Comparison shopping is widely considered one of the most effective ways to save money. And the tool relied on to whittle the price of new cars, furniture and services is an effective means to reduce the price of homeowners insurance, too.

But comparing insurance companies is only effective if you know how to navigate the sea of information available to you. Here’s how to wade through all the information to get a policy that meets your home insurance needs. It takes nine steps, but you'll end up with a good answer.

1. Compare statewide costs

Insurance companies are regulated by state. Your first step should be to visit your state’s Department of Insurance website to learn the typical average cost of home insurance in different areas of your state. The site should also provide a rating for each home insurance company licensed to conduct business in your state, as well as any consumer complaints lodged against the insurance company.

These will help you determine which carriers you want to size up and compare against each other.

2. Do a company health check

Investigate home insurance companies you’re considering via ratings on such websites as those of the National Association of Insurance Commissioners, J.D. Power, A.M. Best and Weiss Research. These sites track consumer complaints against the companies as well as general customer feedback, the processing of claims and other data. In some instances, these websites also rate a home insurance company's financial health to determine whether the company is able to pay out policies in the event you need to file a claim.

3. Consider your specific needs

From its value and contents to location and size, every home is unique. To ensure you find the right coverage for your property, list characteristics and specifics such as jewelry, art and collections you want covered. You’ll also want to note whether the property is a vacation or second home, if it's located in an area prone to natural disasters, if you have a pool or separate structures such as sheds that you want covered, etc.

“You should also determine what deductible you’re comfortable setting,” says Billy Van Jura, an independent insurance broker in Poughkeepsie, N.Y.

Once you know the type and amount of coverage you’re looking for, you’ll be able to compare potential companies and their rates side by side, says Van Jura. Also note whether you want replacement cost or actual cash value coverage for your property; the first type costs more but protects you better, as it will pay to rebuild, say, your 10-year-old sun porch, with a like-value new one – not reimburse you for what the porch is worth after 10 years of depreciation.

4. Start with what you know

Loyalty can factor into home insurance rates. In many instances, a carrier you’re already doing business with (it insures your auto, boat, etc.) may offer the best home insurance rates because you're an existing customer. Before collecting quotes from other companies, request a quote from insurers you already use.

[Want to save on your home insurance costs? Click to get quotes from insurers now.]

5. Get multiple quotes

“Obtaining multiple quotes is important when looking for any type of insurance; however, it is especially important for homeowners insurance since coverage needs can vary so much," says Eric Stauffer, president, ExpertInsuranceReviews.com. "Comparing several companies will yield the best overall results."

Aim for a minimum of three companies. Even more might be useful because you'll learn something more about the industry and the options available in your area from each insurer you consult.

6. Look beyond price

Annual premium is often what drives the choice to purchase a home insurance policy. But don't look solely at price. “No two insurers use the same policy forms and endorsements, and policy wording can be very different,” says Noah J. Bank, a licensed insurance broker with The B & G Group in Plainview, N.Y. “Even when you think you're comparing apples to apples, there's usually more to it, so you need to compare at coverages and limits.”

Be sure you understand what each policy you're considering truly covers – and what limits or exclusions are attached to it – rather than comparing only price. “Something as simple as septic-tank backup protection could be overlooked on a specific house, and that can greatly impact price if an insurance agent primarily sells policies to people hooked up to city sewers,” says Stauffer.

7. Talk to a real person

Stauffer says the best way to get quotes is to go directly to the insurance companies or speak to an independent agent who deals with multiple companies. “There are websites that can get an aggregate list of prices, but every insurance company will have slightly different questions in order to get the most accurate quotes,” he says.

8. Be independent

Look beyond traditional “captive” insurance agents who work for just one home insurance company. Working with an independent agent or broker who works with multiple insurers lets you compare price, coverage, etc., at multiple companies to see which one works best for you.

“Whether you work with a captive or independent agent, I recommend working with an insurance professional who is interested in understanding your needs,” says Bank. “Your agent should be willing to go to market and narrow down to solutions that are right for you.”

9. Ask plenty of questions

Bank urges consumers to ask questions that give them a detailed sense of their options and what each choice costs. “You want to consider different deductible scenarios to best weigh if it makes sense to opt for a higher deductible and self-insure,” he says.

Also ask for detailed definitions of terms and exclusions; every company has its own, which can affect rates and coverage.

The Bottom Line

Home insurance is as unique as the property it protects. You'll be surprised what you learn when you comparison shop. It's the best way to find a policy you can afford that gives you the most protection for your money. To truly compare options – and prevent any unpleasant surprises – be sure to read the entire policy carefully and understand all the fine print before you make your choice.

[Do you need home insurance? Click to compare quotes from insurers near you.]

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