A home is likely the largest purchase you’ll ever make in your life. But what would happen if your oven catches fire and burns down your home? Or lightning strikes and causes major damage?
If you don’t have homeowners insurance, you’d have to pay to repair or rebuild your home yourself. Thankfully, purchasing homeowners insurance can help you prevent a financial disaster.
Best homeowners insurance overview
In-depth Analysis of homeowners insurance companies
- Best for: Online rate shopping
We featured Policygenius as the top online homeowners insurance website for shopping because they give you homeowners insurance quotes by filling out a single application that takes just three minutes to complete.
All you have to do is fill out information about your home yourself and your contact info. Then, Policygenius will send you an email from a licensed expert within 24 hours to talk next steps and they’ll will send you quotes within 48 hours.
- Best for: Those looking for socially conscious insurer
Lemonade isn’t your typical homeowners insurance company. Lemonade earns money by taking a flat fee from your insurance premiums. With the money left over, Lemonade buys reinsurance and pays for unavoidable expenses. Then, they use the rest of the premiums to pay claims.
Any unclaimed money left over is donated to a non-profit of your choice through a process called giveback.
The idea behind Lemonade is by giving back unclaimed money to non-profits you believe in, it lowers the odds of fraud which is a huge cost in the current insurance industry. By choosing Lemonade, both you and the non-profit you select could benefit from this new insurance model.
- Best for: New homeowners
Allstate is our top homeowners insurance company pick for new homeowners due to their extensive resources to help new homeowners figure out homeowners insurance.
In addition to Allstate’s helpful insurance agents that you’ll probably find in your local community, Allstate’s website offers tons of educational material to explain how homeowners insurance works, along with detailed information on some of the more complicated factors.
Allstate also offers discounts that can help new homeowners find an affordable policy that also meets their needs.
- Best for: Military members and their families
USAA is the United Services Automobile Association, but despite their name, they also offer homeowners insurance.
Unfortunately, everyone can’t join USAA. Only those currently serving in the U.S. military, former military, family of military, and cadets or midshipmen may join.
We featured USAA as our top home insurer for military and their families because USAA’s sole focus is serving this important group of people. USAA offers exclusive benefits, products and discounts for U.S. military members and they state their commitment to their members is superior to any other major financial service provider.
- Best for: Those looking for the largest, most reliable home insurer
According to PolicyGenius, State Farm has a market share of 18.63 percent, the highest among homeowners insurance companies listed. The second largest homeowners insurance company, Allstate, only has an 8.44 percent market share.
You don’t become the largest homeowners insurance company without a strong product and decent premiums. For these reasons, we’ve included State Farm in our top homeowners insurance companies list.
Summary of the top homeowners insurance companies
Now that you have a better idea of how homeowners insurance works, what the policies cover, and how premiums are determined, we thought it’d be a good idea to share our picks for the top homeowners insurance companies and why we picked them.
Here’s a quick table to summarize each:
What is homeowners insurance?
Homeowners insurance is a type of insurance that financially protects your home’s structure and your belongings from covered losses. Like most types of insurance policies, you pay a premium in exchange for protection from major perils that could financially devastate you.
Annual insurance premiums will vary depending on many factors, but the premium is typically small compared to the insured value of your home an insurance company may pay out in the event your home is completely destroyed.
Why you need homeowners insurance
Homeowners insurance protects you from losing a significant amount of money should something awful happen to your home or belongings and they need to be repaired or replaced. Without homeowners insurance, you’d have to pay for these costs yourself. Most people don’t have enough money set aside to completely rebuild their home should a natural disaster completely destroy their home.
In addition to spreading out your financial risk, homeowners insurance is likely required by your mortgage company. They want you to be able to repair your home or repay the balance you owe on your mortgage loan in the event your home is a total loss.
What does homeowners insurance cover?
Each homeowners insurance policy is unique and covers your home and property in different ways with different exceptions. In general, homeowners insurance may cover the following major categories:
- Your home’s structure
- Your personal belongings
- Your personal liability from accidents and injuries at your home
- Other structures on your property
Covered events may include perils like fire, vandalism, theft, lightning strikes, hail, windstorms, explosions, and water damage. However, most policies don’t cover other events like floods, sinkholes, and earthquakes.
In the event you want to be protected from a peril not covered by your homeowners insurance policy, you may be able to add a rider to add coverage or you may have to buy a separate policy to cover the other perils.
What doesn’t homeowners insurance cover?
There’s one big thing home insurance doesn’t cover: Flood damage. If you live in a federally-designated flood area, your mortgage may require you to have flood insurance, which is pricey. It can be purchased through the National Flood Insurance Program or most local insurance agents.
Your homeowner’s policy may also exclude or limit coverage from damage by earthquake, hurricane, hail, or tornadoes. In many cases, you’ll need to add additional coverage to your policy for these items.
Other things that home insurance won’t cover include normal wear and tear on your home (including things like furnaces or air conditioners failing because of old age).
Finally, although home insurance covers belongings like technology and jewelry, there are limits. If you have a lot of expensive jewelry, you may want to look into additional coverage above and beyond your home insurance.
With all of the variables about what home insurance will and will not cover, it’s so important to pay attention to your home insurance policy and make sure you understand it. A good insurance agent will walk you through it. Hopefully, you’ll never need your home insurance, but if you do, you don’t want surprises.
What to look for in homeowners insurance
When shopping for a homeowners insurance policy, there are many factors you should investigate to find the perfect policy for you. They including the following:
- Coverage limits offered vs. the value of your home, belongings, and other structures.
- What perils are covered.
- What property is covered.
- How reimbursement for damages is determined (replacement cost or actual cash value).
- What riders you can add to your policy.
- Exceptions for things the policy won’t cover.
- Deductibles for different coverages.
- Discounts you qualify for.
- The financial strength of the company.
- Customer service of the company.
- Customer reviews of the company.
- Your annual premium.
How homeowners insurance rates are determined
One of the major factors most people use to determine which homeowners insurance policy they pick is the premium they have to pay. The formulas insurance companies use to calculate premiums can be extremely complex due to the variety of factors that impact a policy’s cost to the insurer.
That said, insurance companies may consider some or all of the following factors when setting your premiums:
- Insurance laws in the state you live in.
- The amount of coverage you select.
- Which riders you add to your policy.
- How much your deductibles are.
- The size of your home.
- The quality and finishes of your home.
- The age of your home.
- The estimated cost to rebuild your home..
- Where your home is located.
- Crime in your location.
- Fire protection ratings in your location.
- Your credit.
- Your claims history.
- Whether you have actual cash value or replacement cost coverage.
- If you have a home-based business at your property.
- Discounts you qualify for.
- Whether you pay in full or in multiple payments.
While premiums are important, you should strongly consider other factors listed here to make sure you’re properly covered rather than just paying a small premium for bare-bones coverage.
Where to find homeowners insurance
Finding homeowners insurance isn’t difficult in most cases. That said, unique properties or those that present an unusually high risk to insurers may be more difficult to find affordable homeowners insurance for. Even so, there are many ways you can shop around to find the best homeowners insurance policy for you.
Talk to a local agent
The traditional way to get homeowners insurance is talking to a local agent and getting a quote from a single company. If you want to shop around, you can speak to multiple insurance agents that work at different companies then compare quotes.
Get a quote online
The internet has made shopping for homeowners insurance a much easier process. Many homeowners insurance companies allow people to get homeowners insurance quotes online by inputting information about your home and desired policy.
Unfortunately, certain insurers or homes located in particular states may not be able to get online quotes.
Use an insurance broker
If you don’t want to do the work of finding the perfect homeowners insurance policy yourself, you’re not alone. Insurance brokers are the solution for you.
Insurance brokers have the ability to get homeowners insurance quotes from multiple homeowners insurance companies, not just the one company they work for like most insurance agents. Insurance brokers work on your behalf to find a policy that both fits your needs and offers you a great premium. Policygenius is on example of these insurance brokers.
If you have a mortgage (which most people do) you’ll need homeowners insurance. Picking the right insurance for can save you money whether you’re buying homeowners insurance for the first time or are just looking to switch policies.
Keep in mind, just because we think a homeowners insurance company is a top pick doesn’t mean it’s a perfect fit for your situation. As always, fully investigate all policies and compare them to your needs before choosing the policy you want to go with.