0 How To Shop For HO3 Insurance

HO3 insurance, or standard homeowner's insurance policy, is designed to protect the largest investment most people will ever make.  Unless you happen to work in the insurance field however, choosing the right insurance coverage can be a daunting challenge.  Here's how to make the right choice when deciding on an HO3 insurance policy.

When deciding on a HO3 insurance policy, you first need to determine how much insurance you need; specifically, how much insurance do you need to rebuild your home if it is destroyed.  The calculated replacement cost is the total cost of rebuilding your home as close to what you have now and is the figure to use.  This includes not only the building materials, but the labor and cleanup costs.  This figure is different from the market value of the home, which is what either you paid for the home or it is appraised for, and should not be used in deciding on a home's insured value.  These two amounts could be close or they could be vastly different depending on market values in the surrounding community. The recent fall in home values illustrates how this could fluctuate.

To determine the replacement cost of your home, use one of the free online building cost estimators like www.building-cost.net to get an estimate.  Another way is to use a rule of thumb of $100 per square foot of living area for a standard home.  For example, if the living area of your home is 1500 square feet, an approximate replacement cost value would be $150,000.

Once you get the replacement cost value, it's time to start shopping.  The first step in finding an HO3 insurance policy would be to go to an online  insurance quote site to get premium estimates.  These sites will quote insurance costs from available insurers and will give you a good ballpark estimate of what you will pay.  Don't make the assumption that the lowest premium is the best; take a look at the financial rating of the company to make sure they are stable.  Look for a minimum of an "A" rating from one of the rating services like A.M. Best.

Once you choose the best couple of premium estimates, call a couple of local insurance agents in your area for quotes.  Give them the replacement cost you figured earlier in order to better compare quotes.  Having a local agent to work with will save you time and can do all the work for you, if their quoted premium is competitive.

Shopping for a good HO3 insurance policy needn't be hard or time consuming.  Do your work ahead of time, get several quotes, check out the companies, and look for a local agent to use if possible.  By doing these steps, you will sleep better at night knowing your home is properly insured.