The closing date is looming, and you still have to find homeowners insurance!
So many choices, so many things to consider, and you’re under a deadline to buy homeowners insurance before your closing date. Don’t panic–just get educated.
The good news is that here in Illinois, we enjoy below national average premiums for homeowners insurance. And the state has a specific government department dedicated to educating consumers and helping them find the best homeowners insurance for their particular situation. So read on for some quickie help in finding the right policy for you–on a deadline!
Why do I even need homeowners insurance?
There are two major reasons–to save yourself from costly repairs that could put you in the poor house and because, unless you are a cash buyer, you can’t get a mortgage without it.
I’m sure you have heard horror stories of people who were either under insured or didn’t have a policy at all (homeowners or renters). But even minor damage can cost a lot more out-of-pocket than you may expect. So if you need to prove it to yourself, just get a quote on a flooded basement and add in all your personal possessions that you might lose. Now compare this to your premiums and add in your deductibles. You are still coming out on top.
And then there is the mortgage to consider. Your lender will have specific limits and deductibles that they will require you to carry. And if you let your policy lapse, the mortgage company will take over with their own policy, which is often much more expensive than the policy you shopped around for in the first place.
Where do I start?
Your realtor and your mortgage lender can offer you some suggestions. And the Illinois Department of Insurance has some very comprehensive guides on their website.
You will need liability, medical payments, and property coverage at a bare minimum. You can also buy additional coverage for personal property replacement, refrigerated products, business, earthquakes (not common in Illinois), inflation, mine subsidence, water backup and sump pump overflow, flood coverage, and wind and hail damage.
Of all of these, wind and hail coverage may be the most important in our area. While this coverage will cost you a little bit extra, it is such a common occurrence in Illinois, that it can cost you much, much more when those violent storms rip your shingles off and knock trees down on your porches.
How can I get the best premiums?
The age of your home, the number of claims filed on it in the past, and your credit rating can all affect your premiums. So be sure to do some comparison shopping. Each insurance agency analyzes your home and your credit differently. Start with the well-known companies, as they are usually well-known because they offer good rates, easy claims processing, and have strong financial backing.
Make sure your insurance company is licensed in the state, as well. The Illinois Department of Insurance can confirm that for you. The most obvious variables that will affect your premiums are the level of coverage you choose, the level of deductible, and any additional insurance you add on to the basic policy. Other considerations may affect your premiums such as: your home’s type of construction, the type of fire protection you have, where your home is located (including the crime rates and likelihood of disasters), the age of your building and how many units are attached to it, how many claims were filed on the property in the past, and as already mentioned, your creditworthiness.
And while the insurance companies are checking out your creditworthiness, it is a good idea to check out theirs as well. A good resource to use for this is AM Best, a credit reporting company that looks specifically at an insurance agency’s ability to pay out claims (a.k.a., financial backing).
How can I lower my premiums?
Keep up on your bills! Don’t let a late utility bill hurt your credit. If you are a bit spacey or overwhelmed with other responsibilities, put them on automatic bill pay. And keep your debt-to-income ratio low. Track down and correct any errors on your credit reports.
Look for the things insurance companies typically give discounts for. Basic things can get you a 5% discount (like deadbolt locks, smoke detectors, etc.). Want to save something more like 15 to 20% on your premiums? Install more sophisticated things like bugler alarms that alert your police department and fire sprinkler systems.
Install things that are impact and fire-resistant any place you can. Some insurance agencies won’t cover wind and hail damage to your roof if it is older than 10 or 15 years. So if it is time to replace the roof, spend the extra money on materials like cement, asphalt, rubber, and metal.
Homeowners insurance on a deadline
Do take the time to shop around! Ask questions and get multiple quotes. Don’t give in to high pressure sales tactics. Yes, you are on a deadline to get those quotes and get a policy in place. But if you make the time to do it right and get the coverage you need at a price you are happy paying, you can spend all that time after closing putting the pretty finishing touches on your home instead of having to start all over again finding a new policy because you rushed into one that wasn’t right for you.