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Which homeowners insurance you choose has to do with your priorities in cost, quality, choice in policy and company, specifics, location and value of the home, and more. As you have probably guessed, it will be as individual as you are.
Bankrate found that the average annual premium in 2021 for homeowners insurance on a home with a dwelling coverage amount of $250,000 comes to $1,312. We go into more detail about this below, showing you the least and most expensive states, for example.
We’ll also talk about great choices in homeowners insurance providers, what home insurance typically covers (and doesn’t cover), and what you need to know about deductibles.
To make our recommendations for the best homeowners insurance companies in 2021, we used our proprietary SimpleScore system to rate insurers on accessibility, coverage options, customer service, discounts, and support. The research was supported by inputs from experts from renowned third-party market research companies such as J.D. Power and Better Business Bureau and information from the national regulatory organization National Association of Insurance Commissioners (NAIC), as well as Bankrate. Our recommendations and advice for homeowners insurance are developed after evaluating quotes, complaints and customer reviews from the past several years to establish the trustworthiness and reliability of the insurer.
The good news? Our top-rated homeowners insurance companies offer some of the best home insurance rates in the industry. Each provider has something different to offer, so make sure to compare quotes from multiple companies to find the best homeowners insurance value.
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Amica is a relatively small insurance company, but its smaller size allows it to provide customers with personalized service and some of the best home insurance rates in the industry. When rated for its customer satisfaction, Amica receives a 5 out of 5 from J.D. Power.
Amica’s competitive pricing is due to the insurer’s structure. Amica is a mutual insurance company, meaning it does not have stockholders to answer to. When you have a policy with Amica, you own a small piece of the company. As a result, you can get back up to 20% of your annual premium with a home insurance dividend policy. You can also save with discounts like installing an alarm system, bundling other insurance policies, opting into auto pay and remaining claim-free for three years.
Erie Insurance offers a wide range of insurance types — home, auto, condo, rental, mobile home, motorcycle, boat and life. Not only will loyal customers benefit from multi-policy discounts, but also some of Erie’s customer services. For example, life insurance customers can utilize Erie’s retirement planning financial service.
Savings opportunities are pretty limited. Erie only has three discounts — multi-policy, advance quote and a discount for fire, burglar and sprinkler systems installed. You can lock in your homeowners insurance rate to avoid any surprise increase in price in the future. For those on a budget, knowing what to expect gives you peace of mind. Your policy comes with some free perks thrown in too, such as animal coverage and theft or loss.
State Farm goes above and beyond just reimbursing you for home insurance claims with its Premier Service Program. If your home needs any repairs, the program will connect you to one of its participating contractors for water mitigation, flooring, general contracting or roofing services. The resulting workmanship is guaranteed for five years.
If you live in a newer home, you can earn higher discounts for impact-resistant roofing and a home security system. State Farm lacks in coverage add-ons, however. Other companies offer interesting options like home office insurance, hurricane or eco-friendly material reimbursements, but State Farm sticks with pretty standard extended liability or umbrella insurance options.
The Allstate Common & Costly Claims tool will provide detailed information on the most common claims and most expensive claims in your particular zip code. This could help inform the policy you design for your home based on common issues in your neighborhood.
Allstate’s long list of optional coverages include some unique add-ons, including electronic data recovery, green improvement reimbursement and home-sharing. If you’d like to replace damaged items or rebuild after an event with energy-efficient or eco-friendly options, the additional green improvement reimbursement coverage will make it possible. Then there’s the home-sharing option. If you rent your home on Airbnb or other home-sharing apps, your home and property may be covered against certain losses. However, in 2020, Allstate dropped home insurance coverage for California residents in wildfire-prone areas.
Each package has a set of coverage amounts and add-ons. The Standard package is designed for new homeowners, its leaner and focused more on affordability. The Enhanced and Premier policies have higher policy limits and additional features, which may be worthwhile for higher-value homes.
Farmers Insurance is ideal for customers who prefer to work one-on-one with a local agent. It has solid customer service ratings and the local touch is likely to personalize that experience even more.
Home insurance guide: How does it work?
Homeowners insurance provides you with coverage to replace or repair your home and its belongings if they are damaged from unordinary events (such as theft or fire). Homeowners insurance can also help cover costs if a visitor is hurt in your home.
But first, is home insurance mandatory?
If you are taking out a mortgage to purchase the home, the lender will likely require homeowners insurance.
What does home insurance cover?
Dwelling: The policy may pay to rebuild or repair your home if it is damaged or destroyed by disasters listed in your policy, including fire, lightning or hail.
Personal property:Any items inside your home, including furniture, clothes, musical instruments and electronics may be covered for the disasters mentioned or if they’re stolen. If you have many expensive items, such as jewelry or art, you may need additional coverage to protect the cost of the valuables.
Liability:Liability coverage may protect you financially against lawsuits if a visitor is injured in your home or if a family member causes damages to someone else. It includes your pets — if they bite someone who visits or they damage something inside someone else’s home, your liability insurance may step in.
Does a home insurance policy have a deductible?
Homeowners insurance typically comes with a deductible — an amount that you’ll need to pay out of pocket before your insurance pays for the rest. Typical homeowners deductibles can be $500 or $1,000. The higher the deductible, the lower your premium may be.
What is actual cash value vs. replacement cost?
The amount of coverage you get can determine the magnitude of the risk the insurance company will absorb in the event something happens. Depending on your policy, you’re paid in one of two ways: actual cash value or replacement cost.
Actual cash value
This is when your insurance company factors in depreciation when determining how much money to give you after a covered peril has occurred. This often comes into play after roof damage.
This is when your insurance company pays you the full amount to replace the destroyed or damaged property after a covered peril, regardless of its condition or age prior to the event.
What is not covered by homeowners insurance?
As much as insurance is meant to cover the things you can’t plan for, the inverse is also true: You need to plan for the things insurance doesn’t cover. There are certain situations unlikely to be covered by any insurance company — situations that can leave you on the hook for a lot of money if you aren’t prepared.
Here are some of the most common situations that homeowners insurance may not cover:
Bankrate found that the average annual premium nationally came to $1,312 in 2021. When calculating the average annual premium by state and the District of Columbia, Hawaii was the least expensive and Oklahoma was the most expensive.
(Bankrate used Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on 40-year-old male and female homeowners with a clean claim history and good credit.)
Cheapest states by average annual premium
Average annual premium
Most expensive states by average annual premium
Average annual premium
What affects homeowners insurance premiums?
There are many factors that could affect your home insurance rate. Some of the most significant include:
Your area’s vulnerability to weather events such as windstorms and hail
The list above isn’t exhaustive, but it shows you how insurance companies take several factors into consideration when setting home insurance premiums. Higher deductibles can give you lower monthly premiums. Location can have a positive or negative impact. For example, if your home is close to a fire station you may get a lower premium. Also, different insurance companies will weigh these factors differently, which increases the importance of comparing rates from several companies. Chances are if you don’t get multiple quotes you may end up paying too much. Consider some of the following ways to lower your home insurance premiums: choose a higher deductible, ask for discounts for safety devices, perform necessary home maintenance and home repairs, get a discount for bundling with other policies.
Which type of home insurance you get will depend on your needs, the type of home you have and how much you want to pay. Before deciding you will need to know these things about your house:
Decide what type of home insurance is best for you. You will need to know the following:
The specifics of your home.
Details like the age and square footage of your home
The replacement cost and information about siding and roof types.
Types of home insurance
How to choose the best homeowners insurance for you
Start the shopping process by gathering a list of potential home insurance companies and looking into their background. Since you’re already here you can read our homeowners insurance guide and get many of these details from our research.
Look particularly at current policyholder satisfaction scores, and find out how the claims response for each insurer works. You want to know if you’ll be dealing with licensed adjusters or a third-party call center. Claims should be paid in a fair and timely manner.
Once you’ve narrowed the list to 3-4 insurance providers get quotes from all of them. Make sure to include any company you already have insurance through (auto, boat, etc.) since you should be able to get a bundling discount from them.
Evaluate the probability of a natural disaster. How at-risk is your area for natural disasters like flooding, tornadoes and earthquakes? If your house could be damaged by falling trees or rising water, make sure you find a homeowners insurance carrier that covers these things in its basic coverage policies. While homeowners insurance may cover damage from thunderstorms, like hail damage, it may not cover flooding that seeps into your basement and damages your personal property.
Lastly, ensure that the homeowners insurance company makes it easy to file claims. If it’s difficult to submit pictures, documents and evidence, it soon becomes a hassle to use your policy. Especially during a stressful time, you want to make sure that you can communicate and file claims with as little stress as possible.
How to save money on home insurance
Always compare apples-to-apples when choosing home insurance. While some options or features may not be available with some homeowners insurance carriers, you’ll want to make sure that your liability amounts are the same, for example. Here are another five things you need to be aware of when comparing homeowners insurance.
1. Shop around
When comparing quotes from different insurance providers, it is crucial to not skimp. Your home insurance covers your property against unforeseen damages, and when shopping around for the best rates, take care to not compromise on coverage options. Your comparison of three or more providers should not be based on cost alone, but also on the protection you get for the price.
2. Ask your insurer about discounts
Not all available discounts are always listed on the insurance provider’s website. For instance, if you’re above the age of 55, retired or a former member of the armed forces, you may be eligible for certain home insurance price breaks. Discounts often vary from state to state; therefore, it is best to directly talk to a representative.
3. Bundle policies
Major providers usually offer discounts when you bundle your home and auto insurance policies. However, before you consider bundling options, make sure it is indeed cheaper than what you would pay for separate policies with any other insurer.
4. Raise the deductible
The higher the deductible, often the lower the premiums. If you choose to pay more than the standard $500 or $1000 deductible, you can save money on monthly premiums.
5. Improve home security
Installing disaster-resistant features such as shatterproof glass and storm shutters, and reinforcing the roof of the house are some of the ways to secure your dwelling and make a better impression on insurance providers. Modern plumbing, heating, and electrical systems, as well as burglar and fire alarms also contribute to home insurance price cuts.
Homeowners insurance FAQs
The amount of your homeowners insurance coverage depends on your home’s replacement cost and the value of the items inside your home. You may need to conduct an inventory of your belongings for the most accurate amount for your homeowners insurance.
Unfortunately, no. Appliances are covered under home warranties, which are applicable when an appliance’s warranty runs out then fails or needs repairs.
Yes, your premiums may increase after you file a claim. Because of this, you may want to think twice before you file one. Weigh the cost of a potential increase in monthly payments, versus the cost for you to fix the issue yourself. This is especially important to consider if the claim won’t fulfill your deductible, which you’ll need to meet before insurance covers anything. Some insurers do offer a claim forgiveness feature which may be lenient on your first claim or will dismiss some after a few years of being claim-free.
1. What are some things homeowners can do to have maximum discount opportunities?
Homeowners need to first determine what is the right coverage for their needs. Once they decide what coverage is best for them, there are many ways they can save money. Listed below are things homeowners can do to maximize discounts.
Purchase umbrella or bundled policies
Develop, update or reevaluate home inventory lists
Install or increase security systems
Reduce or remove high liability property, if it is not being used (e.g. trampolines, pools and unsafe structures like dilapidated sheds)
We also encourage homeowners to shop around if they want to explore coverage options and related costs. Additional discounts could also be available, so a homeowner’s best bet is talking to their agent or company representative. Homeowners should take a look at the information provided at thankgoodnessforinsurance.org. Tips are available on how to create a home inventory, keep your home in top shape and select the right coverage options.
2. How would you advise people to choose and/or adjust their deductible amounts?
A higher deductible reduces your insurance cost, and a lower deductible raises the cost of your insurance. If you’re looking to pay less for insurance, you could consider raising your deductible but be advised that you will need to pay more if you have a claim. Not surprisingly, purchasing more financial protection has a related cost. Every homeowner should determine what options, including the amount of the deductible, make the most sense.
Also, be sure to take a look at specific deductibles in your policy that may apply as a percentage of your home’s insured value. These deductibles are specific to a windstorm, named storm, and hurricane-related claims and are typically 1%-10% of the insured value of your home. These specific deductibles help decrease the cost of your insurance, but you should be aware of the deductible that may apply if you have a claim.
1. What are some things homeowners can do to maximize discount opportunities?
Often, bundling multiple policies like home, personal automobile and umbrella with the same insurer will qualify you for multiline discounts. There also may be discount opportunities for installing mitigation features or monitoring devices in your home. Examples include locally or centrally monitored alarms for fire and burglary, water and gas leak detection devices, and wind mitigation features. For customers with older homes, your carrier could offer discounts for major systems upgrades like roof replacement, plumbing or electrical systems. I recommend homeowners reach out to their carrier directly and ask which discounts might be available to them. They may find additional discounts for paying premiums in full or having them automatically drafted from their bank account and availability of an electronic discount for receiving documents via email.
2. How would you advise people to choose and/or adjust their deductible amounts?
Ultimately, you’re deciding how much risk you have the ability and interest in retaining yourself before insurance carriers respond to any covered loss. A higher deductible selection can be attractive to many, as it comes with a lower policy premium.
There may be some restrictions on available deductible options placed on homeowners by mortgage lenders, and it’s important to confirm your selection is acceptable to your lender. Deductible options can also vary by state and carrier, so contacting your insurance provider and quoting different options to determine what makes the most sense is recommended.
1. When does a homeowner need flood insurance and where can they get it?
Just about every homeowner should consider flood insurance because most standard homeowners insurance policies do not cover flood. Flood insurance is typically required by lenders when a property is in an area that makes it a high risk for flood. Basic flood insurance can be purchased from the National Flood Insurance Program, and there is a lot of helpful information at floodsmart.gov. The coverage provided by the NFIP is limited; however, owners can purchase what is known as excess flood insurance as a separate policy to obtain more coverage as might be needed to protect one’s assets.
2. Is it possible to own a home without homeowners insurance? If so, what are the pros and cons?
It’s possible, but it is unusual and probably not advisable. Securing and maintaining homeowners insurance is typically a condition of obtaining a mortgage. If an owner does not have a mortgage, it is not required by anyone, but it is a critical coverage for most individuals to have. It covers both the structures and personal property owned by the policyholder and also provides liability protection that responds when an insured is sued. This coverage pays for the retention of a lawyer to defend the insured in the lawsuit. It can also indemnify an insured that is found liable, depending on the circumstances and policy terms.
3. What should a homeowner consider when deciding whether or not to file a claim?
Something to consider is whether the loss is large enough so that it makes sense to file a claim. Very small claims might not exceed the policy’s deductible, which is the amount the insured is responsible for before the insurance company has to pay, or exceed it by just a little. Depending on the circumstances, filing a relatively small claim or multiple ones could affect future rates, which should be taken into consideration.
Too long, didn’t read?
There’s a lot to consider when picking the right homeowner’s insurance. Weighing premiums, coverage options and deductibles can seem overwhelming, but it’s actually easy if you follow a few simple steps.
Your coverage options will largely depend on how much liability coverage you need and the specifics of your home — including square footage and age. You’ll also need to determine what type of homeowners policy you’ll need because each is different depending on your home’s structure. Start by talking to an agent to get a free quote. They can help you pick the right policy for your home’s structure, help you narrow down coverage needs and help you find the best rates possible for your unique situation.
The impact of COVID-19 on your home insurance.
Many homeowners insurance carriers have suspended service cancellations, waived late fees or applied percentage discounts on insurance policies in response to the pandemic outbreak. However, many people are now working from home and may wonder if their homeowners insurance covers equipment needed to work. Things like monitors, computers and other office equipment may be covered under home insurance or at least your company’s business insurance policy.
We welcome your feedback on this article and would love to hear about your experience with the home insurance providers we recommend. Contact us at email@example.com with comments or questions.
Last editorial update – January 22, 2021, updated home insurance buying guide and insurance companies reviews.
The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar. For every review, our editorial team:
Identifies five measurable aspects to compare across each brand
Determines the rating criteria for each aspect score
Averages the five aspect scores to produce a single SimpleScore
Here’s a breakdown of the five aspect scores and their rating criteria for our reviews on home insurance.
Why do some brands have different SimpleScores on different pages?
To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.
However, it’s also possible for the same product from the same brand to have multiple SimpleScores. For instance, if we compare State Farm’s home insurance according to our criteria for the best home insurance, it scores a 3.8 out of 5. But when we compare State Farm according to the criteria for the best auto insurance, it scores higher, since the features the company offers can vary by the type of insurance.
We looked at the number of discounts each company offers – more discounts mean a higher score.
We awarded higher scores to the companies that offer more coverage options.
We awarded higher scores to companies with the most channels for customer support.
We leveraged the J.D. Power 2019 Home Insurance Satisfaction Study℠ to see how customers rated their experience with each company. (If a company wasn’t included in J.D. Power’s study, we skipped this aspect and averaged the four remaining aspect scores.)
We looked at the level of accessibility of each company – the more resources they have the higher their score
An avid traveller and hiker, Steve has been writing in the personal finance, investing, and blockchain spaces for nearly a decade. His writing has been featured on Financial Samurai, Free Money Finance, Coin Bureau, and a number of other personal finance and investing sites.
Nasha Addarich is an editor at The Simple Dollar and a former attorney who specializes in home insurance, auto insurance, life insurance, and savings. She is a former contributing editor to Reviews.com.