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Let’s say you’re the homeowner of an $800K home. You have Christmas decorations littered throughout your house since you’re hosting a Christmas party. You think about home insurance companies to protect your home in the back of your mind, but instead you focus on the festivities. You go to bed when the party is over. While sleeping, you smell something burning. You step into the hall and notice smoke coming from downstairs. Below, you notice that your tree is on fire, and the presents surrounding the tree further fanned the flames. You put out the fire using an extinguisher from the kitchen. The damage isn’t that heavy. However, the fire could have burned down your entire house. Worst of all, you could have lost everything, with no recourse whatsoever. You take homeownership more seriously, but you don’t know where to look.
Where do you start?
First, ensure that your insurance carrier will cover all of your home in its entirety, including precious valuables within your home. Certain home insurance firms offer more perks than others, such as comprehensive coverage without depreciation and lower rates. Also, you can also customize your homeowner policy and include add-ons that will provide additional protections. You can also get quality coverage for a cheaper premium, but the cost will depend on the carrier. Further, you must also look for enhanced online tools that help you create a policy on your own. With that, an insurance carrier may not offer policy coverage in your state or region. Also, certain insurance carriers restrict who can become a policyholder. This article will show you the pros and cons of home insurance carriers. Read on for our picks on top home insurance carriers in 2020.
Unlike other insurance companies, Amica doesn’t restrict who can become a member. Under an Amica plan, you’re buying into the firm, becoming an owner. Amica Mutual doesn’t have any shareholders. Instead, the wealth generated from the company returns to you, the owner. The return amounts to anywhere between five and 20 percent of your premium. The policies also come with perks, such as saving money if you have an existing policy with them, otherwise known as the multi-line discount. Also, policyholders who haven’t filed a claim in three years can take advantage of a discount. Further, you can benefit from more savings if you remodeled your home. Most importantly, Amica provides low-cost rates for home insurance, including auto insurance.
In addition to auto insurance, the carrier also offers the following policies:
- Watercraft insurance
- Life insurance
- Small business
Moreover, you can bundle all your policy needs under Amica and take advantage of the discounts offered.
Amica offers prime discounts, but the giant offers fewer discounts than other competitors. As a result, you may not save as much money as you’d anticipated. When dealing with cost, you’re more likely to pay a higher amount in the first year. This is because you’re becoming an owner of the company. It’s also worth noting that Amica suffered a credit downgrade from A++ to A+ in 2017, translating into higher premiums for its customers. The decline occurred due to a massive amount of disastrous losses, increasing premiums overall. When entering information about your home, Amica may also ask you for some inconvenient information that many homeowners don’t know, such as the architectural style.
USAA is considered one of the best because it carries an industry-ranking score of 878. This number is the highest in the industry. According to J.D. Power, USAA surpasses Amica Mutual, which is the second most reputable company in the industry. Note: USAA only offers policies to veterans and their families. However, the plans cover adult children of veterans and ex-spouses. What makes USAA different from other carriers is the payment of replacement costs without including depreciation. This is a far step from other carriers, which pay the replacement costs with the reduction. The depreciation of your lost or damaged assets means a lower payout overall. A policy that will cover your replacement costs without the reduction means that you won’t have to pay out of pocket to recover your losses.
USAA will also cover damages up to 75 percent of the home value. Even the coverage percentages vary by the provider, USAA’s coverage percentage is among the highest in the industry. You can also customize your policy if necessary. Example: You can include endorsements if you live in a danger zone, such as a flood or earthquake zone. Moreover, a policy can offer up to $5,000 in identity theft protection. When it comes to rates, USAA also offers some of the most affordable prices when compared to other insurance providers.
USAA is inaccessible to those who never served in the military. When stacked against other carriers, the company also offers fewer discounts. You’ll only get discounts for such things as living in a fireside community, having a home security system in your home, or living in a new home.
If you’re looking for another carrier that covers replacement without depreciation, consider Metlife. This house insurance provider will cover the full replacement expense of your home. Example: If your damage amounts to $200K, Metlife will cover the full $200K without depreciation. You’ll also benefit from guaranteed coverage of the replacement value. Metlife also won’t consider your current value when assessing the damage, only the value of the damages. For your personal property coverage, your policy will also cover the same replacement perks for such things as damaged/lost electronics or furniture.
You can also secure enhanced coverage for more valuable items in your home. Metlife policy can rank higher than an average plan depending on your home value. However, you may get a lower rate in other instances. An average Metlife policy quote amounts to roughly $2,000 annually. If you have a policy that covers between $800,000 and $1,000,000, you may have a $3,000 annual policy. For discounts, you’ll receive reduced rates if you have a bundle policy. You’ll also get a discount if you work for certain employers, or if you have a membership in an association or partnership. Homes with alarms or special devices also come with discounts.
Metlife is another organization that lacks sufficient discounts that can lower your premiums. The online resources are also subpar, with no ability to create a home inventory. Its entire online system also needs vast improvement. To file home insurance claims, you must do so via fax or email instead of on their website.
Allstate is another affordable option if you’re shopping for a cheaper premium. Example: In Illinois, you could pay an Allstate homeowner premium of $135/month for a $250K two-story townhouse. However, the rates depend on such factors as the location and the home type. If you’re looking for premium discounts, Allstate offers a wide selection of rate cuts.
You could obtain a discount if for the following reasons:
- Installing storm-proof shutters
- Being over 55
- Bundling policies
- Paying through automatic billing
- Buying a new-construction home
Policy-wise, Allstate has some of the most comprehensive choices in the industry, allowing policyholders to bundle plans with ease. In terms of dwelling coverage, Allstate recommends that consumers take out a policy that covers 100 percent of the replacement damage. If you’re concerned about a rate hike after invoking your policy, Allstate offers a feature known as Rate Guard. Rate Guard can prevent rate increases stemming from a policy claim. The Rate Guard add-on is unique within the industry. It also acts as an accident forgiveness measure for homeowners. Also, Rate Guard can prevent your claim from going up after you file your first claim.
One main drawback is that your coverage for personal property is lower than other carriers. Additionally, you’ll face a cap on Loss of Use and Additional Living Expenses on the dwelling portion of your coverage. As a result, you won’t receive coverage for the total losses. Customer satisfaction ranking is also average by industry standards. Even though coverage varies, other experts suggest that Allstate policies were among the most expensive. Furthermore, Allstate coverage is not available in certain coastal cities.
In addition to auto insurance, Geico also fosters the ability for homeowners to buy policies that are flexible and affordable. However, Geico doesn’t offer home and content insurance. Instead, Geico will pair you with a provider within the Geico network. Geico doesn’t underwrite the policies whatsoever. Geico also has some of the highest rankings, an A++ from A.M. Best. Therefore, you can choose an affordable premium and custom policy of your choice. The network option seems to satisfy many customers, as Geico ranks highly in terms of the premium rates.
You can also add on additional coverages, such as:
- Identify theft protection
- Sump coverage
- Electronics protection
- Earthquake coverage
In addition to home coverage, you can also take out coverage for mobile homes or condos. Geico also offers standard discounts, such as new home, fire/smoke alarms, and security alarms. You can also get a discount if you haven’t filed a claim in the past few years. Geico also provides bundling discounts for multiple policies.
Even though many customers like the premium rates from in-network providers, they are generally not happy when dealing with another provider for coverage. Also, you’ll contend with a full degree of uncertainty as Geico pairs you with an unfamiliar provider. Further, Geico also offers fewer discount choices than competitors.
Erie Insurance Group
Erie has some of the lowest home insurance rates when compared to other carriers. Though coverage rates vary, a sample cost hovers around $116/mo. In other cases, you can get a policy for as low as $34/month for a two-bedroom townhouse in Illinois. Erie also provides a standard selection of discounts, such as bundle discounts and renewal discounts. Overall, the carrier ranks high when it comes to customer satisfaction. Moreover, Erie offers some advantages, such as a guaranteed replacement coverage at no additional cost. You’ll also get theft protection for lost or stolen items. You can also cover precious metals and cash up to $500, along with pets for the same $500 limit.
You can also add specific items in the form of:
- Rental income or home business coverage
- Natural disaster protection
- Sewer and service line protection
Due to the additional add-ons and great prices, you’ll find a few customer complaints. You can also better customize your policy, mixing and adding policy choices where necessary. You can also choose pre-established policies that will give you adequate protection. You can access their website to find valuable information. Erie offers blogs and tips on how to navigate an emergency situation best. Moreover, the site can guide readers on the right policy choices. It also gives you insight into how an Erie policy compares to a competitor.
Erie only offers homeowner protection in 12 states, including Washington D.C. It also doesn’t have sophisticated online tools. You must call a claims agent instead of filing a claim online. Also, the provider doesn’t have mobile app capabilities for policyholders. You also cannot build an insurance policy online.
Home Insurance Companies and the Right Choice for You
When choosing the right home insurance companies, the best choice depends on your needs as a consumer. Are you looking for a cheaper premium? Do you want comprehensive coverage?
If you’re looking for full coverage, choose a carrier that offers guaranteed replacement coverage. Also, the best insurance providers are ones that provide coverage without depreciation, saving you out-of-pocket costs in the process.
However, you’ll come across some drawbacks when shopping around, such as a lack of online tools or insufficient discounts. Regardless, read home insurance reviews to determine the best carriers for you.
If you are interested in additional homeowner insurance policies, click here to learn how we can help you.
Homeowner’s Insurance FAQs
Learn the basics of home insurance
What is homeowners's insurance?
Homeowners insurance is a crucial part of your home. While it isn’t mandatory, it is important to have home insurance to protect your investment. Some lenders will require homeowners insurance in addition to a mortgage to protect their investment. They might even require the homeowner to open an escrow account to ensure that the homeowner isn’t late on any payments.
What does home insurance include?
Homeowners insurance is exactly what it sounds like. It is an insurance policy that homeowners take out to protect their home. If there is any damage to the home and your insurance plan covers it, you aren’t responsible for paying out of pocket for everything. It is wise to have insurance so that in the event of an emergency, you won’t have to stress. After all, repair costs can get very expensive.
While homeowners insurance sounds like it only covers damages to a home due to natural disasters, it covers much more. Depending on the plan, most homeowners insurance can cover personal belongings. For example, if furniture is damaged from a fire, your insurance company will help with that. Homeowners insurance will even cover personal items that travel with you. If you’re on vacation and you accidentally left your expensive watch in a hotel room, insurance will help to cover the costs to replace it.
Homeowners insurance can also cover liability issues that take place in your home. For example, if someone were to fall in your home and take legal action, homeowners insurance can help cover the legal costs and injuries. This isn’t something that most homeowners think about, but it could happen.
Typically, a homeowners insurance policy can be covered in 6 parts:
- A house or attached structures
- Other structures
- Stand-alone structures such as a tool shed
- Personal property
- Covers replacement or repair of property stolen or damaged in a covered loss
- Personal liability
- Costs of another party’s injuries while on the insured party’s property
- Covers the cost of additional living expenses due to temporary relocation if the property is inhabitable
- Medical Payments
- Medical costs that happen on the property by those not listed as residents
How much home insurance do i need?
This really depends on the replacement cost of your home, which is usually determined by the insurance company you work with. This replacement value is how much it would cost an insurance company to replace your house and belongings. This is different from the market value that depends on a lot of outside variables that effect the real estate market.
Is homeowners insurance required?
Home insurance is not legally required like other insurance types like auto insurance, but mortgage lenders may require it as it is in the mortgage company’s best interest to have this coverage.
What are different homeowners insurance policy types?
With all insurance companies, there are different tiers of policies for people to choose from. For dwelling coverage, the two most common types are HO-2 and HO-3. The difference between the two policies is the amount of coverage. An HO-2 policy covers your personal property and is commonly known as a “named-peril” policy. This homeowners insurance covers less and very specific problems like property damage from and aircraft, riots, windstorms, volcanic eruptions, hail, falling objects, etc.
The HO-2 policy also covers more normal incidents like fire, smoke, water damage, theft, and vandalism. HO-2 policies also cover personal belongings, but only when the damage is caused by the specific incidents listed. Of note, flood damage is not covered in any standard homeowner’s policy and requires separate flood insurance to cover damage specific to a flood.
The HO-3 policy is an “open-peril” policy, which means that it will cover most risks. An HO-3 policy will cover all of the risks listed in an HO-2 policy and more. It will not only cover more risks so that there’s more coverage, but it will also cover personal objects as well as personal liabilities that take place on your property. HO-3 policies also provide more financial protection. Usually, insurance companies will reimburse you for personal property claims via the actual cash value, which is the amount of money it would cost to replace an item, usually handled by an insurance company’s claims department.
What are additional home insurance coverage types?
Homeowners insurance can cover other unexpected occurrences away from your home such as personal property coverage for lost items while traveling or covering your children’s stuff when they are away at college in on-campus housing. Depending on your policy, property and liability coverage for cemetery plots and for trees and plants in your garden may also be covered.
What doesn't homeowner's insurance include?
While homeowners’ insurance companies include coverage for a variety of risks, there are some that all insurance companies exclude from their policies. Flooding, earthquakes, landslides, mold, infestations, normal wear and tear are some of the risks that make the list. For these particular risks, you can purchase insurance policies protecting you from these risks separately. You are more than welcome to talk to your insurer about risks that aren’t listed on your policy and see if adding endorsements is possible. Endorsements will cost extra, but they will provide more protection.
How do I choose the right insurance company?
Different insurance companies offer different rates for their policies, so it is important to research and see which one best fits your priorities. If you don’t have the time to sit down and research different companies and what they cover, check out PolicyPilot.com that will provide a breakdown of the best homeowners insurance options.