Best Homeowners Insurance Companies Of 2022
Your home and all the valuables inside add up to a big investment that deserves quality protection, which is why it’s important to choose the right homeowners insurance. We’ve evaluated major insurers across the country to help you find the best home insurance,
Cheapest homeowners insurance
You can save hundreds if not thousands of dollars by shopping around for home insurance. Knowing what coverage you need and requesting quotes from homeowners insurance companies takes some time.
Our research found that average home insurance rates varied by about $1,600 from the lowest to the most expensive among the companies we analyzed.
Here are the cheapest homeowners insurance companies.
What is homeowners insurance?
Homeowners insurance is a combination of coverage types that protect your investment in your home. It covers the residence (house), other structures such as fences, and personal belongings caused by accidents and problems, such as house fire and theft.
Homeowners insurance also provides liability coverage, which pays for property damage and injuries caused to other people by members of your household. Liability coverage also pays for legal defense and settlement if you are sued for injury or property damage.
Standard home insurance policies include additional living expenses (ALE) coverage, which pays for additional expenses if you are unable to live at home due to a loss covered by the policy. Additional costs may include hotel lodging, restaurant bills, and other services (such as pet boarding).
What does home insurance cover?
Home insurance covers your home, other structures on your property such as barns and fences, and your belongings. It also provides liability protection and coverage for additional living expenses if you are forced to move out of your home due to damage.
A standard home insurance policy has these valuable coverage types.
The residence section of a Homeowners insurance policy covers the structure of your home. The amount of home coverage should reflect the cost of rebuilding the home based on construction and labor costs in your area. Dwelling coverage is not dependent on the real estate market value of your home.
There is relevant coverage for other structures such as fences or unattached garages.
Personal property coverage
Personal property coverage pays to repair or replace your personal belongings if they are damaged or destroyed. This includes furniture, clothing, kitchen utensils, home decor such as curtains, and anything else you have packed in boxes in your basement or attic.
The coverage amount for personal property is usually set between 50% to 70% of the residence coverage amount. For example, if your residence is insured for $250,000 and your contents coverage is set at 50%, you would have $125,000 in contents coverage. You can purchase more personal property coverage if you need it.
While it’s easy to focus on material things like your home and belongings, homeowners insurance includes critical coverage for liability.
This liability insurance pays for injuries and property damage you accidentally cause to others. For example, if a guest trips on your sidewalk and is injured, liability insurance can pay their medical bills. Liability insurance also pays for a lawsuit judgment if you are sued and your legal defense costs.
If your liability insurance is inadequate, you may be on the hook for more than the policy limits. For the best homeowners insurance, a general rule of thumb is to buy enough liability insurance to cover your net worth or what could be taken from you in a lawsuit.
Umbrella insurance is an inexpensive way to add more liability insurance.
Additional living expense coverage
Also known as “loss of use,” additional living expense coverage can pay for additional expenses such as hotel bills, restaurant meals, and pet boarding if you are unable to stay at home while repairs are made due to damage covered by the policy.
The amount you have for additional living expense coverage is usually set as a percentage of your residence coverage amount, but you can buy more if you don’t think it’s enough.
What Does Homeowners Insurance Not Cover?
A standard Homeowners insurance policy excludes several types of problems, such as:
- Ordinance or law, such as a government requirement to demolish, repair or rebuild your home to meet local ordinances
- Earth movement, including earthquakes, landslides and sinkholes
- Water damage, including floods and water backup from sewers and drains
- Power failure
- Neglect, such as a failure to maintain heat
- Nuclear hazard
- Intentional loss
- Government action, such as a seizure of property
- Wear and tear
- Smog, dry rot, rust or other corrosion
- Discharge, migration, seepage, escape or release of pollutants
- Smoke from agricultural or industrial operations
- Mechanical breakdown or a latent defect that causes property damage
- Shrinking, settling, expansion or bulging of bulkheads, pavement, footings, foundations, patios, walls, floors, roofs and ceilings
- Vermin, rodents, birds or insects
- Damage caused by an animal you own
How much is homeowners insurance?
Forbes Advisor found a national average of $1,854 per year for homeowners insurance for a home insured for $300,000.
What Factors Affect Homeowners Insurance Rates?
The cost of home insurance can vary depending on several factors, such as:
- Where do you live
- The cost of remodeling the house
- Materials that make up your home, such as wood, stone, stucco, and brick
- How close are you to a fire department and water source?
- Claims history in your area, such as wildfires and crime rates
- Your personal claims history
- How much coverage you choose
- Your credit (if allowed as a pricing factor in your state)
Is Homeowners Insurance Necessary?
Homeowners insurance is generally not required unless you have a mortgage. Mortgage lenders also see your home as their investment, so they expect you to take care of the property and that includes home insurance.
Mortgage lenders may require a mortgage escrow account for both Homeowners insurance costs and property taxes, so you stay current on your insurance and tax payments.
Once you’ve paid off your mortgage, you generally don’t need home insurance, but it’s still a good idea to maintain coverage.
How to find the best homeowner insurance policy
Your home and all your belongings are a big investment, so naturally you don’t want to go with a company just because you see commercials on TV. Here are some tips to help you start your shopping journey.
Determine how much coverage you need
The key to figuring out how much home insurance you need is to look at each standard coverage type and adjust the amount to fit your specific needs, then add additional coverage to plug any gaps. Here’s what it might look like:
- Residence coverage. The cost of replacing your home and other structures can vary based on local construction and material costs, so it’s difficult to come up with a number on your own. Your insurance agent can help provide an estimate. It’s a good idea to add additional coverage, such as extended or guaranteed replacement cost coverage, if available, to help account for potential increases in local construction costs, especially if your area is prone to natural disasters.
- Content coverage. A good way to calculate how much coverage you need for all your belongings is by doing a home inventory. It’s a good idea to have “replacement cost” coverage in your home insurance policy, which pays for new items. Actual cash value only pays the depreciated value of your damaged items.
- Liability coverage. You want to buy enough liability coverage to cover what could be taken from you in a lawsuit, like your savings.
- Additional Living Expenses (ALE) coverage. ALE coverage is usually set at a percentage of your residence coverage, such as 20%. But if you need more, you can increase your usage coverage. This pays extra expenses if you can’t stay at home because of the damage.
- Other coverage types. You can fill policy gaps with coverage types such as flood insurance, earthquake insurance, water and sump overflow, and home system breakdown coverage.
Compare home insurance quotes
Once you know how much coverage you need, you can start shopping around. It’s important to compare home insurance quotes from multiple insurance companies because rates can vary significantly for the same coverage.
You can get a free home insurance quote:
- Online. You can get it from the insurer’s website or by visiting a website that specializes in providing multiple quotes at once.
- Insurance agent. An independent insurance agent can get quotes from multiple companies. A “captive” insurance agent works for only one company.
Home insurance discounts
Make sure you ask about discounts. Here are some common types to look for:
- New or renovated home discounts. This is a price break that often requires upgraded wiring and plumbing.
- Safety and security discounts. Having fire safety devices (such as smoke alarms and sprinklers) and security devices (such as burger alarms and deadbolts on exterior doors) often results in discounts.
- Roof age discount. Your insurance company may lower your rate if you have a new roof.
- Disaster preparedness discounts. Ask about this discount if you take steps to protect your home against natural disasters, such as installing storm shutters and shatterproof glass if you live in a hurricane-prone area.
- Multi-policy discount. These discounts are often available if you purchase more than one type of policy from the same insurance company, such as auto, RV, and motorcycle insurance. Bundling auto and home insurance is usually one of the best
- Multi-home discount. If you need to insure more than one home, find discounts if you insure them with the same company.
- Claim-free discount. Ask about price breaks when you don’t have a recent history of insurance claims.
- Insurance payment discount. You can often get a small discount for going paperless and paying your premium in full.
- Employment, Organization and Association Discounts. Depending on your occupation (such as teachers) or if you are a member of a union, professional body or alumni association, your insurer may have affiliation exemptions.
Types of Homeowners Insurance Policies
Whether you rent or own, live in a condominium, mobile home or single-family house, there is a type of home insurance to suit your living situation.
HO-1: This bare-bones policy typically only covers your home for 10 “perils” or problems. It is not sold in many states and if you have a mortgage, you need to have a better home insurance policy.
HO-2: This type of home insurance covers your home and other structures on your property, your belongings, liability insurance, additional living expenses and medical payments. However, coverage for your home and belongings is only for specific perils or problems, such as fire.
HO-3: The most common type of home insurance policy, the HO-3 covers your home and other structures as well as your possessions. It also includes liability insurance, additional living expenses and medical payments coverage. Unlike the HO-2, it covers damage to your home from all perils unless it’s specifically listed as excluded, such as flood. Your personal property is covered for 16 types of problems, such as theft and fire.
HO-4: Known as renters insurance, HO-4 covers your belongings, and includes coverage for liability and additional living expenses.
HO-5: This type of policy covers your home and belongings under all circumstances, except for those specifically listed as exclusions. HO-5 policy offers the highest level of protection for homes and belongings.
HO-6: HO-6 is home insurance for people who live in condominiums. It covers the walls, floors and roof of the unit you own, and includes coverage for liability, excess living expenses and medical payments.
HO-7: This policy is similar to HO-3, but for mobile homes.
HO-8: An HO-8 is designed for older and historic homes, where remodeling costs typically exceed the home’s market value. It includes coverage for the home and its contents for 10 specific problems.
We have evaluated home insurance companies on various factors that reflect their protection, customer care and prices.
- Home insurance rates (50% weighting) are based on national averages for each insurer. Source: Quadrant Information Services.
- Complaints about homeowners insurance (20% weight) are upheld by state insurance departments. Source: National Association of Insurance Commissioners.
- Availability of extended and/or guaranteed replacement cost coverage (20% weightage), which is important in case of major disasters, when construction material and labor costs increase. Source: Forbes Advisory Research.
- Restricted dog lists (10% weight), which makes homeowners ineligible for coverage. (A company’s list of prohibited dogs may not be applicable in all states.) While any homeowner’s insurance company may prohibit any dog with a history of bites, all do not prohibit certain breeds. Source: Forbes Advisory Research.