Get Home Insurance Quotes

How Do Insurance Companies Calculate Home Insurance Quotes?

(Our actuaries dish the secret formula)

Christine Lacagnina | July 17, 2018
Beautiful Exterior of New Home at Twilight

So you're ready to find the right insurance coverage for your home. Let’s do this. We’ve been around the block a few times and know that finding insurance quotes can be a bit tricky—the process can be long, tedious and confusing. 

Lucky for you, our independent insurance agents are here and can handle all the dirty work. They'll shop and compare policies from multiple carriers to find the best coverage. Best part is, they’ll break down all that fancy insurance-y technical jargon in a way that's easy to understand.

But before we get too far ahead of ourselves, let’s talk about homeowners insurance quotes, how they’re made and how to get the best ones placed on the table in front of you. 

How Homeowners Insurance Quotes Are Born

Before you dive into getting coverage, you should know how insurance companies come up with quotes. 

  • They start by evaluating a series of risk factors that have number values (costs) associated with them, in a rating manual.
  • Risk factors may be things like age, gender, location, etc.—things that could increase the chances of you filing a claim.
  • The cost of the risk factors is determined either through studies of historical trends, or via analytical models (basically, super sciency/mathy stuff).
  • They'll check off those attributes that apply to you.
  • A quote comes from the sum total of everything checked off on the list—plus a bit extra factored in for the insurance company's profit margin. However, due to competition from other companies, they might lower the price a bit.

NOTE: Quotes are subject to change—the insurance company may gradually increase your premium over time to keep up with the financial demands of offering the coverage.

How to Get the Homeowners Insurance Quotes You Want

Step 1: Understanding Homeowners Insurance and Why You Need It

Now that you understand how homeowners insurance quotes are born, it's important for you to understand what homeowners insurance is, and why you'd need/want it:

  • The what: Homeowners insurance is a contract between you and an insurance company. This contract states that you’ll pay them a premium and they’ll help protect your home. So, should your home be damaged, destroyed, vandalized, or the scene of an accident they’ll pay to replace, repair or cover medical/legal fees.
  • The why: If you’ve got a loan on your home, which is most often the case, your lienholder will most likely require homeowners insurance to protect their investment. But sometimes that’s not the case.
    Regardless, it's important to protect your home, your stuff and yourself from things like property damage, natural disasters, vandalism and injury on your property.

Step 2: Gather All Your Info

Homeowners insurance quotes are only as good as the info you provide. So make sure you supply the following details with a sharpshooter’s accuracy:

  • The value of your home (you know, the purchase price)
  • The value of your stuff in it (all of it)
  • Your exact address (as stated on the home title)
  • Materials used in your home (i.e. if it's made of straw, wood or brick)
  • The square footage of your home (how many feet, ya got)
  • The year of construction (check the birth certificate)
  • Any history of repairs/renovations (new roof, new egress windows, new wall sconces)
  • Any safety devices (smoke detectors, fire extinguishers/sprinklers, a bucket of water, etc.)
  • Any security features (deadbolts, fireproof safes, burglar alarms, security gates, vicious attack dogs, etc.)

Step 3: Connect with an Independent Agent

Comparing quotes by yourself can be complicated, frustrating and sometimes dehydrating. You've gotta keep things in mind like an insurer’s claims process, customer service and reputation or you may really kick yourself if something bad ever happens.

Here's where an agent comes in to save the day—they'll know everything that's important to consider when comparing quotes.

An independent agent can make your life a whole heck of a lot easier—at least through this whole quote-getting process. They're not tied down to one insurance company, so they're free to shop, compare and assemble all the pieces of the coverage puzzle for you—even if they end up coming from multiple carriers.

Step 4: Work with Your Agent

The more you can tell your agent about your situation, the better. Makes sense, right? So open communication is key to make sure you have just the right amount of coverage at just the right price. When chatting with your agent, here’s a couple getting-to-know-you type items you’ll want to discuss:

  • Start out by listing everything you need the policy to protect–including the property, your stuff and anything of value like fine art or collectibles
  • Ask about bundling policies like homeowners and auto insurance, you may find a nice little discount there
  • Determine the type of coverage you need based on your specific areas of risk
  • Point out anything that may increase the amount of liability coverage you need, such as a pool, or a guard dog named Cujo
  • Make sure to bring up any expensive "grown-up toys" like motorcycles, ATVs, boats and apocalypse-ready utility vehicles
  • Ask for and discuss any deals or incentive payment plans (i.e. discounts for paying annually vs. monthly)
  • Pick the best combination of coverage for you (it's not for anyone else, after all)

Step 5: Tell Them Everything

And we mean everything. Tell them all the nitty gritty details, because inevitably they, or the carrier, will eventually find out. And purposefully omitting risks to get yourself a lower premium will often come back to bite you in the back door. So keep these pointers in mind:

  • If they do  ask, you tell. This honest communication will lead to a premium/risk match in terms of your policy's price (and no biting of any kind).
  • If they don't ask, you tell. Don't ignore anything you might  think is relevant just because it didn't come up. The longer your Q&A/confessional segment is with your agent, the better your homeowners insurance quote will ultimately be.

The Lowdown On Online Quotes

We know what you want—quick and easy homeowners insurance quotes in under a minute. We get it, you want the lowdown, ASAP. But insurance isn’t a microwavable corn dog, and not being cautious could mean sacrificing accuracy...which could end up costing you.

Look, we all love quick quotes–but online companies might leave out options that'll save you some serious green, while conveniently leaving in factors that assume higher risk and leave you with a pricier policy.

Not only that, but our competitors might sell your precious info to multiple companies, which could lead to a bunch of unrecognized phone calls and a flooded voicemail box. We flipped the script by giving YOU all the info and options to connect with an independent insurance agent when the time is right.

TrustedChoice.com Article | Reviewed by Dorothy Andrews

Now, who's ready to get their insurance problems solved?