Cheap homeowners insurance is like cheap anything else: of questionable value.
Anything sold for considerably less than a peer product probably is of lesser value. Either the product’s materials are not of comparable quality, or workmanship is suspect. Of course, perhaps a producer does not plan to be in business long and simply priced a product low without hope of exacting any profit from it. Concerning this last possibility, a word to the wise: Be wary of producers who give away their products.
In the case of cheap homeowners insurance, consumers should be concerned about two factors: the financial integrity of the insurer and coverage. If the insurance company is not apt to be around when your home is damaged and you file a claim, you will have wasted your money on the insurance, regardless of how little you have paid to that point. Checking industry ratings and state insurance commissioner recommendations is good advice, especially when a deal seems too good to be true.
The other consideration is the level of coverage a homeowner will receive when he buys cheap homeowners insurance. Policies certainly vary in their coverage and that in itself is not a red flag. Homeowners have options about coverage and the more complete coverage and lower deductible they choose, the more they will pay for it. By the same token, “getting by” with minimal coverage indeed can lower premiums to the proximity of “cheap.”
Anyone in the market for cheap homeowners insurance should, first of all, shop around. Your family might always have been with one company, for example, but that is no reason you need to stay with the company. Online shopping of companies is relatively easy.
Then a buyer should determine the level of replacement cost he wants to purchase. A policy covering the property against just a few perils will cost less than a policy protecting the structure against virtually all perils. For example, if you believe a tornado like the one that whipped through the neighborhood last year is not likely to return while you are living there, opt out of tornado coverage and live with the risk.
Be a smart shopper and a prudent property owner, make sure any policy secured is acceptable to the company holding a mortgage on the house, and enjoy your cheap homeowners insurance.