Picking an insurer

In Lesson 19

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Top things to know Why insurance costs so much Value your home properly Getting the proper coverage Picking an insurer Maximizing your savings A few words about claims

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Cast a wide net

First, check what's out there. Get quotes from at least four carriers.

Try a free database such as InsWeb, which offers quotes from up to 8 insurers, or Quicken InsureMarket, which provides up to 16 quotes. The larger the database, the better.

Try these options.

Companies like State Farm and USAA that deal directly with consumers without using independent agents are called "direct writers." In theory, they can pass on their savings by eliminating the middleman.

Read your junk mail. Direct marketers like Geico and Progressive Insurance Co. save on overhead - and pass on the savings - by marketing by phone, mail, or the Internet.

Let your state be your guide. Most state insurance departments offer online shopping guides for homeowners insurance. Your state's guide may identify little-known companies with competitive rates. Insure.com can link you to your state guide.

Look at service

No discount in the world will make up for slow claims processing, so find out as much as you can about a company's service before you sign on. Consumer Reports periodically publishes service ratings for large insurers. You can also ask a representative about a company's claims turn-around time; a shorter turn-around is an indication of better service.

Focus on financials

Several insurers were hit hard by Hurricane Katrina in 2005 - the industry paid out nearly $60 billion to cover losses from the storm. For that reason, it's wise to look at the financial ratings of your home insurer. Ask the company for that information, or check out one of the financial ratings services on the Web.

An A rating or higher from Standard & Poor's or an AA ranking or better from Moody's Investor Service is a good indicator of strength. Weiss Ratings, the most independent of the ratings services, and arguably the most stringent, publishes a list of the currently weakest homeowners insurers.

As a last resort, there's your state

Unfortunately, if your home's in a hurricane zone, you may be stuck with just one expensive option, your state-sponsored high-risk pool. But try shopping again a year from now. Private insurers are continually looking for new ways to cut up the market, and one company's black mark is another's business opportunity.

Some states provide assistance - either shopping help or special coverage - for homeowners who can't find insurance in urban or vulnerable coastal areas. Check with your insurance department for details.

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