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Best Home Insurance of 2020

If you own a home, buying home insurance may seem like just another expensive box to check to satisfy your mortgage lender. You can expect to pay around $1,192 per year, according to a 2016 report from the National Association of Insurance Commissioners. That’s not exactly cheap.

But consider this: in 2016, 6% of all homeowners had to file a claim, and in 2015 the average payout was $15,532, according to the Insurance Services Office, Inc. That means in any given year, there’s a chance you’ll have to file an insurance claim of several thousand dollars or more. Selecting the right home insurance is a financially wise way to protect yourself against these potential losses.

Not all insurance companies are created equal, however. Once you’ve determined how much coverage you need, you’ll need to choose a company based on factors like financial stability, product offerings, and the ease of the claims process. If you choose a good home insurance company, the money you pay will be worth it.

Important Things To Know About the Best Home Insurance

  • Consider choosing “replacement cost coverage” instead of “market value coverage,” as the former will ensure that your home is rebuilt to the same condition as before, without factoring into account any swings in property value that could lower your payout.

  • Understand that choosing a higher deductible can lower your premium, but also means you’ll have to pay more out of pocket if you ever need to file a claim.

  • Consider purchasing additional coverage for catastrophes that aren’t typically covered by standard home insurance policies, such as damage from hail, earthquakes, or floods.

The 6 Best Home Insurance Companies and Research Tools

Best Home Insurance Reviews

We’ve compiled a list of three home insurance companies and three different home insurance marketplaces where you can find quotes from different companies that will help you price out the best options.

Travelers Insurance

Travelers Insurance has been around for 160 years, and it’s the sixth-largest underwriter of home insurance policies in the U.S. Travelers Insurance also has the highest A.M. Best rating possible (A++), so it’s a good bet that this company will stick around and be able to pay out for the long term.

While you can buy a standard homeowner’s insurance policy from Travelers Insurance, the company also offers a few options for add-on insurance products, such as coverage to rebuild a green home, or higher coverage for jewelry or other expensive items. Travelers Insurance also offers several discounts, such as for purchasing multiple insurance policies (car, umbrella, boat, etc.), purchasing your home within the past 12 months, and even for owning a LEED-certified green home.

Allstate

Founded in 1931, Allstate is an established carrier with multiple lines of business. The company had the country’s second-largest market share of homeowners insurance in 2018, according to the Insurance Information Institute. Many of its policies are sold through dedicated agents, who would be your main point of contact in filing a claim. It has earned an A+, “superior” rating from A.M. Best. For its size, the company has received comparatively few complaints lodged against it with the Better Business Bureau or the National Association of Insurance Commissioners.

In addition to the standard policy options, Allstate offers optional coverage for identity theft restoration, electronic data recovery, and business-related items stored in the home, among others. Customers can receive discounts in certain circumstances, including when their home has theft or fire protection devices and when they’re over age age 55 and are retired. Customers with more than one type of policy with Allstate can get a multiple policy discount.

Lemonade Insurance Company

Lemonade has made a splash in its relatively short history. The New York-based company began offering homeowners and renters insurance in late 2016 and has since expanded to about half of the country. It has a Financial Stability Rating® of A-Exceptional from Demotech Inc.

Lemonade is a certified B-Corp®, a type of for-profit company that meets rigorous standards for social and environmental performance, accountability, and transparency. The company donates leftover claims money to causes that policyholders care about. (It uses reinsurance — a kind of insurance for insurance companies — in those cases where the claims filed exceed the collected premiums.)

The company says this unique business model means that it’s not in conflict with its customers, and it aims to pay out the majority of claims “almost instantly.” You can open a claim easily by going to the Lemonade app and hitting the Claim button. Prospective customers can get quotes in seconds through the app or go to lemonade.com.

Home Insurance Connect

Home Insurance Connect is a home insurance marketplace that you can use to get quotes from multiple companies at once. It’s a relatively new website that’s easy to navigate, and by answering a few questions you can get connected with companies that offer home insurance in your area.

Home Insurance Connect works with more than 900 lenders, although depending on where you live, you’ll probably see just a few results for insurance companies in your area. These companies could range from big-name insurance companies like Travelers Insurance and State Farm to smaller, local firms.

SelectQuote

SelectQuote may be better known as one of the biggest term life insurance marketplaces around, but it also works with companies to provide home insurance. SelectQuote only works with companies that have an A.M. Best rating of A- or better, so if you’re worried about being referred to financially unstable companies, this filtering system will be an attractive feature.

SelectQuote is also a bit different than some competitors in that you’ll work with an agent. In this way, it’s more like a typical insurance broker than an online marketplace that simply generates quotes based on the information you provide. This may be a plus or a minus, depending on how much human interaction you want to have when shopping for home insurance.

Young Alfred

This company’s namesake is a digital butler for the modern age, who’s at your service to help you find the right insurance coverage. It’s a cute idea, but there’s also some serious science behind this company. It uses algorithms to match you with the type of coverage you need, so you don’t have to crunch the numbers yourself. Then, it works with a network of 30 different insurance companies to find the best one for your needs.

This works a bit differently from most other quote tools, which provide you with the prices for a standard home insurance policy. Many people will need additional coverage, and the quotes you get on other websites may not accurately reflect this. Young Alfred works differently, because the quotes you get are customized to your profile.

How We Found the Best Home Insurance

There are many companies out there offering home insurance today. That’s means you have more choices, but it can also make shopping for the best home insurance company overwhelming. Here’s how we weeded through the available options:

Solid financial standing

We chose Travelers Insurance and Allstate because they received the highest possible, “superior” A.M. Best rating. With climate catastrophes becoming more and more common and being one of the most frequent causes of claims, it’s especially important to seek out insurance companies that are able to weather the storm, at least figuratively speaking.

By choosing a company with a strong financial profile, it’s a sure bet that the firm will actually have the money to pay your claim, even if it’s strained by many other claims at the same time. Similarly, we placed a high priority on insurance marketplaces that only work with financially sound companies with high A.M. Best ratings.

Easy-to-use interface

We also prioritized home insurance companies that have a streamlined, navigable interface. Finding the right company is much easier when you can clearly see the options without a lot of fuss.

How to Choose the Best Insurance Company

Finding the best insurance is about more than just settling for the cheapest price possible. Opting for this route can mean that you’re not fully protected, and you could be in for an unpleasant and potentially devastating surprise when it comes time to file a claim. Luckily, finding the best insurance company only takes a little bit of work up front to ensure long-lasting peace of mind.

Step One: Take an Inventory of Your Belongings

Guessing how much insurance you need out of the blue is sort of like throwing a dart at the wall. Instead, it helps to get solid numbers so that you know exactly what you’re working with. This is where taking a household inventory can be a huge help.

This sounds daunting, but it doesn’t necessarily need to take a huge amount of time. You can use apps like MyStuff or BluePlum Home Inventory to quickly create an itemized list of your possessions. The Allstate app has a Digital Locker feature that allows you to take a quick inventory of your household items. From there, you can estimate each item’s value, so that you know the total amount of coverage you should get for the things you keep inside your house. This also helps to prove that you indeed did own an item should you ever need to file a claim.

Step Two: Decide How Much Insurance You Need

When you get a quote for standard home insurance, it’s just that: a standard policy. There’s a good chance that you’ll need to boost your coverage depending on what exactly you need to protect and what hazards exist in your area.

You can purchase optional add-on insurance known as endorsements or riders to help cover things that are specific to your situation. For example, if you tend to keep a lot of expensive items like jewelry, rare artwork, photography equipment, or antiques in your home, you might be able to purchase additional coverage beyond the minimums that most standard home insurance policies come with. Other common endorsements include coverage against sewer backups, home-based business coverage, and inflation riders that gradually boost the coverage limit over time.

If you’re having trouble coming up with an estimate for how much insurance you need, that’s where working with an agent can really help. An agent can work with you to determine exactly how much coverage you need and key you in to the right add-on insurance products for you.

Step Three: Consider Additional Coverage for Weather-Related Catastrophes

It’s especially important to pay attention to what local threats there are in your area. Losses from hail damage and wildfires are particularly common and are generally covered by most standard home insurance policies — but damage from flooding and earthquakes usually aren’t. If you live in an earthquake-or flood-prone area, it’s especially important to consider purchasing additional insurance to cover you for these two types of natural disaster.

Flood insurance is also good to consider even if you don’t live in a flood plain. According to FEMA, over 20% of flood claims come from areas that aren’t deemed high risk. Flood insurance works differently from most other home insurance in that it’s purchased separately through the government’s National Flood Insurance Program, although you may still buy it through a broker.

Step Four: Shop for Quotes

Now that you know exactly what you need, you can shop confidently with different home insurance companies and know you’re making an apples-to-apples comparison. There are several ways you could go about this.

You can check with each company directly. This is useful because you might be able to customize your quote better, but it takes a lot of time to check multiple companies.

You can also choose to use a quote website for home insurance. This has the advantage of comparing more companies than any other method at once in a short period of time. However, the quotes you receive are likely for standard home insurance policies and may not have all of the additional options you need to be fully covered.

Another option is to go with an insurance broker. This looks more expensive up-front because the insurance broker is getting a commission, although they may be able to find you better rates. They can also help you figure out exactly how much insurance you need, so you can buy just the right amount.

Step Five: Choose a Home Insurance Policy

The final step is to make a decision about which company is right for you. Since you’ve already compared quotes for your specific needs, the final decision could be as simple as which option is the cheapest.

However, if there are other aspects that are important to you, make sure to take these into account as well. For example, if you’d rather work with a local company or if you value customer service above all else, now is the time to filter for companies that meet these criteria. Then, simply sign the forms and you’re done.

Types of Home Insurance Policies

You might see terms like “HO-2” or “HO-3” thrown around when shopping for home insurance. These terms refer to the different types of home insurance policies available today. Briefly, here are the different types of home insurance policies and what they mean:

  • HO-1: Most basic home insurance

  • HO-2: Home coverage against specific threats

  • HO-3: Home coverage against all threats except excluded ones; the most common type of home insurance

  • HO-4: Renters’ insurance

  • HO-5: Most comprehensive home insurance

  • HO-6: Condo insurance

  • HO-7: Mobile home insurance

  • HO-8: Older home insurance

Generally, most types of home insurance sold today are HO-3 policies. Still, it’s a good idea to check what type of policy you’re considering for purchase to make sure you understand what it covers and how it works.

Choosing a Home Insurance Deductible

Generally, you’ll be offered a few different options for a deductible. This is just the amount that your insurance requires you to pay yourself before insurance kicks in if you need to make a claim. For example, if a fallen tree does $10,000 worth of damage to your house and your deductible is $500, you’ll need to pay $500 and your insurance will pay the remaining $9,500.

The higher your deductible, the lower your premium will be. It’s generally best to choose the highest deductible you can afford to pay out of pocket. This will save you money on your premium, but you also won’t be stuck in a difficult financial situation if you need to pay your deductible when filing a claim.

It’s also a good idea to keep that deductible tucked away in a savings account that you don’t use for everyday expenses. That way, you’ll be less tempted to spend it, it’ll earn interest, and you’ll be guaranteed to have the money if you need it.

When to Reconsider Your Home Insurance Policy

Generally, it’s best to take a look at your home insurance policy at least once a year to make sure you’re still fully covered. Your insurance needs might change over time as your circumstances change and evolve.

For example, if you’ve made any substantial changes to your home, such as remodeling a kitchen or bathroom, or building a new addition, it’s a good idea to check with your insurer whether this would be covered in the event of a loss, or if you need to up your coverage. Similarly, if you’ve taken up an expensive new hobby such as woodworking or photography, now’s a good time to make sure that you’re still fully covered for all the new equipment in your home.

Summary: Best Home Insurance Companies