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With so many options and variables to consider, choosing your homeowners insurance can be a bit confusing. You know you need it to protect your home, but which one is the best? How does your specific situation influence which homeowners insurance company you should choose? The questions are plentiful, and here I will provide some answers.
As you take steps to buy a home, picking your homeowners insurance might not be the most exciting part of the journey. It is essential, though, as you want to make sure your dream home is protected after you buy it.
Keep in mind that newly constructed homes require home insurance, as do existing homes. So, even if you’re debating building vs. buying a house, picking the best option out of many available homeowners insurance companies to cover your new abode should be built into your plan.Home Insurance Breakdown
Before we get into the best insurance companies to choose from, let's dive into the types of coverage home insurance offers.
Dwelling Protection
Dwelling protection covers the house’s structure, consisting of the foundation, walls, and roof. Your garage, deck, or porch are also covered by dwelling insurance as long as they are attached to the house. The coverage limit (the highest amount the homeowners insurance company will pay for replacement or repairs) depends on how much your home is worth. As we will cover later, some of the best homeowners insurance companies have better dwelling protection than others.
Other Structures Protection
If your garage or another structure is not attached to your house, dwelling protection won't cover it. If you want these additional buildings covered, you will need additional coverage called “other structures protection.”
As the name indicates, other structures' protection doesn't just apply to buildings like detached garages, carpets, or sheds. It can also pertain to fences, driveways, swimming pools, and gazebos. If you don't have any other structures on your property, you can consider homeowners insurance companies with good standard coverage but not great other structures coverage.Personal Property Protection
Personal property can be covered by most homeowners insurance companies as well. This means if your property is stolen, destroyed in a fire, or somehow lost or damaged during another unfortunate event that is covered by your insurance, your insurance company will reimburse you for the loss.
If you have costly items (diamond earrings, for example), you can get additional coverage just for those items. Wedding rings are a common item to add extra insurance for, ensuring they are covered if lost or stolen.
Liability Protection
Many people don't realize that liability coverage is something that homeowners insurance covers. A typical financial protection that most insurance policies include, liability protection can pay for medical expenses and other damages if someone gets hurt in your home.
For example, if your grandfather comes over for the holidays, slips on an icy step, and hurts his hip, you could be found at fault for not making sure the ice was off the step. A feature of your homeowners insurance called bodily injury liability may cover any legal or medical bills that grandpa needs to pay. Personal liability coverage can usually be expanded in the form of a personal umbrella policy, which can cover liability claims beyond the normal limits that your liability coverage would usually provide.
Coverage Limits And Deductibles
Speaking of expanded coverage, all home insurance coverages have limits (the maximum amount your policy would pay toward a covered loss), and almost all of them can be expanded. Expanded coverage options are usually dependent on your home and personal property value.
For example, suppose your home has high-end finishes or expensive personal belongings in it. In that case, you will want to consider making your homeowners insurance coverage limits higher to coincide with the damage or replacement costs you would incur. You can also consider guaranteed replacement cost coverage, where you pay more monthly to ensure everything will be covered when things go array.
When it comes to homeowners insurance policies, keep in mind that most policies will have deductibles. This refers to the cash you pay out of your pocket when you make a claim covered by your homeowners insurance policy. Your deductible amount for each type of coverage can vary significantly based on many factors, so be sure to research the deductibles before selecting between homeowners insurance policies.
What Does Homeowners Insurance Cover?
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Your homeowners insurance policy is a safeguard against possible unforeseen adverse events. The insurance company will work to make things right when something terrible happens, as long as the tragic event is covered. This can mean reimbursing you in cash to repair or replace your home or part of your home because of property damage from any number of natural disasters.
As you may have guessed, there are limits to what is covered by your plan. Limits vary depending on the type of homeowners insurance you have, but here is a list of what is covered by most standard home insurance policies:
What Doesn't Homeowners Insurance Cover?
Knowing what is not covered by homeowners insurance is, in many ways, more important than knowing what is covered. If you think something is covered and it’s not, you will be left with a surprise bill when tragedy strikes, adding insult to injury. Here is a list of some events that are not covered by most standard policies:
How Do I Compare Homeowners Insurance Companies?
Comparing homeowners can be a lot like choosing the right toothpaste at the grocery store, as there are a ton - almost too many - options. Knowing your specific needs and which homeowners insurance companies offer products and services that meet those needs is the best way to make the right choice.
First, you will want to decide what you need to insure, which is different for each individual homeowner. Next, you should use that information to get quotes from various companies that offer the coverage you are looking for.
You should also identify any discounts the home insurance companies you are researching offer.
Knowing your specific preferences and needs is critical before looking into which home insurance company is right for you. Sometimes you can eliminate several homeowners insurance providers if they don't offer the insurance coverage you need.
Comparing Homeowners Insurance Quotes
Once you know how much coverage you need, it's time to get a homeowners insurance quote from several different home insurance companies. The more quotes you have to choose from the better, but aim for at least three. This way, you can make sure you are getting the cheapest home insurance possible.
The average cost of homeowners insurance in 2021 is about $132 a month. This gives you a good ballpark figure, but keep in mind that the house’s value, location, type of coverage options, and many other factors will affect the homeowners policy quotes you receive.
Similar to a life insurance policy or auto insurance policy, there are a number of ways you can research and receive quotes. You can search online or by calling an insurance provider directly. Or, you can ask a licensed insurance agent to get quotes on your behalf. Be careful with this last option, as the insurance professional will likely provide quotes that put their specific insurance company in the best light.
Whatever method you decide to use to search for quotes, make sure you make an apples-to-apples comparison. That means ensuring that the coverages and deductibles for each policy you review are the same.
For example, let’s say that on the left, you have a plan from one home insurance provider that has only dwelling coverage. On the right, you have another provider that has both dwelling coverage and guaranteed replacement cost coverage. That’s like comparing apples to oranges and is not a good comparison.
Don't forget that a quote is not a final guaranteed price but rather just an estimate. Sometimes home insurance providers need to do some due diligence like verifying the value of your home before knowing what the final price of your homeowners insurance will be.
Finding Home Insurance Discounts
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Finding the cheapest home insurance possible means making sure you are researching all the discounts available to you from each of the home insurance providers. Some will be standard across all homeowners insurance companies, and others will be specific to that provider.
One discount that nearly all home insurance companies offer is a reduced price if you insure several different things with them. For example, let's say you have auto insurance or motorcycle insurance with a specific insurance company. If you get your home insurance from that same company, they will give you a discount. Sometimes this is referred to as a multi-policy discount or bundling. Combining your home and auto insurance is the most common homeowners insurance discount.
Avoiding homeowners insurance claims for a few consecutive years can result in a discount as well. This obviously can’t be applied at the beginning of your coverage, but researching these types of discounts is essential to get a sense of how much money you can save down the line.
Taking preventive measures to keep your home safe decreases the likelihood of a homeowners insurance claim and can result in a discount as well. Installing smoke detectors and home security systems are just a few examples.
Don't leave money on the table when it comes to homeowners insurance. Research all the possible discounts the insurance companies you are reviewing offer and leave no stone unturned.
Financial Stability Of Insurance Companies
If you are paying for homeowners insurance each month, you want to make sure you will get paid if you have a covered claim. After all, the best homeowners insurance companies are the ones that have the funds to pay you, right? That means ensuring that the companies you choose from have good financial strength.
You can determine this by using an online rating service like AM Best. Rating companies like this one look at credit ratings, business news, and other data points to determine which ones will be most likely to pay your claims in a timely manner. Doing your own research on how strong an insurer is from a business health perspective can be intensive and exhausting, so using online rating systems is the best route to take.The Top Insurance Companies Of 2021
Now that you have a sense of how to determine your home insurance needs and the strategies for comparing home insurance providers let’s look at some of the top insurance companies of 2021. This is not a complete list of all the options available to you, but it’s an excellent place to start.
Allstate offers a great array of home insurance educational resources, which can be especially useful for first-time homebuyers.
They even have a tool to search by specific zip codes to see the most common claims in that area. This can help you prepare for what might happen and decide on particular coverages you might need.
They also offer the financial stability that comes with a well-known and well-respected insurance firm that has been around for a long time. Their marketing emphasizes this security with the tagline “you're in good hands with Allstate.”
Allstate is available in all 50 states as well as the District of Columbia, and J.D. Power gives them a score of 829 out of 1,000.
Owned by Allstate and known for its friendly customer experience, Esurance has competitive rates compared to most other companies.
They also offer generous discounts, adding to their financial appeal.
Esurance has been an early adapter in terms of digital insurance solutions. They offer an easy online quote and purchasing process and user-friendly online claims services. In addition, their mobile app provides convenience for the insurance consumer looking for quick results without personal connections. Esurance is available in 43 states. J.D. Power did not rank them for customer service in 2021.
Catering to luxury homeowners, Chubb offers
tailored plans that appeal to affluent clients. This includes personalized risk consulting services that allow clients to review their various assets and valuables to ensure they are protected. High-end customer services features include a consultant who studies the home for clients to determine rebuilding costs and a tool called HomeScan that helps customers identify issues in their home before they turn into severe problems and insurance claims.
Chubb might be the type of specialized home insurance provider you need if you are in the luxury home market. Chubb is available in all 50 states as well as the District of Columbia, and J.D. Power gives them a score of 801 out of 1,000.
Nationwide has a well-known name that offers excellent pricing for homes with a high value. For a home with $250,000 in dwelling
coverage, the national insurance premium average is $165 per month. For this same coverage, Nationwide’s average is $149.
In addition to good dwelling coverage value for high-end homes, nationwide also offers many other coverage options, depending on what you need to be protected. This includes personal liability, medical, personal property, credit card coverage, water/sewer backup, and a host of other add-on policies.
The dwelling coverage and the other optional coverages are all dependent on the age, location and replacement cost of your home and other property, which is true of almost all insurance firms. Bundling your home and auto insurance and going claims - free for an extended period of time are a few of the many discounts they offer. Nationwide is available in 43 states as well as the District of Columbia, and J.D. Power gives them a score of 812 out of 1,000.
Liberty Mutual is a massive insurance company that offers home insurance, auto insurance, renters insurance,
motorcycle insurance, pet insurance, life insurance, and business insurance.
This allows them to offer a multi-policy discount to customers who purchase different insurance types from them. For example, if you combine your auto and home insurance, you can save money on both of them.
Liberty Mutual also offers a suite of online tools that help get quotes and file claims. For a company that has been around since 1912, they are embracing new insurance technologies as well as anyone. As one of the largest insurers in the country, their financial stability is excellent, meaning the likelihood of your claims being paid in a timely manner is excellent. Liberty Mutual is available in all 50 states as well as the District of Columbia, and J.D. Power gives them a score of 805 out of 1,000.
Owned by Liberty Mutual and known for its extensive home warranties, Safeco provides this extra coverage as part of its
home insurance offerings. Home warranties can cover the usual wear and tear your home and appliances go through, which is something not covered by most standard home insurance plans. Safeco partners with American Home Shield, a well-respected warranty company, to provide this extra perk to their customers.
Safeco also offers unique products like identity theft coverage to help clients tailor their home insurance to specific needs. One drawback, however, is that policies can be quoted online but not purchased. To finalize the purchase of a policy, you must work with a local Safeco Insurance agent. Safeco is available in 48 states, and J.D. Power gives them a score of 810 out of 1,000.
Widely considered one of the best home insurance companies when it comes to
their digital experience, Lemonade offers a very technologically advanced mobile app. Lemonade runs everything through their app using artificial intelligence, from quotes to claims and everything in between. This results in incredibly fast transaction times, sometimes going from claim to approval in a matter of seconds.
If you like a bit of an old-school approach to insurance where you can meet your agent in person at their office to talk anytime you want, Lemonade is not the choice for you. Their focus on technology is so intense that they have no physical agency locations.
Lemonade is available in 23 states, and J.D. Power did not rank them for customer service in 2021. However, iOS users rated the app as a 4.9 out of 5, while Android users rated it a 4.4 out of 5, so they are clearly doing something right.
If you're looking for the very best customer service from your home insurance company, Amica could be a great choice. JD Power gave them the
highest ranking in their 2021 U.S. Home Insurance Study, as well as placing them in first place in the Property Claims Study for nine straight years.
In addition to standard coverage options, Amica also offers a service they call Contractor Connection. This helps customers find licensed and insured contractors in their area to help with work that needs to be done after damage to the home occurs. They also offer some unique discounts, like savings on insurance for a new or remodeled house.
There are some building types that they don't cover, like farms and mobile homes, so make sure the kind of home you have or are buying is covered before considering this company. Amica is available in 48 states as well as the District of Columbia, and J.D. Power gives them a score of 854 out of 1,000.
NJM is not available in most places, but it’s an excellent option to consider if you are lucky enough to live in Connecticut, New Jersey, Ohio, Pennsylvania, or
Maryland. The primary reason is that NJM offers some very unique discounts. These include things like offering savings for having a backup generator installed at your home or installing storm shutters on your windows. While you can certainly save money by using these discounts, be sure to read the fine print. For example, the home generator discount can only be enjoyed if you purchase the right brand of generator.
In addition to unique discounts, they also offer premiums that are well below the national average.
Erie is a great option to think about if you are interested in beefed-up coverage. They offer things like guaranteed home
replacement and coverage for a sewer line backup. They also feature a ton of add-on coverages, including identity theft coverage and a criminal defense coverage of up to $25,000. Most insurance agencies do not usually cover these. Like NJM, Erie is only offered to a select region of the country, but they do offer premiums that are lower than the national average.
Erie also has pretty good customer satisfaction scores and solid financial stability. In addition, they offer some unique discounts, including one that rewards clients for shopping for insurance before their current policy expires. Erie is available in 12 states as well as the District of Columbia, and J.D. Power gives them a score of 835 out of 1,000.
Often considered one of the best overall home insurance companies, State Farm
has one of the single most significant presences in the insurance industry. They boast the title of the largest insurance company in the country, with more than 17 percent of the total market share. They also have an incredible amount of staff, as they currently employ approximately 60,000 people, including 19,000 agents.
If you want a home insurance agent you can regularly visit without traveling too far, there is probably a State Farm agent near you. They offer a complete array of standard and additional home insurance options, and their premiums are higher than the national average. Their size and stature make them one of the most financially stable options available. State Farm is available in 48 states as well as the District of Columbia, and J.D. Power gives them a score of 835 out of 1,000.
Exclusively for active-duty military members, veterans, and their families, USAA often ranks near or at the top of the industry for its customer service. This has a lot to do with very extensive coverage options and premiums
that are usually lower than the national average. They offer the usual bundling discount but also offer a more unique discount, sharing savings for clients who go claim-free for five years. As you might expect, they offer coverages that are unique to military services members as well. Military uniform insurance is one example of this. USAA works with a largely transient clientele, so it’s no surprise that they are known for having great renters insurance as well. In fact, U.S. News and World Report recently ranked them as the best renters insurance company of 2021. USAA is available in all 50 states as well as the District of Columbia, and J.D. Power gives them a score of 882 out of 1,000.
Travelers offers a user-friendly website and an app with customer-focused features,
giving them a leg up on most home insurance providers when it comes to technology. Their array of discounts is appealing as well.
In addition to a multi-policy discount and savings for installing home safety and security devices like most companies offer, they go a step further and offer a 5 percent discount for homes that are LEED-certified. This is a certification given by the U.S. Green Building Council based on a rating system that analyzes and then designates highly energy-efficient and cost-saving buildings. Travelers is available in 41 states, and J.D. Power gives them a score of 872 out of 1,000.
If you value customization when it comes to your home insurance, The Hanover could be right up your alley. They offer three
basic insurance packages and more than a dozen ways to customize each. Their options for specializing coverage for your unique needs are vast and often include offerings most insurance providers don't offer. For example, The Hanover will cover expenses incurred to bring your home up to current building codes after a covered event has damaged it.
They also offer add-on coverage for high-value homes with no deductible for claims higher than $50,000. Their discounts are pretty unique as well, even offering discounts for being a non-smoker and for being a member of specific organizations. They call this the “Prestige Policy.” The Hanover is available in 19 states.
If you are a tech-savvy consumer that likes to do as much as possible online, Country Financial is probably not the
insurance provider for you. If you want a more personal connection, in person or over the phone, they might be a perfect choice.
The only way to get a quote from Country Financial is by calling their main number or by going to their website, finding a local rep, and then calling them. Despite their lack of consumer-friendly technology, they have good customer satisfaction ratings.
Their coverage is pretty extensive as well, and their discounts include savings for having newer electrical wiring, a safe heating source, smoke detectors, and automatic sprinkler systems. Country Financial is available in 19 states, and they specialize in offering home insurance for high-risk customers. This means including things like replacement cost coverage for less than other companies charge.
They also offer coverage for rebuilding your home to comply with new city ordinances and will recommend contractors to do the work that needs to be done. Discounts include going claim-free, addressing wind mitigation, installing a water detector, and many more. Kin is only available in 2 states.
Looking for a fast quote and a primarily digital experience? Hippo might be the way to go. Pretty much everything they
do is online, which includes super quick quotes and a ton of coverage extras to choose from. The extras are also technology-based, including optional smart home monitoring systems and virtual connections to insurance claims reps and home maintenance professionals.
Hippo emphasizes home safety with their discounts, rewarding clients to install fire alarms and live inside a gated community. They are a great option if you like tech and safety, but if you are not tech-savvy and prefer a personal touch, look elsewhere. Hippo is available in 37 states.
American Family serves as the antithesis to techy home insurance providers like Hippo and Lemonade. They rely, instead,
on personal connections and their network of local agents. This is the personal touch option instead of the one-click route.
American Family offers some unique coverages that aren’t available from most insurers. Their matching side coverage means they will pay to make sure the side of your house that isn't damaged looks like the repaired side damaged during a covered event. In addition, they cover some appliances and other home items that are usually only covered by home warranties, not insurance policies.
Some of the drawbacks of using American Family is that they can be more expensive than most other insurance firms, and they are only available in less than half of the states in the U.S. In fact, American Family is only available in 19 states, and J.D. Power gives them a score of 831 out of 1,000.
Progressive acts as an insurance broker, meaning they sell policies administered
by other companies. They will be the first contact for your quotes and claims, but then you might be handed off to another firm. This allows them to offer a wide array of coverage options because they search policies from many other companies to find the one that’s right for you.
Even though they have been around since the 1930s, Progressive bills itself as an innovative company at the forefront of emerging insurance trends. Their digital suite of services is very consumer-friendly and allows for easy and quick quote comparison. Progressive is available in all 50 states as well as the District of Columbia, and J.D. Power gives them a score of 821 out of 1,000.
Farmers feature a tiered insurance rate and coverage system. They have three tiers, and the higher you go in terms of price, the more coverage you get. For all
three tiers, they offer claim forgiveness. This means that if you don't file a claim for a specific period of time and then need to file one, your rates won't go up.
They also reduce your deductible the longer you stay with them and continue to add discounts if you go long periods without filing a claim. They also offer a multi-policy discount and discounts for setting up auto-pay from your checking account and paying your bill on time. Farmers Insurance is available in all 48 states as well as the District of Columbia, and J.D. Power gives them a score of 813 out of 1,000.Summary: Select The Right Company And Coverage When It Comes To Homeowners Insurance
Selecting the right home insurance all comes down to doing the necessary research to find the one that’s best for you and your family. First, make sure you understand what home insurance is, how it works, and all the various events that are covered. Understanding what is not covered by standard policies is even more critical because this will help you know what types of providers and plans you should be comparing before making a decision.
Once you know what you need, compare only companies that can meet those needs. Investigate every discount, the amount of digital capability (if that matters to you), and each company’s financial stability. With a complete understanding of what each insurance option can offer, you will be ready to purchase the plan that best suits your needs.
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