You are not required to have homeowners insurance in Montana, but you should consider coverage for a variety of reasons. Homeowners insurance protects your property, your investment, and your valuables. Your mortgage lender may insist you get insurance as a condition of the loan.
Homeowners insurance offers four main levels of coverage:
- Basic Form (covers limited damage from 11 common perils, which are events that can cause damage to a property. An example of a peril would be a fire.)
- Broad Form (covers more damage from a greater variety of perils)
- Special Form (covers all perils to the structure of your house itself, and broad coverage to the rest)
- Modified Coverage Form (offers limited coverage for houses that are not in good enough condition for other insurance)
Though it’s often not in the news, Montana can experience floods. If you live on a flood plain, you must have flood insurance through the National Flood Insurance Program, or NFIP. Flood insurance is legally required for your mortgage. Regular insurance policies do not cover floods or water damage.
Montana winters are severe, and the summers can get very dry. This can lead to weather damage in winter and wildfires in summer. Most standard insurance policies cover both wildfire and weather damage, but not water damage. Check with your agent for water damage coverage.
Comparing Montana Home Insurance Rates
Before you start comparing home insurance rates, you have to know what you are comparing. It's important to make sure that you're comparing the same coverage. Many companies offer special deals to some customers that can reduce your premium.
1. Discount for non-smokers: Smoking obviously increases the risk of a fire, so many insurance companies feel there is less risk with those who do not smoke.
2. Multiple policy discount: If you get all your insurance through the same company, you might get a deal.
3. Long-term discounts: Many insurance companies in Alaska lower your premium if you stay with them a long time.
4. Protection discounts: Most companies provide discounts if you have burglar alarms, sprinklers, or smoke detectors.
Check whether a policy offers replacement value or cash value. Replacement value insurance costs more, but gives you more for your money. The cost to repair or replace your losses is the basis of replacement value. Cash value insurance works differently. It takes depreciation into account, so as your property ages, the payout goes down. This insurance is less expensive.
Replacement value insurance can sometimes be more than the market value of your home, but cash value never can. Cash value insurance is common for older homes and your personal possessions.
You should normally carry about 70-80 percent of your home’s replacement cost on your insurance. If you insure your home for less than 80 percent of its value, you are not fully covered for a partial loss.
Living in Montana
Montana is a File and Use state, which means that the Commissioner has no regulatory powers over your insurance premiums. Insurance companies must file their rates with the state, but the market drives the rates.
If you live on a farm or ranch, you want farm insurance, not homeowners insurance. This insurance covers your home for cash value only. You may be able to get replacement value on your farmhouse, but it is not part of your standard farm insurance policy. Crops, outbuildings, and livestock need insurance, too.
Frequently Asked Questions About Montana Home Insurance
1. Why might the payout be less than the insurance estimate?
If your house has lost value since the last appraisal, your payout is reduced. This can be the result of depreciation or poor maintenance.
2. Is one claim grounds for nonrenewal?
Yes, one claim is grounds for nonrenewal, but only if the insurance company told you beforehand.
3. Why do the rates not match the insurance quote?
The most common reason why your premium is higher than your quote is an error filling out your application. Either the agent made a mistake, or the insurance you bought is for a different amount of coverage than you thought.
4. What if the contractor's estimate is more than the insurance company's?
If your contractor's estimate is more than the insurance company's, you should ask the two to meet and discuss the differences. It is much easier for them to work it out directly.
5. How do you get insurance to cover flood damage?
The National Flood Insurance Program covers flood damage. You should contact the NFIP to determine your options because your regular insurance does not cover flood damage.
How to Get Great Rates on Montana Home Insurance
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Montana Home Insurance Resources
MT Insurance Laws
Montana State Code on insurance and insurance companies