What Many Homeowners Insurance Companies Don't Want You to Know
Buying home insurance isn't like buying a loaf of bread so
don't just jump at the cheapest quote you get.
Remember that your insurance company is going to be where you
turn to in your hour of need. You really don't want to be
left dangling with an unpaid claim if your home is hit by
some catastrophic event.
So how do you find out if a company has a good reputation
for honoring their homeowners insurance policies.
http://www.badfaithinsurance.org is one of the greatest
resources on the net for home insurance shoppers. It has a
list of insurance companies that are notorious for not paying
claims. It also maintains a list of good insurance companies.
Other useful web resources are the consumer complaint sites. The
reviews of a lot of the homeowners insurance companies are eye-opening.
Two of the biggest consumer sites that have homeowners insurance
reviews are
Complaints.com and
Rip-Off Report.
Just search for an insurance company's name and see if anything comes up.
Another easy way to research is to use an internet search engine
like Google.
If you want to research a company called XYZ Insurance, just
search Google for an expression like "XYZ Insurance complaints"
or "XYZ Insurance experiences". You can also try searching
for the company name and various expletives. As juvenile as it sounds,
it often yields many illuminating results.
What about the Better Business Bureau (BBB)?
It's worth a shot to search their site, but it seems as
though their services are often of limited usefulness.
The web site provides little detail about complaints. They mention
whether a company has responded to a complaint, but it is not
clear that issues were resolved to the customer's satisfaction. What is
more disturbing is that the BBB takes money (membership fees) from
the very businesses that they are supposed to monitor.
It seems that a conflict of interest is likely.
What Type of Coverage Should I Get?
Named Peril vs Open/All Peril
In a named peril policy, only the types of damage
listed on the homeowners insurance policy will be covered. In an open or
all peril policy all physical damage that is not
specifically excluded will be covered. Generally,
all peril policies are better since they provide
more coverage and usually do not cost a great deal
more. All Peril coverage does not automaticall y
include earthquake or flood insurance, which must
be purchased separately.
Actual Cost Value vs Guaranteed Replacement Cost
An Actual Cost Value policy will only pay you what
your property is worth given its age. For example,
if you bought a television 10-years ago for $500,
it might only be worth $100 to buy a similar 10-year
old television. So if the TV was lost, the insurance
company would only reimburse you $100.
Guaranteed Replacement Cost policies pay you what
a similar new item costs today. Since Guaranteed Replacement
Cost provides much better coverage, the insurance premiums will naturally
be higher.
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