Having the best home insurance isn’t a luxury you can afford to go without; it’s a necessity. The best homeowners insurance policies will work to protect your possessions and home against theft and damage. If you’re buying your home, almost every mortgage company requires you to carry home insurance for a fair or the full value of your property. They won’t finance your home purchase or give you a loan to buy the home without proof.
Additionally, you don’t even have to own the house to need the best homeowners insurance. Most landlords require you to have active home insurance coverage, and it’s in the rental agreement that you have to keep it. Even if it’s not required, it’s a good idea to have this protection. We want you to have all the tools and information you need to make the best decision, and this is why we’re going to walk you through everything you need to know about the best home insurance available.
- Different Types of Home Insurance
- The Best Homeowners Insurance Companies
- The Best Homeowners Insurance Rates – State by State Breakdown
- How Companies Calculate the Home Insurance Rates
- The Home Insurance Policy List
- Things the Best Homeowners Insurance Policies Typically Don’t Cover
- Six Ways to Reduce the Best Homeowners Insurance Policy Costs
- Comparing the Best Home Insurance Companies
- Top 25 Home Insurance Companies in the United States
Different Types of Home Insurance
Every home insurance coverage type is slightly different in terms of the products and events it’ll cover, and the coverage amounts. The cheapest insurance options usually cover fewer items, and more expensive policies cover more things in your home. In the United States, the home insurance policies come in several different forms.
You can find these different forms under HO-1 through HO-8 designation. Each tier offers you different protection levels that will vary depending on the type of residence the insurance is for and the homeowner’s or tenant’s needs. You can break them down into three coverage levels:
- Actual Cash Value – The first tier of coverage is the actual cash value. This tier will cover the cost of the home and the value of your belongings like your central heating and cooling units, excluding depreciation. Depreciation is how much all of your items are currently worth, and it doesn’t matter how much you paid for them.
- Guaranteed Replacement Cost Value – The second tier is the guaranteed replacement cost value. This is an inflation-buffer policy that comes designed to pay whatever it costs you to rebuild or repair your home, and it can exceed your policy limit. Some of the home insurance companies offer extended replacement, and this means you’ll get more coverage than you actually purchased. The ceiling caps out at 20% to 25% over your coverage limit.
- Replacement Costs – If you have a replacement value home insurance policy, this policy will cover the actual cash value of your possessions and home with the depreciation deduction. This tier would let you rebuild or repair your house up to the original appraised value.
The Best Homeowners Insurance Companies
Although we gave you a list of the main homeowners insurance companies in the United States, we wanted to narrow it down for you a little bit so it’s not so overwhelming. The best homeowners insurance companies we picked include:
- Amica Mutual – As one of the most highly-ranked homeowners insurance companies, Amica has a big reputation for excellent customer service. They offer a fast claims process, affordable rates, and efficient customer service. You can get a multi-line discount, remodeled or new home credit, and a discount for not having any claims. They offer loss assessment plans, catastrophic coverage, and identity fraud expenses.
- Metlife – Metlife offers guaranteed replacement cost homeowners insurance. If your home costs $75,000 but it has $200,000 in damages, Metlife will cover up to the $200,000 mark. You get safety discounts for security device installation, bundling, and employer group discounts. The personal property replacement cost is nice too.
- Allstate – Allstate is one of the most cost-effective homeowners insurance companies available. You get customizable coverage choices, education tools, easy navigation and a host of large discounts. They’ll give you up to 25% off for bundling, and a 20% discount for no claims. It’s a great choice for first-time homebuyers.
- Farmers – If you have a larger policy, Farmers will cover it. It has some of the best rates for policies with high limits, and they have a very reputable customer service team on hand. There are policy customization options based on your state, three-tiers of customizations, and low rates with discounts. The discounts include claims-free discounts, declining discounts, and claim forgiveness.
- Erie – Erie is another cost-effective insurance company that offers 24/7 customer support. If you file a claim, you’ll get the cost of your home replacement price guaranteed. You can put together a customized policy, and you can add useful riders for flooding, fire, earthquakes, water backup, and high-end jewelry and valuables.
- American Residential – American Residential Warranty offers good coverage in all 50 states and has competitive rates along with solid customer service
- State Farm – State Farm is another top provider that is very popular across America
The Best Homeowners Insurance Rates – State by State Breakdown
Every state will have different homeowners insurance rates, and there are several different factors that go into breaking down these rates. The ones below are the average cost by state on an annual basis. They include:
- Alabama – $2,981
- Alaska – $1,799
- Arizona – $1,976
- Arkansas – $3,439
- California – $1,166
- Colorado – $3,082
- Connecticut – $1,961
- Delaware – $1,521
- District of Columbia – $1,488
- Florida – $3,439
- Georgia – $2,555
- Hawaii – $499
- Idaho – $1,842
- Illinois – $2,201
- Indiana – $2,423
- Iowa – $2,540
- Kansas – $3,931
- Kentucky – $2,862
- Louisiana – $3,270
- Maine – $1,833
- Maryland – $1,518
- Massachusetts – $1,920
- Michigan – $2,153
- Minnesota – $3,010
- Mississippi – $3,340
- Missouri – $3,111
- Montana – $2,809
- Nebraska – $3,133
- Nevada- $1,486
- New Hampshire – $1,455
- New Jersey – $1,744
- New Mexico – $2,299
- New York – $1,840
- North Carolina – $2,009
- North Dakota – $2,601
- Ohio – $2,107
- Oklahoma – $4,445
- Oregon – $1,608
- Pennsylvania – $1,720
- Rhode Island – $2,125
- South Carolina – $2,678
- South Dakota – $3,172
- Tennessee – $2,692
- Texas – $3,429
- Utah – $1,378
- Vermont – $1,212
- Virginia – $1,956
- Washington – $1,514
- West Virginia – $2,486
- Wisconsin – $1,732
- Wyoming – $2,083
The best homeowners insurance companies and policies will vary from state by state, so it’s a good idea to compare and pick the best for you.
How Companies Calculate the Home Insurance Rates
What decides the rates for homeowners insurance? One of the biggest factors is whether or not a tenant or homeowner will file a claim. This is the risk to the insurer. To determine what your individual risk is for filing a claim, the insurer will take a look at any past homeowners insurance claims you submitted. They’ll also look at any previous claims taken out in relation to the property and your credit score.
If there’s more than one claim related to wind storms, weather damage or a fire due to faulty electrical work at the same property, this will hike your rate. Insurners may be there to pay out your claim, but they’re also here to bring money in. If they decide to insure a home that has had more than one claim in the past 3 to 7 years, it can push your insurance premium up a tier or two. This includes if the previous owner filed a claim at the property. Additionally, the number of past claims dictates your eligibility for homeowner’s insurance.
Other factors that impact the homeowners insurance premiums include the building material availability, crime rate, and the neighborhood. Coverage options like added riders for jewelry, wine, or art, deductibles, and the amount of coverage you want all factor into your final price. Things like your roof type, building construction, heating type, age of the home, condition of the home, swimming pool, security systems, extensions, trampoline, and your home’s proximity to the coast play a role.
If you don’t maintain your home, this increases the insurer’s chances that they’ll have to pay out on a damage claim sooner or later. If you have a dog or cat, this can drive up the cost. This is especially true if you have larger dogs or specific breeds like pit bulls.
The Home Insurance Policy List
When you set up the homeowners insurance policy, you can build it specifically to suit your needs and see what information you need to provide. You can create one specific to the contents of your home and the home itself, so what do you need to keep in mind when you select options?
Basic building insurance on your homeowners insurance policy covers the brick-and-mortar structure of your home. It includes damages against unexpected events like flooding, fires, or weather events. Most mortgage companies require you to have building insurance coverage before they’ll lend to you. They require this because the lender’s loan is a long-term investment in the property itself. Without coverage, the lender could lose out on a lot of money if something were to happen to the home.
Even if you decide to buy the house outright and forego a traditional mortgage, you still want to have building insurance. If something were to damage your home or garage unexpectedly, you could find yourself on the receiving end of a significant or large repair bill. You’ll have to pay a lot of these bills upfront rather than simply submitting a claim to your insurer.
The structure of your home itself gains protection under building insurance, but what about all of your items in the home? Contents insurance covers items like your personal belongings and your furniture in the event something were to happen. If you rent from a landlord, the building insurance is your landlord’s responsibility. However, the contents insurance is yours because it involves your personal items.
The goal of this policy is to give you a greater peace of mind that comes with knowing that you don’t have to pay out of pocket to replace your personal items if something should happen to the house. Another option you have available is to extend this best insurance policy to cover theft or loss outside of your home, and you can also cover accidental damage to electronics or expensive items.
You want to make sure you don’t underestimate your contents insurance because you could be short thousands of dollars if you have to file a claim.
Building and Contents Insurance Combination
Now that you know that contents insurance is a standalone plan that is ideal for tenants and building insurance is great for landlords, what about homeowners? As a homeowner, you’re responsible for both your belongings and the property itself. This is why having a building and contents combination insurance plan is necessary.
When you combine these two policies under one homeowners insurance coverage option, it usually is much cheaper than purchasing them separately. Before you settle on one, you want to compare the premiums you’ll have to pay to see if it makes sense financially to combine them. Also, double-check the coverage to make sure you have enough for your home and contents.
If you live in an area prone to floods, you want flood insurance added to your homeowners insurance policy. This will protect you from structural damage to your home if it should flood. You also want to check your contents insurance and ensure that it’s enough to replace any belongings that you have to toss out due to water damage.
Fortunately, home insurers can’t deny your application for coverage because you live in an area that has higher flood risks. As long as the government agrees to fund flood defenses in your direct region, you can get home and contents insurance through them. However, you should be prepared to pay more for it.
Floods can devastate both your home’s structure and what you have inside it. The best homeowners insurance policy will ensure you get all of your items back without spending a lot of out of pocket.
Student housing or homes where people work from home have a lot of expensive electronic devices like laptops, computers, phones, and textbooks. They’re particularly attractive to burglars because there are usually up to four people living in these houses, and this means more things they can steal in one go. Before you go to college, you may want to consider taking out contents insurance on your items. Even if you plan to have roommates, every roommate will have to take out their own student insurance policy to cover the costs of their items.
Depending on the insurer, they may let parents add their students to their current contents insurance policy. However, to do this, you’ll have to extend your contents insurance to cover areas away from your home. This can be very expensive, and it’s usually easier for the student to take out their own standalone policy.
Subsidence is a phenomenon when your home’s foundation starts to sink into the ground or collapse. Leaking drains could be a cause because it can soften the ground beneath your home. The soil or trees absorbing moisture and holding it in is another common cause. If you notice that you have sudden cracks appearing in the brickwork and plaster of your home, these are early signs of subsidence. Signs of dampness and rippling wallpaper are other signs.
Unfortunately, your building insurance policy will usually only cover damage to the home itself caused by subsidence. If you have damage to the structures surrounding your home like patios, porches, garden walls, or driveways, your building policy won’t cover the costs to repair them unless they were to damage the home itself in some way.
Problems with your fondation can cause massive issues with your home unless you address them straight away.
Things the Best Homeowners Insurance Policies Typically Don’t Cover
Again, homeowners insurance policies vary from insurer to insurer, so what one covers the other may not. This is why it’s so important to double-check your policy. You don’t want to be out a lot of money if you have a problem and it falls under something your insurance won’t cover. Generally speaking, there are a few core things most homeowners insurance policies won’t cover.
The best home insurance will usually cover most scenarios where you could lose your belongings or your home. However, most of them exclude so-called “acts of God” and natural disasters. Acts of war are another thing most policies exclude.
If you live in an area prone to hurricanes, floods, or it has a history of earthquakes, you want to ensure you add riders or additional policies to your coverage plan. Flood and earthquake insurance does exist, but you pay more for them. You can add drain or sewer backup coverage, and some even offer identity recovery coverage that will reimburse you any expenses you incurred by being an identity theft victim.
Six Ways to Reduce the Best Homeowners Insurance Policy Costs
It never pays to skimp on your coverage to save a few dollars, but there are easy ways you can reduce your homeowners insurance premiums. We’ve listed the biggest ones below for you.
Any way you can lower your insurance premiums are great things to take advantage of, and you should revisit it on a yearly basis.
1. Maintain a Security System
You can lower your annual homeowners’ premiums by installing and maintaining a burglar alarm that is either tied directly to your local police station or monitored by a centralized station. It could bring your premium down by as much as 5%. For you to get this discount, you’ll have to provide proof to your lender like a contract with the security company or a bill.
Having smoke alarms and carbon monoxide detectors installed and in good working order are another big point in your favor. These things come standard in newer homes, but they’re usually not standard in older ones. Weatherproofing, sprinkler systems, solar panels, and dead-bolt locks can all drop your premium by as much as 10%.
2. Multiple Policy Discounts
A lot of homeowners insurance companies will offer you a discount of 10% or more if you choose to bundle other insurance policies in with your home insurance like health or auto. It’s a good idea to get a comprehensive quote for other insurance types from the same insurance entity that holds your homeowners insurance. This could help you save on several premiums at once.
3. Pay Off Your Mortgage
Yes, this one is easier said than done. However, if you own your home outright instead of having a mortgage, you could see your average premium go down by a significant percent. This happens because the homeowners insurance company assumes that you’ll take better care of your home if it’s 100% yours. Even putting a little extra toward your payments each month will help you pay it off quicker.
4. Plan Ahead for Any Renovations
If you renovate your home by adding new flooring or building an adjacent structure or an addition onto your existing home, consider which materials you want to use. Structures that have wood frames will usually cost more to cover with your insurance because they’re very highly flammable. Steel or cement-framed structures will cost less to cover because they’re less likely to succumb to fire or have issues with bad weather conditions.
Another important aspect you should consider when you do renovations is the insurance costs associated with installing and maintaining a swimming pool. You could see your insurance premium costs go up by as much as 10% if you choose to install a pool or have a trampoline because they increase the chances of injuries.
Renovations are an excellent way to control your best insurance policy cost, especially if you do a lot in a year to improve your home.
5. Raise Your Deductible
Just like car or health insurance, the higher deductible you have on the best homeowners insurance , the lower your annual premiums will be on the best health insurance policies. However, there is a catch with this plan. Problems or claims that will only cost a few hundred dollars to fix like a leaky pipe or broken window will be your responsibility until you hit your deductible. If you have a few in a row, they can really add up.
6. Review and Compare Insurance Policies Annually
It doesn’t matter what prices your homeowners insurance company quotes you at first when you start comparing the best homeowners insurance companies. You’ll want to take time and do some comparison shopping. Check for things like group coverage through trade or credit unions, association memberships, or employers. At least once a year, compare your policy’s coverage and cost to other insurance entities. Also, note any changes that occured to your policy within the past year.
Maybe you paid off your mortgage, took down the trampoline, or put in a security system. If you do, telling the homeowners insurance company isn’t enough for them to take your word for it. You have to provide proof through pictures or receipts before they’ll lower your premium. If you did any updating, make sure to include it. It can also pay to stay loyal to a company. Your premium can drop the longer you stay with them.
If you update things in your house like buying new furniture or new electronics, make sure you note them on your best home insurance policy. You don’t want to undervalue your contents insurance. If your local city council made improvements to the neighborhood like adding a fire hydrant within 100 feet of your home, this could lower your premium.
Comparing the Best Home Insurance Companies
When you start shopping and comparing the best homeowners insurance companies, there are several things you want to keep in mind. The following criteria will help you keep on track and pick out the best homeowners insurance for your situation.
- Compare Statewide – When it comes to the best homeowners insurance, you want a wide net. Pick out a provider that is trustworthy, reputable, and legitimate. The first step you should take is to visit the Department of Insurance website for your specific state. They give insurance companies ratings based on their conduct. It should also list the average cost for premiums through the different insurers.
- Company Check – Go to the websites for the top credit agencies and do a company health check for any homeowners insurance company you’re considering. The Better Business Bureau is a good starting point. You’ll be able to see nationwide complaints and how the company handled them. You could also find useful information pertaining to how the company operates.
- Claims Response Time – It’s essential that you know how the company handles their claims. The best homeowners insurance entity will have a quick and responsive claims time. Find out whether the company handles their own claims or if they outsource them. When you get into contact with an agent, they can answer your claims questions to help you understand their process.
- Customer Satisfaction – Because it’s incredibly easy for someone to say a company has a great claims process, ask your agent about the retention rate. This is the percentage of policyholders who choose to renew every year, and you want this number to be at least 80%, if not higher. Online reviews, annual reports, and testimonials can help you pick out the best homeowners insurance company.
- Quotes – Many websites allow you to compare the best home insurance companies side by side and get several quotes at the same time. Rates vary by company, as do the prices they charge for various packages or riders. Get at least five different quotes to give you a good idea on what the different companies offer. If you already have an existing insurance carrier for your health or auto insurance, see about bundling.
- Speak to a Representative – It’s a good idea to consider getting quotes using an independent agent. They’re not biased, and they’ll give you straightforward advice. However, there may be additional fees associated with doing this, especially if you take their advice when you pick out the best home insurance for your needs.
Having the best home insurance policy available and tailored to your needs can ensure you’ll be able to repair or rebuild you home without a hassle if something happens.
Top 25 Home Insurance Companies in the United States
Did you know that there are hundreds of home insurance companies in the United States? This can make it challenging to compare products However, we’ve picked out the biggest and most well-known home insurance companies in the United States. This will give you a starting point to compare products and know which ones are better for your needs. The best home insurance companies include:
- Liberty Mutual
- State Farm
- Tower Hill
Picking out the best home insurance can be a challenging and time-consuming process, but it’s well worth it. When you put in the work and use this guide to help you, you should be able to tailor your choice to your wants and needs without blowing your budget. You’ll get the coverage you need and the peace of mind that comes with it.
Hope the information in this guide to the best providers was helpful. Feel free to reach out if you have more information you would like us to include.