How to compare homeowners insurance quotes
A home insurance quote provides an estimate of how much you would pay for home insurance from a particular company. To get a home insurance quote, you may need to provide information on how old your house is, where your house is located, your claim history and what home insurance limits you need.
Home insurance companies determine your quote using many factors. The price in the quote you receive is the result of multiple coverage limits and policy details. That means you should consider more than the final price on the quote. One company may have higher monthly premiums, but you may also get more coverage for the price.
For example, a quote has a dwelling coverage amount, which is the maximum reimbursement a home insurance company will provide if your home must be rebuilt. One company may quote you $150,000, while another quotes you $180,000. When comparing the final quote price between these two companies, remember that one provides more dwelling coverage than the other.
Because homeowners insurance policies are standardized, coverage won't vary much between companies. Still, some parts of a quote may change greatly between companies. For example:
- Coverage limits (the maximum amount the company will pay out)
- Type of replacement (RC vs. ACV)
- Deductible amounts
- Additional coverages and endorsements
There are also different types of policies for home insurance, which are referred to as HO-1 through HO-8. Each policy type is tailored to the kind of housing you live in and your home insurance coverage needs. Home insurance coverages that are owner-occupied range from the most basic (HO-1) to standard (HO-2 and HO-3) to comprehensive (HO-5). The most common type of home insurance policy is the HO-3. There are six coverages in a standard HO-3 homeowners insurance policy, and they each have their own coverage limit.
HO-3 home insurance policy coverages
Typical coverage amount
What it covers
Cost to rebuild your home
10% of dwelling
The other structures on your property, like a garage
50% of dwelling
20% of dwelling
Extra living expenses if you temporarily cannot remain in your home
Legal and settlement costs if you are sued and found liable
Medical expenses if a guest is injured on your property
Your dwelling, other structures and personal property coverages also include a type of replacement, either replacement cost (RC) or actual cash value (ACV).
RC: Replacement Cost
Replacement cost policies reimburse you based on the cost to completely replace a damaged item. For example, if a fire destroys your living room couch, an RC policy will reimburse you enough money to purchase a new couch.
ACV: Actual Cash Value
Actual cash value policies reimburse you based on the value of the item at the time of loss, factoring in depreciation. So, if that same couch is lost in a fire and you have an ACV policy, you may receive a substantially lower settlement that reflects the value of the used couch.
Different coverages in your policy may be RC or ACV. It's common for dwelling coverage to be RC and property coverage to be ACV.
There are a few deductibles you might see on your policy. These include a policy deductible and special deductibles, like a wind, hail or hurricane deductible, depending on where you live. That means the amount you have to pay out of pocket may change depending on the peril that causes damage.
An example of comparing home insurance quotes
Using a comparison website like QuoteWizard lets you get multiple quotes, empowering you to choose the policy that's right for you. As an example, we made up two imaginary policies, which are described in part below.
Personal liability coverage
Property replacement policy
The two policies have different monthly premiums – Policy A is cheaper than Policy B. But how does the coverage compare?
Policy B provides more liability protection than Policy A. That means if you reach your liability limit of $100,000 with Policy A, you could be responsible for any additional out-of-pocket costs. Similarly, Policy B's dwelling coverage limit is higher, meaning your home's structure is protected for a larger amount.
There's also the wind deductible to consider: you could be out $1,000 for Policy A, but only $250 for Policy B after a loss due to wind. This difference could easily negate any policy savings you got by going with Policy A.
Lastly, consider the property replacement type. For Policy A, you'll receive actual cash value after a loss, meaning you'll have to pay some amount out of pocket to completely replace the item. The replacement cost with Policy B, on the other hand, means your insurance company will reimburse you the full cost to replace your belongings after a loss.
The final cost of your homeowners insurance policy doesn't matter if you aren't receiving the coverage you need. Even if one company has lower monthly premiums, what if it doesn't fully cover you after a loss? That's why we recommend comparing price and the quote coverage limits.