claims for lost wages.
Another reason to forgo special identity theft coverage is that you may
be able to get a similar policy for free from another source. Many banking
institutions, including credit card banks, offer identity theft protection
for free. Also, you already have some protection from fraudulent credit
card chargesthe most common form of identity theft injuryunder the federal
Fair Credit Billing Act, which stipulates that victims arent responsible
for fraudulent charges of more than $50 per card.
The cost of your insurance policy depends not only on the coverage you
select, but also on a number of other factors.
Factors such as your homes location, age, and building materials are largely
beyond your control.
Where You Live
Insurance companies divide areas into territories and assign rates based
on the losses companies experience in each territory and such factors as
the quality of police and fire departments, incidence of crime, and general
level of maintenance of the housing stock. Prices for homeowners insurance
vary substantially from territory to territory in the Puget Sound area.
Within territories, companies set rates according to the propertys proximity
to a fire station and a fire hydrant, and on the quality of the fire department
and water supply for firefighting. Rates are usually much lower for homes
in protected areas within five miles of a fire station and within 500
to 1,000 feet of a fire hydrant. Premiums for homeowners insurance in unprotected
areas are typically 40 to 60 percent higher than in protected areas.
Insurance companies rate houses as frame, masonry, superior, or in a
similar category of construction. The lowest premiums go to houses in the
superior categoryhouses in which all floors, the roof, and all exterior
walls are constructed from noncombustible materials like concrete, metal,
or gypsum. The masonry construction category includes houses with exterior
walls made of a noncombustible material like brick, stone, or adobe but
that have floors or roofs made of combustible materials. The most expensive
rating is for wood-frame houses, including houses with wood, vinyl, or
Premiums for superior construction are about 15 percent less than for masonry.
At a location with good fire protection, frame construction costs on average
eight percent more than masonry construction. At a location with poor fire
protection, construction materials matter more because frame houses are
more likely to totally burn. In such a location, total premiums are about
20 percent higher for a frame house than for a masonry house.
While frame construction is a disadvantage in the event of fire, it is
an advantage in an earthquake. If you purchase earthquake coverage, your
overall homeowners premium will be substantially lower for a frame house
than for a masonry house.
How Old or Historic Your House Is
If your house is less than 10 years old, most companies offer a premium
discount, and some offer discounts on houses less than 25 years old. This
discount can be as high as 50 percent for a brand-new house but only about
half as much for a five-year-old house and likely to be five percent or
less for older homes.
If your house was built before 1930, you may not be able to qualify for
an HO-3 policy. Instead, you may be offered an HO-8 policy, which will
not cover damage caused by accidents such as bursting pipes or electrical
shortages that occur more often in older homes.
If your home is located in an historic district, expect to pay much higher
premiums, since historic districts usually require exterior damage to be
repaired to replicate its original features and appearance. Also, homes
in historic districts are likely to be limited in choice of insurers, since
many insurers wont write policies in these neighborhoods. Some insurerssuch
as Chubb and Firemans Fundspecialize in insuring old or historic homes.
Features of Your Home
Most insurers charge higher premiums if your home has features that include
A fireplace or wood-burning stove;
A pool, tennis court, trampoline, or outdoor hot tub;
A fully or partially finished basement;
A garage located beneath a living area;
An electrical system that has not been updated with a circuit breaker;
A roof composed of wood shingles;
A roof over 20 years old; or
A furnace more than 20 years old.
If You Have a Dog
Most insurers charge higher premiums to homeowners who own a rottweiler,
pit bull, or other breed of dog that the company believes has a propensity
to attack strangers, and most insurers charge higher premiums to homeowners
whose dogs have ever bitten strangers. Some insurers specifically exclude
damages caused by dog bites from their liability coverage.
Your Marital Status, Age, Occupation, and Other Factors
Some companies charge higher rates to younger families, some charge higher
rates to singles, and some use policyholders occupations as criteria in
Companies, unfortunately, are increasingly using secretive and opaque methods
to calculate their rates. The only way to determine whether youre paying
too much is to periodically shop around for a better rate.
Although your homeowners insurance premium is determined by many factors
that are beyond your control, you do have choices that can minimize what
you pay. Most important is the company you use and how much insurance you
purchase. But you also have control over several other factors.
Because claims can drastically increase your premiums, try to limit the
number of claims you make.
The most common result of filing claims is that your insurer may refuse
to renew your policy. You will have trouble finding another reasonably
priced insurer that will agree to write you a new policy, and, when you
find one, youll be considered a high-risk customer and charged high premiums.
In a worst-case scenario, you cant find an insurer and are forced to obtain
coverage with the states FAIR [Fair Access to Insurance Requirements]
plan, which is likely to charge higher premiums than even the most expensive
Even if your claims history doesnt cause your insurer to drop your policy,
making claims will probably raise your premium. Some insurers offer steep
discounts to customers who have not made any claims during a two-to-five-year
period. Others simply increase rates for policyholders who make claims.
All homeowners insurance policies include deductibles; your loss must exceed
the deductible amount before the insurance companys coverage takes effect.
Most companies apply a standard deductible of $1,000 or $2,000. All companies,
however, allow you to raise your deductible above the basic level.
By taking as high a deductible as you can, you reduce your premiums substantially.
Figure 1 shows the typical savings. Moving from a $500 deductible to a
$1,000 deductible lowers insurance premiums by an average of about 12 percent.
A $2,000 deductible saves on average about 21 percent compared to a $500
When you take a high deductible, youre also less likely to file small
claims that may generate future premium hikes. Keep in mind that the purpose
of insurance is to protect you from losses that you cant afford to cover
yourself. If you buy insurance for small losses, you pay insurance company
overheadsales, administrative, and claims handling coststo deal with
losses you could cover out of your own pocket. On average, only 60 cents
of every dollar of policyholders premiums is returned in claims payments.
The rest goes to company overhead and profita waste of money from your
standpoint. You need to determine how big a loss you can incur without
unacceptably disrupting your life, and then set your insurance deductible
You can get discounts for installing devices to protect your home from
burglary and fire. Deadbolt locks, fire and burglar alarms, fire extinguishers,
or a combination of these devices will generally save you one or two percent.
Bigger discountstypically an additional five to 10 percentare available
for homes that have alarms that report to a central-station monitoring
service. The biggest discounts usually go to homes with full sprinkler
systems. Click here for ratings of home alarm installers.
Another type of discount is for dual policyholders. If you purchase auto
and homeowners insurance from the same company, some companies will give
you a discount off your homeowners premium, others will cut your auto premium,
and some will cut both.
Keep in mind that such discounts wont make a high-priced company a good
deal. Click here for our most recent report on auto insurance.
Most insurers use credit scores to help determine premiums. With many companies,
your credit score influences the rates youre offered more than any other
factor: The prices most companies offer customers with poor credit are
double what they offer customers with excellent creditwith some companies,
the poor-credit penalty more than triples their rates. The logic is that
if you handle your finances carefully, you are more likely to be careful
with the investment in your home. Many consumer groupsincluding CHECKBOOKoppose
this use of credit scores, arguing that the scores are not a direct measure
of insurance risk and that using the scores in insurance pricing hurts
low-income consumers, whose scores tend to be lower on average.
Since smoking increases the risk of fire, most insurers charge higher premiums
for households that include one or more smokers.
For 10 sample properties, our Ratings Tables show annual premiums for
the companies writing most of the homeowners insurance in the area.
To collect rates, we worked with Quadrant Information Services, a company
that uses the information insurers are required to file with state governments
to calculate and analyze insurance rates. The rates reported on our Ratings Tables were calculated based on insurance company filings as of summer
We asked each of the insurance companies to verify and, if necessary, correct
the prices Quadrant calculated for us. Not all of the companies responded
to our request.
Fortunately, you dont have to wait until the end of your policy term to
shop for a better rate. Although you might have to pay an administrative
fee to cancel your current policy, this fee is quite small compared to
the possible savings you can get with a lower-cost carrier.
While the premiums we report are for properties with specific characteristics
and values, we believe the rates are a good indication of which companies
charge lower prices for properties of higher or lower values.
Similarly, the prices remain useful even if the coverage you desire is
different from the sample profiles. For example, if you want higher limits
for personal property or liability coverage than in the sample rates, you
will have to pay higher premiums than shown, but most companies add about
the same percentage to your premium when increasing these coverages.
When looking at company rankings, keep in mind that all the rates were
collected for policies that would be new business for the insurers. If
youve been with your current insurer for several years and havent filed
a claim, you may be getting a steep discount; you wont know whether starting
over with a new company makes sense until you comparison shop.
This figure will help you identify situations in which the quotes on
our Ratings Tables might be least useful. The figure shows roughly
how much you might save or how much more you might pay if your home or
the coverage you desire differs from the quoted home and coverage. Each
bar on the figure shows a rough range of possible savings or extra costs;
different companies will come in at different points in that range. If
the range is small, the relative rankings on our Ratings Tables wont
change much if you get a particular type of discount or surcharge. But
if the range is large, and youll be getting the potential discount or
surcharge, rely less on the rankings for our sample profiles.
One case needs special attention: the dual-policyholder discount. Many
insurance companies offer lower rates if you insure both your home and
your car with them. Some knock off five percent, 10 percent, or even more
from either the homeowners rate or the auto rate; some knock off a percentage
From a consumers point of view, dual-policy pricing is undesirable because
it makes shopping more difficultto find out the exact savings you can
realize by switching companies you have to shop for both types of coverage
at once. But the discounts arent usually large enough to have a major
effect on the relative rankings of companies.
Click here for our evaluations of companies for auto insurance.
Because homeowners insurance claims are fairly rare, we advise consumers
to shop for the lowest price and put less emphasis on the quality of claims
handling and other service issues. But among companies with similar rates,
you may want to consider service as well as price. Fortunately, it is possible
to choose a low-priced company and still get good claims service.
You want a company with responsive and knowledgeable agents or sales staff
who provide sound advice and accurate price quotes. Unfortunately, CHECKBOOKs
mystery shoppers find insurance agents and sales staff often dont calculate
accurate prices, and some offer alarmingly bad information and advice.
The following are the most common problems we encounter
In some cases, the amount of dwelling coverage we are advised to purchase
on a sample home varies by more than $100,000 from agent to agent for the
same insurance company. Company sales staff and insurance agents often
advise us to take on much more coverageat a higher pricethan needed.
We repeatedly encounter insurance agents who quote completely different
premiums than other agents for a policy written by the same insurance company.
In some cases, agents quote prices that are more than double the correct
Some agents and insurance company staff dont ask enough questions to enable
them to quote accurate prices. For example, some agents dont ask whether
the home was of frame or masonry construction, and many never bother to
ask about features that would affect premiums, such as burglar alarms.
Many companies and agents push add-ons or increased coverage limits. These
options are often tacked on to price quotes without discussion or any mention
that these coverages are optional and will increase the premium.
When questioned about unwanted options, some agents falsely claim that
the extra coverages were required by the insurance company or mandated
by state law.
Encountering purveyors of bad advice is not a new phenomenon for us when
collecting information from local service companies. But our experiences
in dealing with insurance company sales staff and agents are particularly
disturbing because upselling and downright dishonesty are so commonplace,
and because the problem has persisted over many years.
To make sure you receive accurate information and prices, shop several
companies and agents. Push hard for reliable information. First decide
the exact types and amounts of coverage you want to buy, then make sure
the agent bases your premiums on those specifications. Examine price quotes
very carefully. If unrequested or unnecessary coverage is included, request
an explanation. If the answer is unsatisfying, take your business elsewhere.
One of the most important elements of insurance company service quality
is its claims-handling practices. Are claims paid promptly, and are the
payment amounts fair?
One way to spot serious problems is to look at records of complaints filed
with the Washington State Office of the Insurance Commissioner. Our
Ratings Tables report counts of homeowners insurance complaints and
complaint rates for 201113 (the most recent years for which data were
available) for the insurance groups that wrote the most policies in Washington
during that time period. For each company, the table also reports complaint
rates, which take into account the fact that some companies do much more
business than others and are therefore likely to incur more complaints.
The complaint rates indicate the number of complaints per $10 million in
homeowners premiums written.
If you compare the complaint rate information on our Ratings Tables
with the pricing information, you will see that homeowners can find companies
that offer low premiums and also have relatively low complaint rates. For
example, Mutual of Enumclaw, PEMCO, and USAA have low premiums for all
of the sample profiles we report on, and also have low complaint rates.
In short, you can save money and also get good service.
Feedback from Policyholders and Contractors
Another way to measure service quality is to survey customers. We have
collected feedback from area consumers, primarily CHECKBOOK and Consumer
Reports subscribers. Our Ratings Tables show the percentage of respondents
who said they would recommend each company. The companies with the highest
percentage of recommendations were PEMCO, USAA, Amica, and Chubb; the companies
with the lowest were Allstate, Liberty Mutual, and Safeco.
We also asked contractors to rate homeowners insurance companies with which
they had experience as poor, fair, good, very good, or excellent
for treating their customers fairly when paying claims. Some contractors
were unable to respond, since they had little or no experience working
with customers who needed work done under insurance claims. But many did
have opinions based on their experiences. Our Ratings Tables show the
percentage who rated each company good, very good or excellent. Not
surprisingly, there is some correlation between companies scores with
contractors and their scores with surveyed homeowners.
Renters and condominium owners can purchase insurance similar to homeowners
policies to cover belongings, additional living expenses, personal liability,
and medical payments to others.
As with homeowners insurance policies, rates for renters and condo owners
vary significantly from company to company so youll want to shop around.
Renter and condo policies usually cover personal property for its actual
cash value; you can purchase an endorsement for replacement-cost coverage.
As with homeowners insurance, special limits of liability apply to certain
categories of items. If you arent sure your valuables are covered, ask
your agent for clarification. If they are not, you can increase the special
limits or purchase an individual floater for each item.
Coverage for additional living expenses (expenses that result from loss
of use of your dwelling) usually is for an amount up to 30 percent of the
coverage of your personal property under a renters policy and up to 40
percent of the coverage of your personal property under a condominium owners
Renters and condominium owners policies do not cover damage to your buildings
basic structure; landlords and condominium associations should have insurance
to cover such losses. But condominium owners policies do cover some structural
damage. The extent of this coverage varies significantly, and how much
structural coverage you need depends on how much coverage is provided by
the condominium associations policy. Some condominium associations policies
cover built-in fixtures like sinks, bathtubs, and electrical wiring. Others
stop coverage at the unfinished walls, leaving you responsible for any
fixtures or improvements inside. Purchase a condominium owners policy that
takes over where the condominium association policys coverage ends. (Some
renters policies also allow you to purchase coverage for improvements you
make to an apartment.)
If you negligently cause damage to your building, the landlords or condominium
associations insurance company may sue you to recover its expenses. The
liability coverage in your policy should protect you in such an event.
Most condominium policies provide loss assessment coverage, for up to $1,000.
This protects you if your building association assesses you an amount to
make up for a loss it has incurred. For example, if there is damage to
the building, the association might make an assessment to cover the deductible
in the associations policy or for the difference between an actual cash
value settlement and the replacement cost.
Consider purchasing your condominium owners policy from the insurance company
that sold the policy to your association. If it offers a competitive rate,
insuring with it may reduce the time it takes to settle claims where the
loss is partly the associations and partly your own.
Report the Claim
Call your insurance agent. If you dont have one, call your insurance company
and ask for the claims department. The companys phone number should appear
in your policy.
It is important to fully understand your rights and responsibilities. If
your insurance policy has been lost or destroyed in the disaster, or if
you are confused about the policy benefits or exclusions, your agent or
company can tell you exactly what coverage you purchased and provide a
copy of the policy provisions.
Make Sure Your Insurer Promptly Responds
After you report your loss, the insurance company will assign a company
representative to check the damage to your property and determine how much
it will pay. If it is necessary to vacate your home, be sure to report
the address and phone number where you can be reached.
Washington State law requires insurance companies to acknowledge receipt
of your claim within 15 working days. They are also required to provide
you with the appropriate forms to file a claim. If your company does not
respond to you within the required period of time, or if you experience
any other unreasonable delays in the handling of your claim, contact the
states Office of the Insurance Commissioner.
Information You Will Need to Provide
You will complete a claim report that lists all items destroyed, damaged,
or missing. If you dont possess or cant locate a complete household inventory,
picture the contents of every room in your home and then list and describe
all items damaged or destroyed. As accurately as possible, indicate when
or where you bought each item, how much you paid for it, and how much it
will cost to replace it. Also, include the brand name and model number,
if you know them.
Make Temporary Repairs to Prevent Further Damage
To protect your property from further damage, make all necessary temporary
repairs, such as boarding up windows and patching holes in walls or roofs,
as soon as possibleeven before you see the insurance company representative.
Also, move your belongings to a protected area, and begin cleaning and
drying items damaged by water. However, dont dispose of any item that
may be a complete loss until the company representative has examined it.
Take pictures to show how things looked before you began cleaning and repairing,
and keep receipts for all clean-up expenses.
Most homeowners policies cover reasonable costs of emergency clean-up and
temporary repairs. Be sure to keep receipts.
When Dealing with Contractors, Withhold as Much Payment as Possible Until
Work Is Completed
If the repair work is extensive, the contractor may ask for periodic partial
payments as the work progressesbut no reputable contractor should request
full payment in advance. The contract should specify that payments will
be made as the work is completed. If you have a mortgage on your home,
the lending institution may also have specific requirements as to how the
insurance funds are disbursed.
What to Do If the Cost of Repairs Exceeds What the Insurer Will Pay
If there is a discrepancy between what your insurance company offers you
and the actual cost of repairs, or if the contractor finds hidden damage
after the insurance company has set a cost figure, first contact the company
representative and try to resolve the difference. If you are still unable
to resolve your differences, contact your states insurance department.
Where to Live During Repairs
Standard homeowners policies include coverage for costs in excess of your
normal living expenses. Ask your company representative if there are any
restrictions on where and how long you can stay, and how much you are allowed
for hotel rooms. If you stay with a relative or friend, the company may
reimburse your host for lodging only if you can show proof of actual payment.
Extra expenses, such as higher utility bills incurred by the host, would
definitely be considered.
What to Do After a Flood
Standard homeowners policies do not cover flood damage. But, if you have
a flood insurance policy, your company or the National Flood Insurance
Program will assign an adjuster to your claim.
If your home is not covered for flood damage, check with the federal agencies
at the local disaster center to see if you are eligible for federal assistance,
including grants or low-interest loans.
What to Do After an Earthquake
If you purchased an earthquake coverage endorsement, your company will
assign a representative to evaluate your damage. If you do not have earthquake
coverage, check with federal and state emergency agencies to see if you
are eligible for financial assistance.
If You Have a Problem with Your Insurer
Contact your agent or company if you believe your insurance company has
improperly canceled or non-renewed your policy, or has refused to pay all
or part of a valid claim; you have the right to question and complain.
If a mistake has been made, it will be corrected if you make an inquiry.
A complaint by letter or e-mail is best; retain copies of your correspondence.
If you complain by telephone, keep a written record of the date and time
of your call, the name of the person you spoke to, and what was said during
If you do not receive a prompt, courteous, and satisfactory response, ask
the Washington State Office of the Insurance Commissioner for help
resolving your problem. State insurance departments have a lot of leverage
with companies and resolve many complaints in favor of consumers.