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Here’s How to Pick the Right Homeowners Insurance Company for Your Needs

Homeownership comes with certain responsibilities. If you borrowed money to buy your home, chances are that your lender requires you to carry homeowners insurance.

As with any other kind of insurance, homeowners insurance can be a pain if you don’t do your research before picking a company. And with so many coverage options out there, how can you be sure you’re making the right decision?

Before you even consider which company to go with, you need to become familiar with homeowners insurance and what it may or may not cover.

What Does Homeowners Insurance Cover?

Like any other type of insurance, a homeowners policy doesn’t cover everything, but some coverages are offered by most basic policies.

Fire and smoke damage are covered by most home insurance providers. Other situations usually covered include weather damage (such as windstorms), internal water damage, theft, vandalism, snow and ice damage and explosions.

Homeowners insurance also covers your personal property and the costs of living elsewhere if you need to move out during a home repair or rebuild.

Insurance companies offer additional coverage for natural disasters like floods and earthquakes, but these types of disasters usually aren’t covered by a regular policy. If you live in an area prone to flooding or earthquakes, you may want to opt into this additional coverage.

It will cost you more on your monthly premium, but if you ever need to file a claim, it’ll be worth it when you can repair or rebuild your home rather than losing all the money you’ve put into it.

Choosing the Best Homeowners Insurance

What qualifies as the best homeowners insurance policy for you might not qualify as the best for your sister or your neighbor. Before choosing one, consider what “best” means to you.

For example, if you’re on a tight budget, you might be most concerned with price. If you’ve had bad customer service experiences in the past, you’ll probably put more emphasis on high satisfaction ratings. And if you’re a worrier, you may be most concerned about making sure you have good coverage for a variety of factors.

To determine the best homeowners insurance companies, we used J.D. Power’s U.S. Home Insurance Study, which surveyed 14,122 homeowners and renters.

Ratings on a scale of one to five were given in six categories: overall satisfaction, policy offerings, price, billing process and policy information, interaction and claims.

Best Home Insurance on a Budget

If you’re on a tight budget, you should check out these homeowners insurance companies, all of which rated high when it comes to affordability.

Amica Mutual

Amica Mutual got top marks in the price category, making it one of the most affordable homeowners insurance providers on average.

Price Ranking: 5/5

USAA

J.D. Power rated USAA but didn’t include it in their final ranking because it’s only available to members of the military, veterans and their immediate families. Nevertheless, USAA’s score in the price category tied Amica Mutual’s, making it a good option for those who are eligible.

Price Ranking: 5/5

Cincinnati Insurance

While its name comes from Ohio’s Queen City, Cincinnati Insurance is actually available in 43 states and the District of Columbia. It scored four out of five in J.D. Power’s price category.

Price Ranking: 4/5

Erie Insurance

Erie Insurance scored five out of five in J.D. Power’s auto insurance study and four out of five for home insurance. Choosing to bundle your insurance under Erie could be a smart way to save even more money.

Price Rating: 4/5

MAPFRE Insurance

MAPFRE started in Spain and expanded into Latin America and eventually to the U.S., where it is now an affordable choice for homeowners.

Price Rating: 4/5

Best Home Insurance Customer Service

Before selecting an insurance company for your home, it’s a good idea to find out how the National Association of Insurance Commissioners scored it for consumer complaints. The search tool can be a little bit complicated to use, but well worth your time to make sure the company you are considering deals with complaints in a timely and ethical manner.

Amica Mutual

Amica had the highest customer satisfaction ratings and lowest customer complaint ratio in 2018, compared to home insurance providers of similar size. J.D. Power scored Amica at the top of the list for interactions.

Interaction Rating: 5/5

USAA

USAA also scored favorably in terms of customer service complaints. Like many insurance companies, USAA’s customer service is handled by a call center, so the biggest complaint is having to talk to multiple people about the same issue. However, when filing a claim, customers were typically assigned a representative they could reach directly when needed.

Interaction Rating: 5/5

Cincinnati Insurance

Cincinnati Insurance had an average number of complaints compared to other insurance providers. However, J.D. Power’s study gave the company five out of five for interactions.

Interaction Rating: 5/5

Best Home Insurance for Military Families

If you are an active member of the military, a veteran or a family member of a veteran or active-duty member of the military, you may choose to go with a VA loan to purchase your home. If you do, you’ll find the VA has certain requirements when it comes to your homeowners insurance.

One of these requirements relates to flood insurance. If you live in a FEMA-designated special flood hazard area, you’ll need to get flood insurance in order to qualify for a VA loan.

You can choose any insurance company that offers the coverage required by the VA, but USAA is a popular choice.

USAA

USAA scored top marks all around in the J.D. Power study. Its only downside is the fact that it’s only available to military-affiliated families. But if you’re in the military, a veteran or an immediate family member, USAA could be your best option. Here’s a list of who is eligible for USAA membership:

  • Active, retired and honorably separated officers and enlisted personnel
  • Officer candidates in commissioning programs
  • Adult children whose parents were or are USAA members
  • Widows or widowers of USAA members

Military Discounts

If you opt for a non-military insurance company, make sure you ask about military discounts. Many of the bigger insurance companies, like Progressive and Farmers, offer discounts for active-duty military. Availability varies by state, so your options will be different depending on your location.

Best Home Insurance for First-Time Buyers

Homes are next to mountains

Chris Zuppa/The Penny Hoarder

There is no single best home insurance company for first-time buyers. But if you’ve never been on the property ladder before, you’ll need to educate yourself on the types of insurance you need to make sure you’re getting the best deal. Look for insurance companies that offer plenty of online resources to help you understand the homebuying process.

Allstate

Allstate provides resources to help you decide which homeowners coverage to opt into. This includes articles on dwelling insurance, flood and earthquake insurance and quote comparisons.

You can also take an online quiz to see what type of insurance is right for you. All of these resources are available before you’ve even contacted a representative for a quote.

Best Home Insurance for Coverage

If you’re looking for insurance that goes beyond the basic — for instance, you live in a flood- or earthquake-prone area — you may want to look at these providers.

Amica Mutual

Amica Mutual’s standard policy includes coverage for your dwelling, other structures like garages or sheds, personal property, personal liability and loss of use. But because Amica believes that homeowners insurance shouldn’t be “one size fits all,” you can choose to extend your coverage where you need it.

For example, you can opt into dwelling replacement coverage, which covers up to 30% above your rebuild costs. Additional theft coverage protects you while you’re traveling as well as at home. Catastrophic coverage will help cover repair and replacement costs if your home is affected by a flood or earthquake.

Policy Offerings Rating: 5/5

USAA

Home insurance coverage from USAA varies depending on where you live. The basic policy covers you for fire, theft, vandalism, most weather-related events, liability and even identity theft. USAA also covers uniform replacement for active members of the military.

You can also choose to add an umbrella policy that protects you further in case of liability. For example, if your dog bites someone or your child’s friend is injured while at your home, the umbrella policy would cover your legal costs.

Policy Offerings Rating: 5/5

Best Overall Home Insurance Company: Amica Mutual

Amica Mutual scored top marks in all six J.D. Power categories. Not only is it a smart choice for budget-conscious buyers, but it’s also the best of the best for coverage and customer service. Only USAA was able to meet Amica Mutual in all categories.

Worst Home Insurance Companies

The following homeowners insurance providers scored below average for overall satisfaction in the J.D. Power study.

UPC Insurance

UPC provides insurance in 12 states and specializes in coverage for areas prone to natural disasters like hurricanes. This sounds great, but if you don’t live in one of those areas, your rates will likely be higher than you’d find with competing companies.

Customer service also appears to be lacking, with a high number of complaints from customers, especially in Florida.

Overall Satisfaction Score: 2/5

Homesite

Homesite Insurance has one star out of five in Consumer Affairs’ Overall Satisfaction Rating. This rating is based on 41 ratings submitted in the last year.

Overall Satisfaction Score: 2/5

The Hanover Insurance Group

The Hanover boasts competitive prices on homeowners insurance and has local agents you can meet with in person. But overall, customer service ratings are pretty poor: the company has two out of five stars on Consumer Affairs. Some customers also reported a delay in payment and billing.

Overall Satisfaction Score: 2/5

National General

National General’s customer service rating fares better than some others on this list, but it scored two out of five in all categories in the J.D. Power 2018 U.S. Home Insurance Study.

Overall Satisfaction Score: 2/5

Travelers

Out of 157 reviews that have star ratings (as of March 2019), Travelers’ homeowners insurance has 1.5 stars out of five in Consumer Affairs’ Overall Satisfaction Rating.

Overall Satisfaction Score: 2/5

At a Glance: Top 10 Best Homeowners Insurance Providers

The following table makes it easier for you to compare the top 10 home insurance companies, so you can get a better idea of the best companies to contact for a quote.

Company J.D. Power Overall Satisfaction Rating Price Ranking Interaction Ranking Policy Offerings (Coverage) Ranking
Amica Mutual 5/5 5/5 5/5 5/5
USAA 5/5 5/5 5/5 5/5
Auto Club of Southern California* 4/5 5/5 3/5 5/5
Cincinnati Insurance 4/5 4/5 5/5 3/5
Erie Insurance 3/5 4/5 3/5 3/5
MAPFRE 3/5 4/5 3/5 3/5
State Farm 3/5 3/5 3/5 3/5
Allstate 3/5 3/5 3/5 3/5
Auto-Owners Insurance 3/5 3/5 3/5 3/5
Farmers 3/5 3/5 3/5 3/5

*This company does not insure homes outside the state of California, so we have chosen not to include it in our analysis.

What to Consider When Choosing a Home Insurance Policy

Because your insurance premiums will vary based on your location and credit history, it’s in your best interest to shop around to make sure you’re getting the best deal. Here are some factors to consider when looking for a homeowners insurance policy.

Consumer Ratings

Read online reviews and consumer advocacy organization ratings of different insurance companies to get a feel for how the average customer feels about the company and how it treats customers and handles claims and complaints.

If most customer satisfaction reviews mention bad customer service or skyrocketing premiums, or it is rated poorly by consumer advocate organizations, you might want to scratch that company off your list.

You can also ask your friends and family members for recommendations. They will give you honest reviews based on their personal experiences, and you can trust these recommendations more than those that you read from ranting strangers on the internet.

Rebuild Costs

When getting quotes from your shortlisted insurance companies, make sure you ask about rebuild costs. This is how much your insurance will shell out to repair, rebuild or replace your house if it is destroyed or damaged.

This is important, because, depending on your coverage, you might end up having to pay out of pocket to repair or rebuild your home.

There are typically two ways your insurance company will pay out to repair your home: RCV or ACV

Replacement cost value (RCV) shells out the amount of money it would cost to replace the part of your home that is damaged or destroyed. For example, if your roof is destroyed, RCV coverage will pay to replace the roof.

Actual cash value (ACV) takes depreciation into account, so if your policy has only ACV coverage, and your roof is destroyed, your insurance company will pay only the amount it determines your roof was worth before it was damaged.

It’s important that you understand exactly what kind of coverage you have so you know what to expect after a disaster.

Medical Payments Coverage

If someone is injured on your property, your homeowners insurance will help pay their medical bills if you have medical payments coverage. Your policy will specify a limit, and after that, you will be liable for paying the remainder of the medical bill.

It’s up to you to determine where that limit should be, based on your financial situation and how much risk you want to take.

Additional Coverage

Before choosing a policy, it’s important to know what kinds of additional coverage you might need. The most obvious is flood insurance, which your lender will likely require if you live in a flood-prone area. (FEMA provides a handy resource where you can enter your address to see if you live in a flood area.)

Earthquakes happen most often in California but sometimes hit other states. You could choose additional insurance if you live in an earthquake-prone area. This type of insurance will cover the cost of rebuilding your home after earthquake damage, and will also cover any personal property inside your home.

Sinkholes can destroy not just your home but also your property. They are extremely costly to repair, and in some cases are irreparable, making your home and property uninhabitable and worthless. If you live in a sinkhole-prone area, you should investigate sinkhole coverage.

According to the Insurance Information Institute, some states require that standard homeowners insurance policies cover sinkholes at no additional cost, while others require that insurers offer optional sinkhole coverage for an additional premium.

If you’re buying an older home, you can purchase insurance designed for that too. Companies usually offer this for historic homes or registered landmarks.

There are a lot of options out there for home insurance, and deciding on the best policy can seem a bit like spinning a roulette wheel and hoping for the best.

But as long as you understand your needs, prioritize your requirements and do your research, you can be confident that your home will be covered in case of accident or disaster.

Catherine Hiles lives in Ohio with her husband and their two children. By day she manages a team of writers and graphic designers, and catches up on her own writing in her spare time.

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