Finding the ideal homeowners insurance policy can be a difficult task. While many people make their choices based primarily on NJ homeowners insurance quotes, this can lead to inadequate coverage and eventual losses. To pick a policy that is truly cost-effective, homeowners need to keep other factors in mind, starting with the following two.
- True Replacement Cost
A homeowners insurance policy must cover the total cost of replacing the home. Unfortunately, many homeowners make missteps when evaluating this figure and purchase the wrong amount of insurance coverage. The current value of the home and land, the home mortgage, and the purchase cost of the home are not proxies for the replacement cost. The true replacement cost should be based on work estimates from contractors.
- Changes in Coverage Needs
It’s not uncommon for New Jersey homeowners to keep renewing the same insurance policy even as local property values shift, construction costs rise, or home upgrades are completed. All of these factors can dramatically change a homeowner’s coverage needs. Variables such as inflation can also render an old policy or coverage limit inadequate. Homeowners should regularly evaluate whether they need enhanced coverage.
Choosing a Cost-Effective Policy
Of course, homeowners also need to consider basic pricing when comparing NJ homeowners insurance quotes. Still, this should be a secondary consideration after the factors above, since an affordable policy with inadequate coverage can just end up costing a homeowner substantially in the long run.