May 18, 2022

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The Best Homeowners Insurance of 2021

The Best Homeowners Insurance Options

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Purchasing a home is a major investment and one that should be protected to make the most of that investment. Unfortunately, you never know when your home could sustain damage, whether it’s from a busted pipe, fire, or a storm. Having the best homeowners insurance can provide the coverage you need to restore your home to good condition.

Of course, homeowners want the best homeowners insurance coverage possible from a quality insurance company they can trust. Finding the best home insurance company depends on your individual needs and preferences. Some people like to work directly with their insurance agent to craft a policy, while others prefer to research and purchase their homeowners insurance online. You may want to bundle your policy with other insurance products, or you may want specific add-ons to get the full coverage you need. As such, it’s imperative to research the best home insurance companies to find the right one for your homeowners insurance.

  1. BEST OVERALL: State Farm
  2. RUNNER-UP: Amica
  3. BEST FOR HOME AND AUTO: Allstate
  4. BEST FOR BUNDLING: Nationwide
  5. BEST DIGITAL EXPERIENCE: Lemonade
  6. BEST FOR DISCOUNTS: NJM
  7. BEST FOR MILITARY MEMBERS: USAA

The Best Homeowners Insurance Options

Photo: depositphotos.com

What to Consider When Choosing the Best Homeowners Insurance

When researching the best homeowners insurance companies, there are a number of factors you should consider. Do they offer add-on policies to get the full coverage you need? Can you bundle homeowners insurance with other policies you currently have? Does the company have the financial strength to guarantee its policies? What home insurance companies serve your community? Does the company have a reputation for providing great customer service? These are just a few questions you need answered when shopping for the best homeowners insurance.

Add-On Policies

While your homeowners insurance covers the structure and contents of your home, there are some specific types of damage that may not be included in your policy. For instance, if you live in an area prone to floods, you will need to add flood insurance to your homeowners policy. This is true, too, for areas known for earthquakes.

Homeowners insurance also typically covers water damage due to a burst pipe, but what if your home is damaged by water from a sewer backup from your city’s water lines? You will need an add-on policy to pay for repairs.

Other add-on policies worth considering include coverage to repair or replace the utility lines that run from your house to the street, coverage for repairs due to sinkholes, and policies to cover scheduled personal property such as jewelry and antiques.

Multi-Policy Discount

A great way to save on your home insurance cost is to bundle your homeowners insurance with other insurance policies you have from your insurance company. Many home insurance agencies offer discounts when you purchase more than one type of insurance coverage from them. One of the most popular options is bundling home and auto insurance, which could save you up to 25 percent on your rates.

If you don’t have a car, you may be able to get a multi-policy discount by bundling your homeowners insurance with other coverage such as umbrella coverage, term life insurance coverage, or boat insurance. Another benefit to bundling home and auto insurance is easier policy management because both policies are with the same company.

AM Best Rating

When researching home insurance agencies, look for companies that have a good AM Best rating. AM Best is a credit rating agency that reviews insurance carriers to determine their financial strength and credit information. AM Best ratings look at a number of factors to evaluate the company’s financial and risk management, and AM Best assigns a letter rating between A++ and D-, with A++ being the best. This information provides a picture of a company’s ability to pay out claims to its policyholders.

Although an AM Best rating does not guarantee a company’s performance, it is a good indicator of the customer service you can expect as a policyholder. Combining an AM Best rating with other tools such as Better Business Bureau ratings and customer reviews could help you decide if a homeowners insurance company is right for you.

Coverage Area

One of the key factors insurance companies look at when pricing a homeowners insurance policy is where you live. At a basic level, not every homeowners insurance company will cover every state in the country, so first check that the policy you’re interested in covers your home.

If you live in a major city, your homeowners insurance could cost more than for homeowners who live in the suburbs. One reason for this could be because homes in big cities may have higher property values, so repairing or replacing the home could be more expensive.

If you live in an area known for natural disasters, such as tornadoes or earthquakes, your homeowners insurance could be more expensive since the risk for home damage is higher. Homes located in high-crime areas that are at risk for theft also may be more costly to insure.

Quotes

Not all home insurance quotes are the same. Every insurance company looks at a number of factors such as age of the home, location, and home value to determine how much a homeowners insurance policy will cost. To find the best rates, it’s important to shop around and check with at least three different insurance companies to get a homeowners quote.

Make sure you provide the same information to each company, preferably on the same day, to ensure the homeowners quotes are comparable. In addition, make sure the components of the homeowners insurance policy—amount of coverage, deductible, add-ons, etc.—are the same so you’re comparing apples to apples.

Different companies also offer different methods of getting a quote, whether that’s online or in person with an agent. Agents will have extensive knowledge of the available policies and be able to answer any questions that may arise, but it may not be the most convenient solution when you’re looking to get a quote quickly.

Replacement Cost Coverage

Homeowners insurance reimburses you for property damage using one of two values. The first is actual cash value. This amount is determined based on the depreciated value of your items, meaning what those items are currently worth, not what you paid for them or how much it would cost to replace them. Replacement cost coverage pays your claim based on how much it would cost to repair or replace your home or an item based on current pricing, not a depreciated value.

Because replacement cost coverage typically pays out a higher claim amount than actual cash value coverage, homeowners insurance policies with replacement cost coverage are usually more expensive.

Complaints

Reviewing customer complaints for home insurance agencies can provide insight into how reliable the company is for paying claims and the type of customer service you can expect to receive. A good resource for checking customer complaints is the National Association of Insurance Commissioners (NAIC), which maintains a Company Complaint Index. You can enter the insurance company name, type of insurance, and state where you live to pull up the Complaint Index Report.

Another source to review customer satisfaction is J.D. Power, which uses consumer insights, data, and other tools to evaluate a company in relation to its competitors. Each year, it issues rankings through its U.S. Home Insurance Study, which lists the top companies for homeowners insurance.

Our Top Picks

What defines the best homeowners insurance companies depends on your individual needs. You may want a company that checks most, if not all the boxes, such as State Farm for Best Overall, or you may want something more specific, such as the best digital company, like Lemonade.

The Best Homeowners Insurance Option: State Farm

Photo: statefarm.com

Why It Made the Cut: Highly rated for financial strength and customer satisfaction, State Farm is available nationwide and typically offers lower pricing than its competitors and even the national average.

State Farm touts that it offers great rates for everyone, and the company backs that up with pricing that typically is lower than its competitors as well as the national average. One reason for that is the company offers a variety of discounts, including a multi-policy discount that could save you up to $965 each year. However, unlike the company itself, those discounts are not always available where you live, so it’s important to find out what discounts are available to you.

For policyholders, State Farm has a strong history of being reliable, with a A++ rating from AM Best for financial strength, and providing excellent customer satisfaction, per the NAIC. Plus, it offers other insurance products such as car and life insurance, so you can work with one company for all of your insurance needs.

Specs

  • Additional policies: Vehicle, life, health, small business, umbrella
  • Multi-policy discount: Up to $965 per year
  • AM Best rating: A++
  • Coverage area: 50 states and Washington, D.C.
  • Quote process: Online, phone, or through an agent

Pros

Cons

  • Discounts vary by state and will not be available to every homeowner
The Best Homeowners Insurance Option: Amica

Photo: amica.com

Why It Made the Cut: With a claims process that is simple and efficient, Amica has been awarded the highest in customer satisfaction by J.D. Power.

Offering coverage nationwide (with the exception of Alaska and Hawaii), Amica ranks high for customer satisfaction, meaning it is reliable for processing claims and providing good customer service. If this is a priority for you, this could be the right choice. When purchasing homeowners insurance, policies also include credit card coverage if your credit cards are stolen and used for unauthorized purchases.

Depending on where you live, online quotes are not available for all policies, which could be a deterrent if you like to handle your research and purchase online. If you do prefer managing your homeowners insurance online, once you purchase your policy, you could receive a discount for receiving policy information and billing statements electronically. Other discounts include multi-policy, autopay, loyalty, and claim-free discounts.

Specs

  • Additional policies: Vehicle, life, umbrella, small business
  • Multi-policy discount: Up to 15%
  • AM Best rating: A+
  • Coverage area: 48 states and Washington, D.C.
  • Quote process: Online or phone

Pros

  • Awarded highest in customer satisfaction by J.D. Power
  • Credit card coverage for stolen credit cards built into homeowners insurance policy
  • Claims process is simple and efficient

Cons

  • Not all policies can be quoted online depending on the state
The Best Homeowners Insurance Option: Allstate

Photo: allstate.com

Why It Made the Cut: Allstate offers a 25 percent discount when you bundle home and auto insurance, one of the largest multi-policy discounts available in the industry.

Available nationwide, Allstate offers a lot of flexibility to customize your homeowners insurance, particularly if you are willing to work with an agent. Before talking with an agent, though, you’ll find free resources on the company’s website, so you can research the coverage you want and need ahead of time.

Rates with Allstate may be higher than those of its competitors, but the company’s multi-policy discount of up to 25 percent could make those rates more affordable. Additional discounts for switching and staying with Allstate, setting up automatic payments, signing up before your current coverage expires, and paying your premiums on time could further reduce those rates so they are less than competitors.

Specs

  • Additional policies: Vehicle, life, pet
  • Multi-policy discount: Up to 25% with auto insurance
  • AM Best rating: A+
  • Coverage area: 50 states and Washington, D.C.
  • Quote process: Online, phone, or through an agent

Pros

  • Generous 25 percent multi-policy discount for bundling home and auto
  • Plans are more customizable than those of other companies, especially when working with an agent
  • Many free resources available on the provider website

Cons

  • Prices may be higher than those of competitors
The Best Homeowners Insurance Option: Nationwide

Photo: nationwide.com

Why It Made the Cut: Thanks to a wide variety of insurance products, Nationwide offers up to 20 percent off if you bundle your homeowners with other coverage, which can make rates quite affordable.

To make sure you have the right coverage for your needs, Nationwide’s On Your Side review offers you the opportunity to review your policy each year with an agent. This could result in additional savings if you no longer need certain coverage options. In addition, if you purchase other types of insurance coverage from Nationwide, you could receive up to 20 percent off your rates.

If you like to research and buy your homeowners insurance online, Nationwide’s online quote process is clear and straightforward, so you can feel confident in the homeowners quote you receive. However, while the company does offer a mobile app, it’s geared more toward auto insurance than homeowners insurance. For instance, you can file a homeowners claim in the app, but you can’t track it.

Specs

  • Additional policies: Vehicle, life, pet, travel, dental, accident, identity theft, umbrella
  • Multi-policy discount: Up to 20%
  • AM Best rating: A+
  • Coverage area: 45 states and Washington, D.C.
  • Quote process: Online or through an agent

Pros

  • Homeowners can bundle multiple policies thanks to a wide range of insurance policies
  • On Your Side review allows homeowners to annually review and reassess policies with an agent
  • Online quote process is thorough and straightforward

Cons

  • Mobile app is geared toward auto insurance and is not as helpful for filing or tracking claims for homeowners insurance
  • Overall customer satisfaction is lower than that of other brands, according to J.D. Power
The Best Homeowners Insurance Option: Lemonade

Photo: lemonade.com

Why It Made the Cut: Lemonade is ideal for those who prefer to manage their homeowners insurance online, from getting quotes to making a purchase to filing and tracking a claim.

Offering homeowners insurance to residents in 23 states and Washington, D.C., Lemonade is tailor-made for those who like to skip the agent and handle their insurance purchase and management online. However, because the company is relatively new to the industry marketplace, it doesn’t have the same coverage variety as some of its competitors. Homeowners coverage includes the typical offerings such as property damage, personal belongings, and liability coverage, but additional coverage for such things as scheduled personal property for valuables, sports equipment, or coverage for sewer backup is not available.

For those who choose companies based on their civic and environmental commitments, Lemonade could be ideal. Each year, the company donates unclaimed money to the charity of the customer’s choice. In 2021, the company donated more than $2.3 million through its Lemonade Giveback program.

Specs

  • Additional policies: Auto, pet, life
  • Multi-policy discount: Yes
  • AM Best rating: Unknown
  • Coverage area: 23 states and Washington, D.C.
  • Quote process: Online

Pros

  • Certified B Corp means that the company has high social and environmental standards
  • Lemonade donates unclaimed money from customers’ premiums to the charity of their choice with the Lemonade Giveback program

Cons

  • Quote and claim system are only available online
  • Limited extra coverage options
The Best Homeowners Insurance Option: NJM

Photo: njm.com

Why It Made the Cut: Unlike many other homeowners insurance companies, NJM offers certain coverage that is not typically included with basic homeowners policies, which could mean big savings on your rates.

Only available in Connecticut, Maryland, New Jersey, Ohio, and Pennsylvania, NJM prides itself on routinely providing great customer service. The company ranked No. 1 in customer satisfaction for auto insurers in the Mid-Atlantic region by J.D. Power.

Unlike many other homeowner insurance companies, NJM offers specialty coverage as part of its standard homeowners insurance. This includes water backup, ordinance coverage, and guaranteed replacement cost coverage. The company also offers the option of adding coverage for damage due to mold, mildew, or dry rot, which is not a typical add-on policy.

While NJM does have a mobile app, it’s only for auto insurance, so you cannot manage your homeowners policy using the app. You can, however, manage your policy online.

Specs

  • Additional policies: Vehicle, umbrella
  • Multi-policy discount: Yes
  • AM Best rating: A+
  • Coverage area: 5 states
  • Quote process: Online, phone, or through an agent

Pros

  • Add-on policy for mold, mildew, or dry rot available
  • Water backup, ordinance coverage, replacement cost coverage for personal belongings, and guaranteed replacement cost coverage automatically included in policy
  • Multiple avenues for unique discounts: nonsmoking, impact-resistant glass, smoke detectors, backup power supply, and more

Cons

  • Only available in 5 states
  • Mobile app is only for auto insurance, so filing a claim requires more effort than other companies
The Best Homeowners Insurance Option: USAA

Photo: usaa.com

Why It Made the Cut: Available nationwide, USAA consistently ranks high for customer satisfaction, financial security, and affordable rates, earning an A++ rating from AM Best.

With rates that typically are less than the national average, USAA also offers additional savings for members who use ADT home security systems. The company’s standard homeowners insurance policy includes identity theft coverage, which usually is an add-on policy with other companies. This could increase your savings compared with other insurers. In addition, with a multi-policy discount of up to 10 percent when you bundle homeowners coverage with an auto insurance policy, you could further reduce your rates.

Although USAA is available nationwide, its customer base is limited to active and former members of the military and their families, so the majority of homeowners cannot purchase coverage.

Specs

  • Additional policies: Vehicle, life, health, pet, travel
  • Multi-policy discount: Up to 10%
  • AM Best rating: A++
  • Coverage area: 50 states and Washington, D.C.
  • Quote process: Online or phone

Pros

  • Special savings available for members who use ADT home security systems
  • Policy automatically includes identity theft coverage
  • Prices typically fall below national average, making coverage more affordable than that of some competitors

Cons

  • Homeowner must be a current or former member of the military or a family member of one

Our Verdict

Our Top Picks are State Farm for Best Overall and Amica for Runner-Up. Available nationwide, State Farm rates high for financial strength and affordable pricing, while Amica’s rates could be quite affordable thanks to the company’s dividend program where homeowners receive up to 20 percent of their premium back.

How We Chose the Best Homeowners Insurance

To determine the best homeowners insurance, we reviewed homeowners insurance companies for financial strength using AM Best ratings and customer satisfaction using J.D. Power rankings. We also looked at the various coverage options that came standard that boosted the value of basic homeowners insurance, as well as available discounts that could make policies more affordable.

We also chose companies that are available to a wide customer base. Although USAA is limited to active and former members of the military and their families and NJM is only available in five states, both companies were included because they have great reputations. As such, they qualify as some of the best homeowners insurance for those homeowners who qualify.

Before You Buy a Policy From One of the Best Homeowners Insurance Companies

When shopping for the best homeowners insurance, it’s important to note that not every company featured in this guide will apply to every homeowner. That’s why it’s important to research not only coverage options and rates for homeowners insurance, but also review such factors as where the insurance company offers policies, how you can purchase policies (i.e., by phone, online or through an agent), and other available insurance products in the event you want to bundle coverage. These additional factors could be essential in narrowing down your choices for what the best homeowners insurance coverage would be for your specific needs.

Cost of the Best Homeowners Insurance Companies

Shopping for the best homeowners insurance obviously will center strongly on cost, so naturally, not every company listed here will be the right fit for you and your budget. It’s important to review the available discounts to determine which ones you qualify for, and see if they will provide the savings you want. Comparing both rates and available discounts could make some companies more affordable than others that initially may seem more expensive. If you are considering a multi-policy discount, it’s important to make sure the additional coverage required for the discount is something you actually want and need before making a purchase.

The Advantages of Buying Homeowners Insurance

Having homeowners insurance is the best way to protect the investment you have in your home. You never know when a natural disaster may strike or a pipe may burst in your home, resulting in damage you may not be prepared to pay for out of pocket. It also can provide much-needed protection should you be liable for the accidental injury of others or damage to their personal property. In addition, many mortgage lenders require homeowners insurance as part of their mortgage lending agreement, so purchasing homeowners insurance will ensure compliance. Homeowners insurance is a required purchase, but it’s well worth it.

FAQs

Shopping for homeowners insurance can be confusing, especially if you are a first-time homeowner. It’s important to know what homeowners insurance is and what it does and does not cover so you get the right coverage for your home. It’s also important to review optional add-on policies in the event you need specialty coverage.

Q. What does homeowners insurance cover?

Homeowners insurance repairs or rebuilds your home if it sustains damage by such events as a natural disaster or fire. It also pays to repair or replace your personal property if it is damaged by a covered event.

Q. What doesn’t homeowners insurance cover?

Essentially, unless an event is listed in your homeowners insurance policy, it is not covered. Some exclusions that may be listed include damage due to neglect or intentional damage such as setting your house on fire.

Q. Is homeowners insurance mandatory?

Although there is no mandatory requirement to purchase homeowners insurance, your mortgage lender will likely require you to purchase homeowners insurance as part of your mortgage loan agreement.

Q. Does homeowners insurance cover flooding and storm damage?

Although standard homeowners insurance typically covers certain storm damage such as that resulting from lightning and hail, it does not typically cover floods. Instead, you would need to purchase flood coverage through the National Flood Insurance Program.

Q. Does homeowners insurance cover fire damage?

Yes, most homeowners insurance policies cover fire damage as long as the fire is not deliberately set by the policyholder.

Q. Does homeowners insurance cover earthquake damage?

While standard homeowners insurance does not cover earthquake damage, your insurance company may offer earthquake damage coverage through an add-on policy.