If you don’t know the ABCs of homeowners insurance, you might end up paying more for inadequate coverage. To aid you in the process and help you find a homeowners policy that works for you, here are the best 5 homeowners insurance companies of 2021.
Money’s Best Homeowners Insurance Companies for August
- Lemonade: Best Online Insurance Company
- Erie Insurance Company: Best Range of Coverage Options
- Allstate: Best for Claim-Free Homeowners
- Amica Mutual: Best for Customer Service
- USAA: Best for Military Members
Lemonade Insurance: Best Online Insurance Company
|Lemonade Insurance Highlights
|Fast quotes in minutes
|AI claims processing system
|Flat fee on low monthly premiums
|In many cases, get paid in a matter of minutes
|Lemonade Giveback program pays up to 40% of premiums not paid out in claims to a non-profit of your choice
|Demotech Financial Stability Rating: A
The only downside to Lemonade is that its insurance policies are not available in all states.
Lemonade COVID-19 Response
Lemonade allows customers to go through financial hardship to defer premium payments for up to 60 days without losing coverage. They have also extended their grace period to 60 days for customers who have already fallen behind on their payments.
Erie Insurance: Best Range of Coverage Options
|Erie Insurance Highlights
|Customizable coverage deductibles
|16% to 25% reduction for bundling with car insurance
|Guaranteed Replacement Cost pays to rebuild home to pre-incident condition, without a policy limit
|Full Roof Replacement pays to fully rebuild roof
|J.D. Power Ranking: 6th (out of 20)
|A.M. Best Rating: A+
Erie offers insurance customers savings for those who install automatic sprinklers, smoke detectors, and burglar alarms.
Erie Insurance COVID-19 Response
Erie Insurance is being more flexible with payment dates and may waive some penalties and fees. You can request deferred payments by logging into your account. For more information, visit their blog.
Allstate: Best for Claim-Free Homeowners
|Allstate Insurance Highlights
|Additional rebate when renewing your standard policy after a claims-free year
|Rateguard option locks in your premium
|Lower deductible amount for every additional claims-free year
|HostAdvantage for home-sharing or renting
|J.D. Power Ranking: 7th (out of 20)
|A.M. Best Rating: A+
As part of its wide array of insurance products, Allstate also offers a program called HostAdvantage that provides personal property coverage to protect against theft and damage by home-sharing guests or renters.
Allstate COVID-19 Response
Allstate is encouraging policyholders to use the company’s mobile app to view policy information, start a claim, provide proof of insurance, or request 24/7 roadside assistance.
Amica Mutual: Best for Customer Service
|Amica Mutual Insurance Highlights
|Contractor Connection database connects you with contractors, and guarantees their work with a 5-year warranty
|Discounts for claim-free customers
|As a mutual company, buying a policy means customers receive dividends as cash or applied to their premium
|J.D. Power Ranking: 1st (out of 20) for nine consecutive years
|A.M. Best Rating: A+
Amica offers pricing discounts to customers who have been with the company for at least two years, as well as those who are claim-free for at least three years.
Amica COVID-19 Response
Amica is working with customers to establish repayment plans and keep their coverages in place. Check out their FAQ for more information.
USAA: Best for Military Personnel and their Families
|Get 10% off with a car insurance policy
|Standard policies more comprehensive than competitors
|Cover personal belongings at today's replacement cost, with no depreciation
|Discounts for condo or renters policyholders with no claims
|Fewer complaints to state regulators than comparably sized insurers
|A.M. Best Rating: A++
One of the few downsides to USAA is that it’s only available to military members and their families. However, if you qualify for membership in USAA, it would be hard to find better home insurance for property damage.
USAA COVID-19 Response
Policy cancellations for non-payment have resumed, except in states where non-payment cancellations are prohibited. However, the insurance provider offers financial assistance to qualifying members who the pandemic has economically impacted.
Other Home Insurance Companies We Considered
As we analyzed home insurance companies, we emphasized financial stability and strong customer satisfaction ratings, plus the variety of coverage options each company offered.
The insurance providers we selected excelled in all of these categories, but that doesn’t mean there aren’t other home insurance providers that can offer the right coverage, price, and customer service for you.
What Is Homeowners Insurance?
Homeowners insurance coverage is a type of property insurance that provides financial protection to a private residence against loss due to disasters, theft, and accidents.
There are several types of homeowners insurance policies. The most common policy is the HO-3 policy, also known as the “special form” policy, which includes coverage for the dwelling itself, your personal property within it, and personal liability coverage.
What ISN’T Covered by Homeowners Insurance
When it comes to dwelling coverage, it’s easier to talk about what isn’t covered. In general, most policies will not cover losses to the structure caused by the following perils:
- High-risk flood areas: If FEMA determines you live in a high-risk area, you will be required to purchase a flood insurance add-on. The National Flood Insurance Program (NFIP) provides flood insurance to property owners, renters, and businesses and is available for anyone living in one of the 23,000 participating NFIP communities. For more information about what’s covered, visit FloodSmart.gov.
- Hail and wind: Depending on where you live, there may be additional weather-related exclusions. For example, homeowners insurance policies issued for coastal homes in Texas don’t cover wind or hail damage. For that, you need to sign up for wind and hail coverage with the Texas Windstorm Insurance Association (TWIA).
- Dangerous dog breeds: Many insurance companies also limit losses and liability claims caused by some dog breeds.
How to Determine Your Homeowners Insurance Coverage Limits
Coverage limits usually boil down to a decision between "actual cash value" or "replacement cost" coverages.
- Actual cash value calculates the value of your home minus depreciation, taking into account any existing damage or wear. With this option, if your home is destroyed, you’ll only receive a settlement for your home’s value at the time it was lost.
- The home replacement cost reflects the amount needed to rebuild your home to be as similar as possible to how it was before. Home replacement costs are almost always higher than the actual cash value, which is why it’s the most expensive coverage option.
In any case, to make the most out of your policy, you should make a detailed inventory of all your personal property and its value before coverage begins and submit that to the insurance company to ensure it will all be covered.
For homeowners in climate-risky geographical areas, often the only choice is to obtain insurance through a Fair Access to Insurance Requirements (FAIR) plan. While these afford insurance to high-risk properties, these “last-resort insurance policies” can be expensive.
Most Common Homeowners Insurance Discounts
Each company will have its own options for helping you lower your insurance costs, but the following are the most common:
- Bundling your home and life insurance policies with the same company
- Living close to a fire station
- Having a house newer than 10-50 years old
- Signing up for an insurance policy within a year of purchasing your home
- Renewing your policy before it expires
Best Homeowners Insurance FAQ
How much is homeowners insurance a month?
According to the latest data published by Statista, the average cost for a single homeowners policy in the US is $1,200 per year or $100 per month. However, homeowners’ insurance rates may vary substantially depending on your home’s specifics, how much coverage you want, and where you live.
What does homeowners insurance cover?
Most standard policies include four types of coverage: 1) coverage for the structure of your home; 2) coverage for your personal property; 3) liability protection; and 4) coverage for additional living expenses. A few providers offer identity theft coverage in their basic policies, but you will have to purchase an endorsement (also known as a rider) for an additional cost.
How are homeowners insurance claims paid?
In most cases, an adjuster will inspect the damage to your home and offer you a certain sum of money for repairs, based on the terms of your homeowners policy. The first check you get from your insurance company is often an advance against the total settlement amount, not the final payment. You may get multiple checks from your insurer as you make temporary payments, permanent repairs, and replace damaged belongings. Bear in mind that your lender or management company might have control over your payment, and some insurance companies may pay your contractor directly.
What is the 80% rule in homeowners insurance?
Though it is an “unwritten rule” in the homeowners insurance industry, in practice, this rule means that companies will only offer complete coverage after a disaster if — and only if — the policy is for at least 80% of the property’s total replacement value.
Do homeowners insurance policies cover loss of use or additional living expenses?
Loss of use — also known as additional living expenses — is included in most standard home insurance policies. This coverage will help policyholders pay for everything from groceries to hotel rooms while the damaged property is repaired.
How We Chose the Best Homeowners Insurance Companies
Our list of best homeowners’ insurers streamlines the shopping experience. To devise a methodology, we looked through dozens of insurers and coverage options and narrowed our choices to the best ones based on a series of attributes.
We started our research by seeing how insurance companies stacked up in JD Power’s 2020 U.S. Property Claims Satisfaction Study, which measures customer satisfaction with such processes as claim settlement, claim servicing, First Notice of Loss (FNOL), estimation, and repair.
To further narrow the field, we considered each underwriter’s complaint ratio for homeowners insurance based on data from the National Association of Insurance Commissioners (NAIC). After that, we eliminated companies with A.M. Best financial strength ratings below A+.