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When it comes to living in California there are many things to consider. For one, where to live.

For instance, do you want to own a home in a major city, such as Los Angeles or San Diego, or would you prefer mountain or country living? In all of these decision there is the matter of considering not only the matters we tend to keep in the forefront of our decision making variables, but also the peripheral decisions, like homeowners insurance.

The insurance game is one that must be played, and while some need to live in certain areas for the work they do, others with more versatile lifestyles can make more flexible decisions. This includes buying insurance.

When shopping for insurance it is crucial to know that there is not only a big difference in where you live, but also where you inquire with regards to your quotes.

Some companies have great disparities in the prices of their policies and the difference is not a matter of quality, coverage, or anything that has to do with you and your future, but actually how the insurance company pays commissions and quotes prices.

While some homeowners spend unnecessary amounts of money getting the same insurance, you do not have to, even if you live in LA. This starts with knowing how much insurance you actually need, which can be surprising. Be sure to always compare rates using our FREE search tool above!

How much insurance do you need?

California real estate can be a beast and a blessing within just a few years of the market cycle. This effects prices of homes in the neighborhood you live in and it can also make your insurance cost more.

The key to buying insurance is that the amount of coverage you need is not for the amount you paid, but how much money it would take to rebuild.

For example, if you purchase an older home there is some money to be saved compared to new construction, but thinking that you can save on insurance because of this is a terrible idea. You need to make sure that you purchase coverage for the replacement amount, not the appraisal value.

If you don’t then you run a serious risk of not being able to rebuild to spec, and this is crucial because you didn’t buy your home for $500,000 because you wanted a half-million dollar home, you bought it because it had the right amount of space.

However, if rebuilding to spec is $750,000 and your coverage is $500,000, then you’ll be floating up the creek with one less bedroom and bathroom.

The same situation is found for those who do not purchase the proper kinds of supplemental policies.

These policies that are optional, but when homeowners understand the risk they run by not having them, the only option for most is to make the small sacrifice and buy it rather than find themselves trapped with a home that cannot be repaired or replaced.

Additional Kinds of Insurance

When it comes to living in California, there are two different kinds of additional insurance you will need to consider: earthquake and flood insurance.

Earthquake insurance covers your property in the event of an earthquake. The average homeowners policy will not cover this, which is why you need it.

While many quakes come and go with little damage, the possibility of a ruined foundation occurring is worth the cost. However, there are times that an earthquake hits and the result is water damage. When this occurs the claims adjuster may conclude that while an earthquake caused the flooding, the matter pertains to a flood policy.

Flood insurance covers matters related to storms and any other events that result in water damage. In fact, it is the lack of flood insurance that causes many homeowners to request (and many unaffected taxpayers to cover) assistance from FEMA.

What frequently occurs is that an incident where “flooding” didn’t actually occur causes a great deal of flood damage. For example, in New York there were two hurricanes this decade, Irene and Sandy. Hurricane Irene was an actual storm with a great deal of wind and rain. Hurricane Sandy was a tidal surge, meaning that while there was some wind and rain, the real damage hit the homes on the water the hardest because the water level rose up and flooded them.

Having said this, many were denied claims on their homeowners policies after Irene because the damage was considered to be that for a flood policy, and it has to d with how flooding is defined per the insurance company.

If a tree branch is blown into a window and that window lets in rain from the storm, it is perfectly reasonable to consider that the damage was from the hurricane, but only the damage that the branch did will be covered. The water damage is deemed to be from flooding.

Now that we’ve covered these additional policies sufficiently, the truth is that they also need to be shopped around. There may be some areas where the options are limited, and if there’s only one choice, then that is the one you must buy.

However there are typically several choices, and so long as they offer comparable service, have a good reputation, and the product is similar or the same, the only matter left to compare is price.

How to Compare Insurance

Save for a little effort, quotes are free, and you can even take part in a California survey for how much you pay. Along with this, you can go online and find comparisons within a few minutes. For some, savings is everything, but don’t let money be the sole determining factor.

For instance, companies with higher denial rates of honoring coverage may not be worth the minor savings. Also, for those who have a personal relationship with an agent, it is a good idea to give him or her the benefit of the doubt by bringing the quote to be compared.

Bringing quotes to your agent will give him or her a chance to meet the amount, and also find out if those rates are leaving out anything crucial, such as including a clause that would prevent you from collecting because of something that you specifically bought insurance for.

Additionally, if the new policy is cheaper because it is lacking something you do not want coverage for but were buying, then the agent can take it off the policy, which may bring the lower than the quote.

The key to comparisons is to make sure you are comparing like things. After all, you wouldn’t set a Dodge Neon next to a Dodge Viper and call them the same.

Lastly, comparisons in different zip codes can also be helpful if you need to make a choice on where to relocate. After all, if insurance is more expensive for your home in an area, then everything else will be more expensive.

The reason this happens is because just as you insurance is more expensive, so are those of local business who must account for the cost in their prices.

Making the Decision

When you decide where you want to live the cost of everything needs to be taken into account. After all, if you can pay for a house but not the insurance, then you cannot afford the home. The home’s insurance coverage amount must be for the replacement cost of the home – new construction – not the current value.

No one is going to build a 50-year-old home, and lacking this amount can be a disaster in the wake of a catastrophe.

In addition to the standard policy you carry on your home and land, you will need to consider the supplemental policies, particularly when it comes to earthquake and flood policies. While a hurricane is by its very nature wet, there are many times that the damage done results in the need for flood coverage.

For those who do not have it, the lesson of small savings is extremely expensive.

When it comes to getting insurance quotes, the comparisons need to be apples to apples. There is about as much value in comparing a high quality policy with one that covers the bare bones minimum as there is to measuring the costs of a trip to a remote getaway to a vineyard in the north to what one will spend during a weeklong trip to Disney.

By following these guidelines you will find that the policy for you and your property is out there, and the savings may surprise you. Be sure to use the FREE comparison tool below to start your search!

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