Our content is free because we may earn a commission when you click or make a purchase from links on our site. Learn more about how we make money.

January 27, 2020
Money; Getty Images

If you’re a new homeowner, buying home insurance may seem like just another expensive box to check to satisfy your mortgage lender. According to the National Association of Insurance Commissioners, as of 2016, you could expect to pay around $1,192 per year. That’s not exactly cheap.

But consider this: in 2016, 6% of American homeowners had to file a claim, and in 2015 the average payout was $15,532, according to the Insurance Services Office, Inc. That means there’s more than a small chance you’ll have to file an insurance claim for several thousand dollars or more in any given year. Choosing the right home insurance is the best way to protect yourself against these potential losses.

Speaking of claims, one company did stand out while conducting our review. Lemonade Insurance Company does not pay claims out of profits like the others. Instead they take a flat fee, with the rest going to the policy holder who made the claim or to charity. Innovation is even happening in the insurance space.

Insurance, generally and as a rule, is a trade-off. You have to determine if the amount of the premium is worth handing the risk over to the other side or if it’s better to keep it,” said Etienne Font, an attorney at Merlin Law Group with 29 years of experience handling claim litigation for homeowners insurance.

Homeowners insurance should be treated like any other item you would purchase. Learn what it is that you have. Instruct yourself as soon as you can and then compare the actual item that you’re purchasing, not the price.

As Font points out, not all insurance options are created equal, and the same rule applies to companies. Once you’ve determined how much coverage you need, you should choose an insurance company based on factors like financial stability, product offerings, and the ease of its claims process. Choosing a good home insurer can help you protect your most important asset and save you trouble down the road if you ever need to file a claim.

Important Things To Know About the Best Home Insurance

  • Consider choosing “replacement cost coverage” instead of “market value coverage,” as the former will ensure that your home is rebuilt to the same condition as before, without factoring into account any changes in property value that could lower your payout.
  • Understand that choosing a higher deductible can lower your premium, but that also means you’ll have to pay more out of pocket if you ever need to file a claim.
  • Consider purchasing additional coverage for catastrophes that aren’t typically covered by standard home insurance policies, such as damage from hail, earthquakes, or floods.

The 7 Best Home Insurance Companies and Research Tools

Best Home Insurance Reviews

Before choosing an insurance company and policy, make sure to compare all of your options to get an idea of what coverages and premium amounts best fit your situation.

There are certain policies that just have very strange exclusions,” said Font.

It’s important to ask for an itemized policy statement so you know how that exclusion may affect you and if you should invest in additional coverage.

According to the latest research from Statista, 53% of people don’t shop around for homeowners insurance. Comparing insurance companies can save you money in the long-run, however, especially when you consider that 60% of homeowners have underinsured homes.

We’ve compiled a list of highly-rated carriers that includes big industry names as well as small independent players with high customer satisfaction and financial strength ratings, as well as a broad range of policy options.

Lemonade Insurance Company

Lemonade has made a splash in its relatively short history. The New York-based company began offering homeowners and renters insurance in late 2016 and has since expanded to about half of the country. It has a Financial Stability Rating® of A-Exceptional from Demotech, Inc., a Columbus-based financial analysis firm.

Lemonade is a certified B-Corp®, a type of for-profit company that meets rigorous standards for social and environmental performance, accountability, and transparency. The company donates leftover claims money to causes that policyholders care about. (It uses reinsurance — a kind of insurance for insurance companies — in those cases where the claims filed exceed the collected premiums.)

The company says this unique business model means that it’s not in conflict with its customers, and it aims to pay out the majority of claims “almost instantly.” You can open a claim easily by going to the Lemonade app and hitting the Claim button. Prospective customers can get quotes in seconds through the app or go to lemonade.com.

Lemonade is different than the other companies. In the insurance world, every dollar you submit for a claim comes out of the company’s profits. That is not the case with Lemonade. Lemonade takes a flat fee and then pays the rest out to either the policy holder (claims) or to charity. Regardless of what happens, the money is going out the door so the mentality around paying claims and incentives is completely different.

State Farm

State Farm has been in business since 1922 and is currently ranked as one of the biggest underwriters of homeowners insurance in the US. With a total market share of 18.4% according to the National Association of Insurance Commissioners, State Farm is an industry leader with an extensive network of agents and availability across 50 states.

State Farm’s homeowners insurance policy covers losses by weather and non-weather events, such as theft, vandalism and riots, as well as accidents that result in direct physical loss, like water damage from a broken pipe in your plumbing system. There are several discounts available for its homeowners policy, including a roofing material discount, utility rating plans, home security devices, and more. You can also purchase additional coverage against unexpected life events that may come your way, such as flood insurance.

Liberty Mutual

As one of the nation’s largest insurers, Liberty Mutual Insurance offers a variety of insurance products, including robust add-on protection and coverage options customized to your policy preferences. Founded in 1912, and ranked third in the National Association of Insurance Commissioners 2018 Homeowners Insurance Market Share Report, Liberty Mutual is known for its comprehensive coverage plans.

Its standard homeowners policy will cover your property as well as attached structures such as a garage or deck.

Liberty Mutual also offers similar policies for condo and mobile home owners as well as renters. As for its discount options, the company extends opportunities to save to those who invest in home security and new roofing, have multiple policies, or serve in the military. Policyholders may also choose to invest in additional insurance products such as flood, earthquake, and inflation protection. Liberty Mutual is rated A by A.M. Best.

Travelers Insurance

Travelers Insurance has been around for 160 years, and is the sixth-largest underwriter of home insurance policies in the U.S. The company also has the highest A.M. Best rating possible (A++), so it’s a good bet Travelers will stick around long enough to be able to pay claims.

While you can buy a standard homeowner’s insurance policy from Travelers, the company also offers a few add-on insurance options, such as coverage to rebuild a green home or higher coverage for jewelry and other expensive items. Travelers Insurance also offers several discounts, such as for purchasing multiple insurance policies (car, umbrella, boat, etc.), purchasing your home within the past 12 months, and even for owning a LEED-certified green home.

Allstate

Founded in 1931, Allstate is an established carrier with multiple lines of business. The company had the country’s second-largest market share of homeowners insurance in 2018, according to the Insurance Information Institute. Many of its policies are sold through dedicated agents, who would be your main point of contact when filing a claim. It has earned an A+, “superior” rating from A.M. Best. For its size, the company has received comparatively few complaints lodged against it with the Better Business Bureau or the National Association of Insurance Commissioners.

In addition to the standard policy options, Allstate offers optional coverage for identity theft restoration, electronic data recovery, and business-related items stored in the home. Customers can receive discounts in certain circumstances, including when their home has theft or fire protection devices and when they’re over age 55 and retired. Customers with more than one type of policy with Allstate can get a multiple policy discount.

Home Insurance Connect

Home Insurance Connect is a home insurance marketplace that you can use to get quotes from multiple companies at once. It’s a relatively new website that’s easy to navigate, and by answering a few questions you can get connected with companies that offer home insurance in your area.

Home Insurance Connect works with more than 900 lenders, although depending on where you live, you’ll probably see just a few results for insurance companies in your area. These companies could range from big-name insurance companies like Travelers Insurance and State Farm to smaller, local firms.

SelectQuote

SelectQuote may be better known as one of the biggest term life insurance marketplaces around, but it also works with companies to provide home insurance. SelectQuote only works with companies that have an A.M. Best rating of A- or better, so if you’re worried about being referred to financially unstable companies, this filtering system will be an attractive feature.

SelectQuote is also a bit different than some competitors in that you’ll work with an agent. In this way, it’s more like a typical insurance broker than an online marketplace that simply generates quotes based on the information you provide. This may be a plus or a minus, depending on how much human interaction you want to have when shopping for insurance.

Young Alfred

This company’s namesake is a digital butler for the modern age who’s at your service to help you find the right insurance coverage. It’s a cute idea, but there’s also some serious science behind this company’s approach. It uses algorithms to match you with the type of coverage you need, so you don’t have to crunch the numbers yourself. Then, it works with a network of 30 different insurance companies to find the best one for your needs.

This works a bit differently from most other quote tools, which provide you with the prices for a standard home insurance policy. Many people will need additional coverage, and the quotes you get on other websites may not accurately reflect this. Young Alfred works differently because the quotes you get are customized to your profile.

How We Found the Best Home Insurance

There are many companies out there offering home insurance today. That means you have more choices, but it can also make shopping for the best home insurance company overwhelming.

To help simplify the process, we compiled a list of options taking several factors into account, including consumer satisfaction, financial strength ratings, claims processing, and coverage options.

We suggest you read through your homeowners insurance policy carefully to understand your coverage and exclusions. While this might sound like a simple step, many homeowners have gone through the experience of having their claims denied after a disaster. Save yourself the trouble and understand your policy before you need to use it!

Coverage Options

Homeowners insurance provides financial protection against unprecedented loss due to natural disasters, accidents, and theft. Most standard policies include four essential types of coverage: coverage for your personal belongings, the structure of your home, additional living expenses (ALE), and liability protection. Some of these policies even allow you to protect tenants if you rent out part of your home.

We considered companies with a wide variety of coverage options, and evaluated the degree of protection they offered when it comes to a total loss or exceeded coverage limits. We also took a look at policies that provided opportunities to invest in additional protection such as flooding or offered discounts for bundling policies.

Claims Processing

An ideal homeowners policy should safeguard you from any out-0f-pocket expenses to cover damages or loss. For this reason, we prioritized insurance companies that had a solid overall track record of getting back to their clients in a timely manner, as well as those that provide hassle-free, 24-hour claims processing.

Solid Financial Standing

We chose Travelers Insurance and Allstate because they received the highest possible, “superior” A.M. Best rating. With climate catastrophes becoming more and more common, it’s especially important to seek out insurance companies that are able to weather the storm, figuratively speaking.

By choosing a company with a strong financial outlook, you’ll avoid headaches like delayed claim payouts down the road. Similarly, we placed a high priority on insurance marketplaces that only work with financially sound companies with high A.M. Best ratings and a solid reputation according to the National Association of Insurance Commissioners’ (NAIC).

Consumer Satisfaction

Feeling at ease with your insurance company is one of the key attributes you should consider when shopping around for home insurance. That includes being informed, getting updated during the claims process, and being treated fairly during a claim settlement. We checked out different consumer review websites such as the Better Business Bureau (BBB) and the National Association of Insurance Commissioners (NAIC) to assess how well companies are doing according to customer reviews.

As a rule of thumb, it’s a good sign when organizations answer customer reviews online, as it indicates they value their clients’ feedback and overall satisfaction with their products. Customer reviews can also help you identify patterns in the complaints before you decide to commit to a policy or company.

How to Choose the Best Insurance Company

Finding the best insurance is about more than just settling for the cheapest price possible. Taking this route can mean that you’re not fully protected, and you could be in for an unpleasant and potentially devastating surprise come time to file a claim. Luckily, finding the best insurance company only takes a bit of work upfront to ensure long-lasting peace of mind.

Step One: Take an Inventory of Your Belongings

Guessing how much insurance you need is difficult. Instead, it helps to get solid numbers so you know exactly what you’re working with. This is where taking inventory of your belongings can be of great help.

It may sound daunting, but it doesn’t necessarily need to take a huge amount of time. You can use apps like MyStuff or BluePlum Home Inventory to quickly create an itemized list of your possessions. The Allstate app has a Digital Locker feature that allows you to take a quick inventory of your household items. From there, you can estimate each item’s value, so you know the total amount of coverage you should get for your belongings.

This can also help you expedite the claims process should you ever need to file a claim.

Step Two: Decide How Much Insurance You Need

When you get a quote for standard home insurance, it’s just that: a standard policy. There’s a good chance you’ll need to boost your coverage depending on what you need to protect and the hazards that exist in your area.

You can purchase optional add-on insurance, also known as endorsements or riders, to help cover things that are specific to your situation. For example, if you tend to keep a lot of expensive items like jewelry, rare artwork, photography equipment, or antiques in your home, you might be able to purchase additional coverage beyond the minimum that most policies cover.

Other common endorsements include coverage against sewer backups, home-based business coverage, and inflation riders that gradually boost the coverage limit over time.

If you’re having trouble coming up with an estimate for how much insurance you need, working with an agent could help. They can work with you to determine exactly how much coverage you need and help you choose the right add-on insurance products for your situation, if any.

Step Three: Consider Additional Coverage for Weather-Related Catastrophes

It’s especially important to pay attention to the local threats in your area. Losses from hail damage and wildfires are particularly common and are generally covered by most standard home insurance policies — but damage from flooding and earthquakes usually isn’t. If you live in an earthquake- or flood-prone area, it’s especially important to consider purchasing additional insurance to cover these two types of natural disasters.

Anything could go wrong when you least expect it,” said José Gandia, a Puerto Rico-based independent insurance broker with over 20 years of experience. “It doesn’t matter if you own your house or if you’re still financing it. It’s always a good idea to consider additional insurance to cover a natural disaster or events out of human control [commonly known in the insurance industry as ‘acts of god’]. In Puerto Rico, there were many homeowners that had paid off their properties and thought that since they sustained a category 5 hurricane they were in the clear. They didn’t, however, anticipate the devastating damage an earthquake could have.”

Flood insurance is also good to consider even if you don’t live in a flood plain. According to the Federal Emergency Management Agency (FEMA), over 20% of flood claims come from areas that aren’t deemed high risk. Flood insurance works differently from most other home insurance policies in that it’s purchased separately through the government’s National Flood Insurance Program, although you may still buy it through a broker.

Step Four: Shop for Quotes

Now that you know exactly what you need, you can shop around for quotes confidently and know you’re making an apples-to-apples comparison. There are several ways you could go about this.

You can check with each company directly. This is useful because you might be better able to customize your quote, but going through the quote process with multiple companies can be time-consuming.

You can also opt to go with an insurance marketplace. This gives you the option of comparing multiple homeowners insurance quotes from different companies at the same time. However, the quotes you receive are likely for standard home insurance policies and might not have all of the additional options you may need to be fully protected.

Another option is to go with an insurance broker. This might seem more expensive up-front because the broker is getting a commission, but they may be able to find you better rates. They can also help you figure out exactly how much insurance you need so you can buy just the right amount.

Step Five: Choose a Home Insurance Policy

The final step is to make a decision about which company is right for you. Since you’ve already compared quotes for your specific needs, the final decision could be as simple as choosing the cheapest option. However, if there are other aspects that are important to you, make sure to take these into account as well.

For example, if you’d rather work with a local company or if you value customer service above all else, now is the time to filter for companies that meet these criteria.

Font also advises homeowners to not rely solely on the information provided by your insurance agent, as their recommendations can often be self-serving.

They will only tell you what they think will sell you,” said Font. “You should ask for the policy or copy of a standard policy they would issue for your property. They should be able to provide that, and if they don’t – then what are they hiding, right?

Types of Home Insurance Policies

You might see terms like “HO-2” or “HO-3” thrown around when shopping for home insurance. These terms refer to the different types of home insurance policies available today. Here is a brief description of the different types of home insurance policies and what they mean:

  • HO-1: Most basic home insurance
  • HO-2: Home coverage against specific threats
  • HO-3: Home coverage against all threats except excluded ones; the most common type of home insurance
  • HO-4: Renters’ insurance
  • HO-5: Most comprehensive home insurance
  • HO-6: Condo insurance
  • HO-7: Mobile home insurance
  • HO-8: Older home insurance

Generally, most types of home insurance sold today are HO-3 policies. Still, it’s a good idea to check what type of policy you’re considering for purchase to make sure you understand what it covers and how it works.

Choosing a Home Insurance Deductible

Generally, you’ll be offered a few different options for a deductible. This is just the amount that the carrier requires you to pay before your insurance kicks in. For example, if a fallen tree does $10,000 worth of damage to your house and your deductible is $500, you’ll need to pay $500 and your insurance will pay the remaining $9,500.

The higher your deductible, the lower your premium will be. It’s generally best to choose the highest deductible you can afford. This will save you money on your premium and keep you from being stuck in a difficult financial situation if you need to file a claim.

It’s also a good idea to keep that deductible tucked away in a savings account you don’t use for everyday expenses. That way, you’ll be less tempted to spend it, it’ll earn interest, and you’ll be guaranteed to have the money if you need it.

When to Reconsider Your Home Insurance Policy

It’s recommended to take a look at your home insurance policy at least once a year to make sure you’re still fully covered. Your insurance needs might change over time as your circumstances change and evolve.

For example, if you’ve made any substantial changes to your home, such as remodeling the kitchen or bathroom or building a new addition, it’s a good idea to check with your insurer whether this would be covered in the event of a loss or if you need to up your coverage. Similarly, if you’ve recently taken up an expensive new hobby such as woodworking or photography, now’s a good time to make sure that you’re still fully covered for all the new equipment in your home.

Summary: Best Home Insurance Companies

You May Like

EDIT POST