The once unthinkable is happening: An insurance company — Homesite Insurance Group — is binding condo, home, and renters policies online, meaning you'll receive coverage three business days after you submit your application.

Apply, pay, and bind online

Home insurance applications can be quite lengthy, but your thoroughness of response is required to get an accurate quote. An entire home insurance application takes about six minutes to fill out at Homesite, and you'll need to know your house intimately to complete the application. Make sure you know when your plumbing, electric wiring, and roof were installed. You can choose between replacement-cost and actual cash value coverage. Click to Home insurance basics for more about these coverages. Homesite's condo and renters insurance applications contain fewer questions and you can cut down on the number of blanks you have to fill in by choosing one of Homesite's four pre-packaged condo or renters insurance policies: $20,000 worth of personal property coverage with or without replacement cost coverage, or $40,000 worth of personal property coverage with or without replacement cost coverage. Homesite has several payment options — credit card, electronic funds transer, or check — or in some cases you can have Homesite bill your mortgage company. You can opt to pay either 25 percent upfront and then make installment payments, or pay the full premium amount. After you select your payment option, a Homesite property inspector will come out to examine your property and home, and the insurer will perform a background check on you, verifying your home insurance claims and credit history. If you're approved, Homesite will issue coverage within three business days of your application submission or on the date you select coverage to begin, provided your payment clears. Homesite will then mail your policy 14 business days after it receives your payment. You can call (800) HOMESITE (800-466-3748) to request faster confirmation.

Homesite CEO Charlie Kline says the three-day delay is to make sure his company is not selling coverage to someone living where a natural disaster is in progress or imminent while they're shopping at their computer.

Homesite is currently binding homeowners policies online in Arizona, Colorado, Minnesota, Nevada, New York, Pennsylvania, and Utah, and will begin binding policies in 11 other states by July 2000: California, Illinois, Iowa, Kansas, Michigan, Nebraska, New Mexico, Ohio, Oklahoma, Tennessee, and Michigan. Florida and Texas residents will be able to bind a condo, home, or renters policy at Homesite.com by the end of 2000.

Kline says that people who have the best claims records will generally save the most money at Homesite. In addition, the company offers discounts like those available from offline insurance shopping: discounts for retirees, smoke alarms, sprinklers, and burglar alarms, for example.

Home insurance neglect

In November 1999, an informal survey conducted by Insure.com of Internet marketplaces found that home and renters insurance quotes were absent at online insurance marketplaces. With e-commerce more cost-efficient than ever before, according to Kline, how long could a $20 billion to $30 billion business remain on the outside looking in?

Nothing much in the online home insurance arena has changed since Insure.com's last look — InsWeb, QuickenInsurance.com, and YouDecide.com, three insurance marketplaces, still do not offer instant quotes for condo, home, or renters insurance. We tried three ZIP codes — 14620 (Rochester, N.Y.), 33904 (Cape Coral, Fla.), and 92103 (San Diego, Calif.) — and were unable to obtain an instant quote for homeowners insurance from those sites.

In contrast, Kline says his company has sold approximately 500 policies, 85 percent of which have been sold since the company began selling insurance policies over the Internet on April 24, 2000. (The other 15 percent were sold through the company's 800 number prior to the Internet sales launch.) And although Kline is confident sales will increase dramatically at Homesite.com, he says the company has "deliberately maintained a low profile."

The nitty gritty

So how do you evaluate a new online insurer? That might be tough, considering the company has no track record. There are no official complaint records from state insurance departments yet because Homesite began binding policies online in April 2000, and the insurer has handled only five claims to date. In addition, Homesite Insurance Group is currently unrated by A.M. Best Co., Duff & Phelps Credit Rating Co., and Standard & Poor's. That's neither good nor bad. It means the insurance group has not been around long enough for analysts to judge its financial stability.

Only game in town, for now

Despite Homesite's unique position — it's the only game in town on the Internet home insurance front — at least one other, more well-established company is about to become competition. Allstate Insurance Co. will start binding home insurance policies over the Internet in September 2000.

Overall, growth of online home insurance sales will be slow, according to a March 2000 study conducted by Forrester Research, based in Cambridge, Mass. The study predicts that by 2002, a majority of insurance companies will start binding homeowners and renters insurance online in "a handful of states." And it won't be until 2004 that "the availability of online renters applications will uncork pent-up demand [and] homeowners premiums closed online will top $1.1 billion." Forrester's study also says the first insurers online in the home insurance arena — specifically, sellers of renters insurance — will have the advantage, because a majority of Web users rent their living spaces.

Kline is cautious about his company's first-on-the-Web status. "There may be an advantage to being first, but it has not necessarily been proven to be a decisive advantage," he says. "The decisive advantage will be for those who do it early and correctly."