Not all insurance companies charge the same price for the same coverage. Some charge more and that increase doesn’t necessarily mean they’re better. In fact, it can mean just the opposite.
Insurance companies set their rates using three factors. The first is the number of claims, not only totally, but also for your particular area. If they had a bad year nationwide where they paid many claims, they raise their rates for all contents policies. The cheapest contents insurance may be policies that had stricter underwriting provisions and therefore fewer losses.
The company also has to calculate in the cost of doing business. If the company took their entire staff to a high dollar hotel for a conference, fed them like kings and gave lavish bonuses and gifts, the policyholders end up paying if the profits aren’t enough to cover this expense. The cheapest contents insurance often comes from companies with good management and low expenses.
Finally, you can get the cheapest contents insurance when you deal with a company that invests excess funds wisely. Insurance companies make money on the money they hold. If their investments do well, their premium is lower. If their investments do poorly, their policyholders pay a higher premium.
When you’re looking for the cheapest contents insurance, make certain you find a policy that offers all the coverage you require. If you have high dollar items, you might want to get scheduled coverage. Scheduled coverage extends the limits of the contents insurance policy. Most policies have a limit for objects such as furs, computer equipment, collectibles such as stamps or artwork and jewelry, among other items. If the limit on your policy is $500 and you have a piece of jewelry, for example, that’s worth $2,000, the maximum you’d receive if you had a claim is $500.
Ask for replacement cost on your personal property. While you might find cheap contents insurance, if it doesn’t offer replacement cost, you could end up with a significant loss if there were a disaster. Suppose a fire wiped out your home and all your personal property burned in the fire. Even if you had an accurate list of your contents and it totaled the amount of insurance you carried, you’d probably not receive the entire amount. That’s because of depreciation. The minute you purchase an item and leave the store, it depreciates. A computer that’s a month old, isn’t worth as much as you paid for it, even if it’s still in the box. Adjusters offer you the price of the item, minus any depreciation when you have a loss. That is, unless you carry replacement cost on your contents. Then the insurance company gives you the price of replacing the item. Even the cheapest contents insurance should carry replacement cost even if it adds slightly to the price of the insurance.
By comparing coverages and premium costs of a number of different companies, you will learn about the various differences in coverages they offer and what type of policy will be the best choice for you.