Best Homeowners Insurance Companies of 2020 | Homeowners Insurance

A typical homeowners insurance policy will cover repairs to or reconstruction of your home if it is damaged by fire, smoke, theft or vandalism, or bad weather such as lightning, wind or hail. A standard homeowners policy also generally covers your appliances, furniture and other possessions, as well as medical expenses and legal fees if people other than you or your family are injured on your property.

Not covered in most standard policies are jewelry, artwork or other collectibles in your home, identity theft protection, or damage caused by an earthquake or flood. These types of coverage are generally optional but may not be offered by all insurers in all areas.

If flood insurance is not offered by your homeowners insurance company, you may be eligible for coverage through the National Flood Insurance Program, administered by the Federal Emergency Management Agency. NFIP policies are offered through independent agents nationwide. Costs and requirements can vary widely depending on risk factors where you live. FEMA’s website includes an interactive flood map that can help determine the risk in your area.

To determine whether you need additional homeowners insurance beyond what’s included in a standard policy, start with the most obvious factors. If you live in or are looking at homes in an area prone to earthquakes, wildfires or extreme weather, look for a policy that covers those types of events.

Next, think about what it would cost to replace major items such as a damaged furnace, water heater, roof or even your entire home. Talk to an independent insurance agent, call insurance companies directly or check company websites for guidelines. Inventory your possessions, including your vehicles, artwork and other valuables. Consider what it might cost to live with relatives, in a hotel or in a rental unit while your home is being repaired or rebuilt.

A basic rule of thumb is to make sure you buy enough coverage to replace your home and its contents. Be honest in your assessments and make sure that any policy you consider will be sufficient.

The cost of homeowners insurance can vary greatly depending on a wide variety of factors, primarily involving the age, size and location of your home, and the likelihood of a major weather event in your area.

“Location, location, location,” says Lynne McChristian, communications consultant at the Insurance Information Institute. “Where you live and the natural disasters afflicting that area play a big factor. Unlike real estate, the cost of homeowners insurance reflects the rebuilding cost of your property.” Not all homeowners policies include standard replacement cost coverage, so make sure to choose one that does.

Other factors that can affect homeowners insurance premiums include the age and condition of the roof, furnace and other major components; whether you have a security system or fire alarm; and the value of your possessions. An alarm system can lower your rates, while living in an area prone to floods can make insurance quite expensive. Collectibles such as art or jewelry can add to the cost or require additional coverage.

There are several other factors to consider when shopping for homeowners insurance. For example, know the difference between a cash-value policy and a replacement-cost policy. “The former pays the depreciated cost, so you get less at claim time. With replacement cost, you may pay 10-15% more for coverage, yet you get much more when you file a claim,” McChristian says.

You also should compare rates from different insurance companies every year even if you’re happy with your insurer, says Robert Hunter, director of insurance at the Consumer Federation of America.

“The biggest mistake consumers make is to not shop around, especially if you’ve been with the same insurance company for five years or more,” Hunter says. This is because companies sometimes raise rates for longtime customers. “They’ll give you a 5 to 10% loyalty rate after 10 years, but by then, you’re paying 20% more. They figure you’re not going anywhere,” he says.

Our analysis of 10 homeowners insurance companies found a wide range of basic rates. The rates we calculated were based on a family of four living in a two-story, end-unit town house in Naperville, Illinois, priced at $250,000. Expect your rates to vary.

Hunter also says it’s important to read your policy carefully and understand exactly what is and is not covered. If coverage for something you’re concerned about isn’t specifically mentioned, such as damage from a falling tree, ask for a written statement clarifying the issue. “If they want to sell you a policy, they’ll put it in writing,” he says.

Along with homeowners insurance, Amica sells insurance for renters and condo owners.

Amica’s financial strength rating: Amica has an A+ rating for financial strength from A.M. Best.

Types of customer support available: Amica offers 24/7 customer support by phone. Customers also can pay bills, update information, get an estimate or make a claim on the company’s website, and there’s a smartphone app.

What discounts are offered

Unique or useful policy features and customization options
Amica offers Platinum Choice, a package of extras that don’t come with a standard homeowners insurance policy. It includes, among other things, increased dwelling and personal property replacement coverage, increased personal liability coverage, and coverage for water backups and sump pump overflows, fraudulent credit card charges, electronic devices and business property.
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In addition to homeowners policies, Erie sells insurance for autos, motorcycles, boats and recreational vehicles, as well as an array of business insurance products, life insurance and retirement planning products. The company also offers insurance for condo owners, mobile home owners and renters.

Erie’s financial strength rating: Erie has an A+ rating from A.M. Best.

Types of customer support available: Erie can be reached by phone or through its website. Either can guide you to an independent agent in your area.

What discounts are offered

Unique or useful policy features and customization options

Auto-Owners sells auto, life and business insurance in addition to homeowners insurance.

Auto-Owners’ financial strength rating: Auto-Owners has an A++ rating from A.M. Best.

Types of customer support available: Auto-Owners can be reached by phone or through its website.

What discounts are offered

Unique or useful policy features and customization options

In addition to being the largest financial investment most of us will ever make, a home provides shelter and security for ourselves and our loved ones. If that isn’t enough justification for homeowners insurance, the odds are you’ll need to have it anyway. Most people finance their home, and lenders typically require homeowners insurance. If you’re looking at a condo or co-op, the association also may require it.

A homeowners policy typically covers damage from things like fire, smoke, theft and vandalism. It also covers legal fees and medical expenses fees if someone other than you or a family member is injured on your property, as well as damage from most weather-related events such as lightning, wind and hail. Most policies also cover water damage from leaking pipes or a failed water heater, furnace or air conditioner. It’s important to note that standard homeowners insurance typically does not cover flood or earthquake damage. That coverage may be available by purchasing a separate policy, depending on your insurer and where you live. Some companies will not provide flood insurance in areas known to flood.

Some policies cover homeowners who rent out a room or their entire home. Some basic policies may only cover your home and whatever decks or structures are attached to it, while excluding outbuildings such as a garage or shed. More comprehensive policies cover outbuildings without supplemental insurance.

Other optional coverages you may want to consider include business equipment if you work from home, musical instruments, jewelry, sports equipment or financial losses stemming from identity theft.

A common mistake when shopping for homeowners insurance is not buying sufficient coverage. For example, according to the Massachusetts State Attorney General’s Office, a homeowner should tell an insurance agent about any unique features like ornate woodwork or stained-glass windows that might not be addressed in a standard valuation to replace the home.

The following types of coverage typically are included in a standard homeowners insurance policy and are part of standard policies offered by all 10 insurers in our analysis. Speaking with an independent insurance agent or company representative can help determine appropriate coverage amounts.

There are other types of coverage you may want to consider based on your circumstances and budget. Depending on the insurer you choose, some of these may be included with a standard policy. Others may charge extra or not offer some types of coverage.

When purchasing home insurance, you want to buy enough coverage to make repairs or rebuild in the same location. However, note that your bank or mortgage lender may only require you to have sufficient coverage to pay off your mortgage, not to repair or replace your home.

One way to determine rebuilding costs is to multiply the home’s square footage by the cost of construction per square foot in your area. A local real estate agent, builders association or your insurance agent should be able to provide these costs.

There are several ways to shop for a homeowners policy, including online or through an agent. Many insurers have websites that will provide a lot of background information and even allow you to purchase a policy if you prefer to do the legwork yourself. You can also work through an independent or captive insurance agent. An independent agent is usually affiliated with more than one insurance company and paid by commission, while a captive agent normally works for one company.

When comparing quotes and coverage options, it’s important to look at more than just what is and is not covered. Factors to consider include obvious things such as price, exclusions and coverage limits, and some less obvious considerations like a company’s financial stability.

Remember that the cost to rebuild your home is not the same as the purchase price, which includes the cost of the land. Moreover, labor and material costs vary by region, as do the logistics of getting materials to your location. An urban setting is likely to be more expensive than a suburban one, for example. Your insurance agent should be able to help determine these costs, along with the replacement costs for the contents of your home. The cost to rebuild also may be impacted by changes to local zoning laws, particularly if you live in an older home.

“If your home is more than 10 years old, you should ask your insurer about building ordinance and law coverage,” McChristian says. “Building codes change periodically, and if an older home is damaged significantly, it must be rebuilt to the current building code, which is typically more stringent.”

Whether your home is made of brick or wood will affect your rates as well. The premium is usually lower for brick and masonry houses than for those with wood frames. Proximity to resources and services such as a water source or fire department also can affect your rates, as can the quality of your community’s fire protection services. A wood stove or furnace may increase the likelihood of a fire and may also raise your rates.

The age and condition of your home is another important consideration. Premiums are often higher for older homes and those in poor condition. The claims history in your neighborhood and community is another factor, particularly for the homes closest to yours.

Other things that may raise your rates include what insurers sometimes regard as high-risk outdoor amenities, such as a swimming pool, trampoline or playground equipment that could cause injuries. Aggressive dogs or other pets regarded as dangerous can also raise rates.

Once you have an idea of the types and amount of coverage you need, you’re ready to start shopping. Some questions you should ask an agent or company representative include:

The following describes our 360 approach to researching and analyzing homeowners insurance companies to provide guidance to prospective consumers.
1. We researched the companies and products people care most about.
U.S. News analyzed and compared a variety of publicly available data, including internet search data, to determine which homeowners insurance brands Americans are most interested in. We found 20 companies that stand out in terms of volume of searches and research among consumers, as well as across the different rating sources. Once we identified these companies, we reviewed the companies’ available homeowners insurance features offered at the time of publication.

We compared available coverages from top homeowners insurance companies across several criteria, including cost, coverage limits, policy features and availability. Research shows that these criteria are among the most important considerations to people shopping for homeowners insurance. We compared cost across different companies using an archetype that, as much as possible, represents a standard American home: a townhome in Naperville, Illinois, with an estimated market value of $245,000, equipped with a home security system and fire alarms, belonging to a non-smoking, four-person family with no pets. We built a standard plan that includes coverage for the home itself, personal property, personal liability, loss of use/additional living expenses and guest medical protection, with a $1,000 deductible and comparable coverage amounts.

2. We created objective 360 Overall Ratings based on an analysis of third-party reviews.
U.S. News’ 360 Reviews team applied an unbiased methodology that includes opinions from independent life insurance experts and third-party reviews.

Our scoring methodology is based on a composite analysis of the ratings and reviews published by credible third-party professional and consumer review sources. The ratings are not based on personal opinions or experiences of U.S. News. To calculate the ratings:

(a) We compiled two types of third-party ratings and reviews:

Please note that not all professional and consumer rating sources met our criteria for objectivity. Therefore, some sources were excluded from our model.

(b) We standardized the inputs to create a common scale.

The third-party review source data were collected in a variety of forms, including ratings, recommendations and accolades. Before including each third-party data point into our scoring equation, we had to standardize it so that it could be compared accurately with data points from other review sources. We used the scoring methodology described below to convert these systems to a comparable scale.

The 360 scoring process first converted each third-party rating into a common 0 to 5 scale. To balance the distribution of scores within each source’s scale, we used a standard deviation (or Z-Score) calculation to determine how each company that a source rated was scored in comparison to the source’s mean score. We then used the Z-Score to create a standardized U.S. News score using the method outlined below:

(c) We calculated the 360 Overall Score based on a weighted-average model.
We assigned “source weights” to each source used in the consensus scoring model based on our assessment of how much the source is trusted and recognized by consumers and how much its published review process indicates that it is both comprehensive and editorially independent. The source weights are assigned on a 1-5 scale. Any source with an assigned weight less than two was excluded from the consensus scoring model.

Finally, we combined the converted third-party data points using a weighted average formula based on source weight. This formula calculated the consensus score for each product, which we call the 360 Overall Rating.