Homeowners insurance pays to repair or rebuild your home and replace its contents if they’re damaged by specific perils like fire, theft or a weather event such as wind or lightning.
If you’re not familiar with home insurance coverage and its policies, you might end up paying more than you should for inadequate coverage. To help you find a homeowners insurance policy that works for you, here are the seven best home insurance companies of 2021.
Our Top Picks for the Best Homeowners Insurance
Lemonade – Best Online Company
Hippo – Best for Fast Quotes
Erie Insurance Company – Best Range of Coverage Options
Allstate – Best for Claims-Free Homeowners
Amica Mutual – Best Customer Service
USAA – Best for Military Members
AIG – Best for High-Value Homes
Pros
Unusually fast quotes and claims payments
Unused claims money is paid to a non-profit of your choice
Flat fee for administration, in addition to low monthly premiums
Demotech Financial Stability Rating: A
Cons
Not available in all 50 states
Why we chose Lemonade: Lemonade’s streamlined online services and use of AI make the process of getting quotes and filing claims easier and faster.
Lemonade Insurance is an online-only insurance company that uses artificial intelligence to provide notably fast home insurance quotes and claims payments. The company can provide a quote in a few minutes — you simply fill out a form on their website and choose the coverage amount you want.
The use of AI also makes the claims process unusually quick, with many reimbursements paid in a matter of minutes, the company says.
Lemonade also has unique and appealing approaches to paying for its operations and using company profits. Its operations are funded, at least in part, through a flat fee that’s added to the policy’s premium. Then, through its Lemonade Giveback program, it will donate up to 40% of premiums that haven’t been used to pay out claims to a non-profit organization of your choice.
Lemonade also offers a Standard selection of coverage options, including:
Dwelling coverage
Other structures coverage
Personal property coverage
Personal liability
Medical payments
Loss of use
Pros
Obtain an online quote in 60 seconds
Purchase a policy online in around 5 minutes
Get discounts when using Hippo’s Smart Home System
Offers home-care services
Cons
Discounts for homes with digital and smart systems
Coverage is not available nationwide
Why we chose Hippo: Hippo’s use of technology both for customer service and improved home security makes them a top choice for tech-savvy homeowners.
Hippo allows customers to complete the quote process entirely online and get a quote in as fast as a minute, and receive a policy in as little as five minutes, the company claims.
Hippo also provides a smart home discount if you agree to install and use a free smart home monitoring system. There are several levels of kit, with escalating arrays of equipment. The company claims customers save an average of $64/year if they agree to installing the plain self-monitoring kit — which includes smoke, CO2 and water-leak detectors — and $91/year when opting for the pro monitoring kit, which adds 24/7 monitoring and emergency dispatch services.
Their Hippo also offers a HomeCare Expert program that provides professional service recommendations, via phone, to policyholders who need repairs or maintenance.
The company’s policy discounts are subject to the use of a smart home kit, given at no cost to eligible policyholders.
In addition to standard home insurance coverage, Hippo offers to cover:
Computers and home office equipment
Appliances and electronics
Smart home upgrades
House cleaners and sitters
Water backup
Service line protection
Enhanced rebuilding
Full replacement costs
Costs for local ordinance changes
Pros
Customizable coverage deductibles
Discounts available when bundling with auto insurance
Add-ons include liability coverage, identity recovery, and service line protection
J.D. Power Ranking: 3rd out of 22
A.M. Best Rating: A+
Cons
Only available in 12 states
Why we chose Erie: Erie’s standard policy includes guaranteed replacement cost and an array of add-on’s that usually cost extra — all valuable additions to an already solid insurance package.
Erie Insurance is among a handful of homeowners insurance companies that include guaranteed replacement cost coverage as part of their standard coverage. This allows homeowners to rebuild their home the way it was before the incident, rather than receiving a depreciated amount due to the home’s age. Their policy also includes roof damage coverage as well, although full replacement does cost extra.
Erie also offers a 16% to 25% discount for bundling and additional discounts if you install automatic sprinklers, smoke detectors, and burglar alarms.
The company is among the few insurers — along with Allstate and USAA — to offer, at additional cost, home-sharing coverage as an alternative to buying such insurance through AirBnB or Vrbo. As a rule, damage from paying guests is not covered under standard homeowners insurance.
Erie’s base policy also covers these other items, which cost extra with many other companies:
Valuables and hard-to-replace items
Gift card and gift certificates
Animals, birds, and fish
Cash and precious metals
You can also add the following coverage to any Erie policy:
Water backup and sump overflow
Personal liability coverage
Identity recovery services
Service line protection
Pros
Discounts for being claims-free
HostAdvantage add-on available for home-sharing or renting
A.M. Best Rating: A+
Cons
J.D. Power Ranking: 10th out of 22
HostAdvantage feature is not available in all 50 states
Why we chose Allstate: Allstate’s discounts for claims-free homeowners, solid reputation and great financial standing earns it a place on our list.
Allstate compensates homeowners who take good care of their property and are claim-free. You can get up to a 20% discount if you switched to Allstate and hadn’t filed a claim with your previous insurer. Allstate will also lower your deductible amount for every additional year without a home insurance claim while you’re with them.
For an extra fee, Allstate also offers a Rateguard option, which allows you to file one “free” claim every five years without triggering a rise in your premium. However, since there’s a low likelihood of placing a claim in any year, the option may or may not be worth buying, depending on its cost and the increase in premium that would result from making a claim.
The company is one of the few — along with Erie and USAA — to offer, at additional cost, home-sharing coverage as an alternative to buying such insurance through AirBnB or Vrbo. As a rule, damage from paying guests is not covered under a standard homeowners insurance policy.
The company also offers optional coverage for:
Identity theft restoration
Green improvement reimbursement
Water backup
Yard and garden
Scheduled personal property
Electronic data recovery
Business property
Musical instruments
Sports equipment
Pros
Offers database of contractors and guarantees their work for 5 years
Discounts for claims-free customers
J.D. Power Ranking: 1st out of 22
A.M. Best Rating: A+
Cons
Discounts not available in all states
Contractor database feature not available for HI and AK
Why we chose Amica Mutual: Amica Mutual’s customer service is one of the best out there, and their Contractor Connection ensures that quality service extends outside of their coverage.
Amica Mutual stands out for customer service on claims, having topped the J.D. Power Property Claims Satisfaction Study for nine consecutive years. Another standout aspect to the company is its Contractor Connection database, which lists thousands of vetted, licensed and insured contractors and guarantees their work with a five-year warranty.
Like many insurers, Amica also offers loyalty discounts, in its case to customers who have been with the company for at least two years. It also offers breaks to those who are and are claim-free for at least three years.
For customers who require additional coverage, Amica offers:
Valuable items coverage
Catastrophic coverages
Identity fraud expense coverage
Home business coverage
Pros
Get 10% off with a car insurance policy
Home sharing coverage available
Discounts for claims-free condo or <a href=”https://money.com/best-renters-insurance/”>renters insurance</a> policyholders
A.M. Best Rating: A++
Cons
Only available for military personnel and their families
Home sharing not available in all 50 states
Why we chose USAA: USAA has a great combination of low premiums and wide coverage for military members, along with outstanding trustworthiness and financial stability.
USAA is a highly rated insurance provider — for both financial stability and customer service (although its limited availability means it is not included in JD Power customer satisfaction rankings). It offers many different coverage options for military members and their families (including the children of veterans and those who are serving).
USAA is also among a handful of homeowners insurance companies that includes as standard Guaranteed Replacement Cost coverage, which allows homeowners to rebuild their home the way it was before an incident, rather than receiving a depreciated amount due to the home’s age.
The company is also known for its low premiums. If you qualify for membership in USAA, it would be hard to find better home insurance rates and coverage for property damage.
The company is one of the few — along with Erie and Allstate — to offer, at additional cost, home-sharing coverage as an alternative to buying such insurance through AirBnB or Vrbo. As a rule, damage from paying guests is not covered under a standard homeowners insurance policy.
Pros
Coverage for homes of up to $100 million
Robust cybersecurity coverage
Coverage for properties outside the United States
Lower average premium than other high-end competitors
Cons
Low customer service ratings
Customers have to buy more than one policy with the company
Why we chose AIG: AIG provides comprehensive coverage for high-value properties worth up to $100 million.
AIG is known as a luxury insurer that provides high net-worth individuals with comprehensive coverage, from dwelling to cybersecurity protection. It offers guaranteed replacement cost (without any limits, according to the company) for homes valued from $750,000 all the way up to $100 million on an “all-risk” basis — meaning their policy covers all perils except the few specifically excluded. It also offers the option of ultra-high deductibles (up to $100,000) so you can lower your premium.
You must have one of the company’s other policies to get homeowners insurance with AIG, but the company has a wide array of policies aimed at high net-worth customers to choose from — including collection insurance, yacht insurance, auto insurance and even private aircraft insurance.
You can also find services that will help you prevent accidents or take care of them quicker. The insurer provides background check services for domestic staff, private firefighting units, cybersecurity measures and more.
In addition to standard coverage, AIG offers services such as:
Kidnap, ransom and extortion coverage
Landscaping coverage
Crisis management and reputation restoration
Multinational property coverage
Business property coverage
Other home insurance companies we considered
As we analyzed home insurance companies, we focused on financial stability and strong customer satisfaction ratings, in addition to the variety of coverage options each company offered.
The insurance providers we selected excelled in all of these categories, but the following carriers fell a bit short when it came to most homeowners’ needs.
However, read on to see if one of these companies might fit your specific needs.
Pros
Partnership with Ting to prevent electrical fires
Discounts for bundling policies and for first-time sign-ups
Insurance agents available in most states
Cons
Policies not available through independent agents
Online quotes not always available for manufactured or mobile homes
Fewer discounts than competitors
Pros
Farmers Smart Plan Home Policy offers three types of coverage
Claims-free discounts
Up to $25,000 to replace appliances with eco-friendly options
Cons
No home insurance in Alaska or Washington D.C.
Somewhat more expensive than competitors
Pros
Wide array of discounts for online purchases, new homes and more
Comprehensive mobile app
Customizable policies and add-on options
Cons
High number of complaints with the National Association of Insurance Commissioners (NAIC)
Pros
Add-ons to cover identity fraud, green home and water backup
Discounts for homeowners with a wide variety of protective devices
Cons
Higher prices than competitors for policy limits above $75,000
Low customer satisfaction rating in the 2021 J.D. Power study
Pros
Covers high-value properties worth more than $1M
Coverage for traumatic events such as child abduction and stalking
Excellent A++ AM Best Rating
Cons
More expensive than average
Only sells through local agents
Low customer satisfaction rating in the 2021 JD Power Study
Pros
Lower than average premiums
Generous discounts for bundling and for new and renovated homes.
Mobile app lets you make payments, monitor claim status and more
Uncommon standard coverage such as sewer backup damage
Cons
Lower than average satisfaction score in the J.D. Power study
Homeowners Insurance Guide
Homeowners insurance coverage is a type of property insurance that provides financial protection against loss due to natural disasters, theft and accidents. A home insurance policy is required if you are financing a new home, and cannot travel from one dwelling or owner to another — something to keep in mind before selling your house. When shopping for a policy, it can be useful to contact an insurance agent that can help you compare quotes and coverage options.
What does homeowners insurance cover?
There are several levels of homeowners insurance policies. Which one is right for you will depend on the level of coverage you want.
Read our list below for the different types of coverage available to you.
H01
The most basic, bare-bones policy. It only covers damage inflicted by these 10 perils:
Fire and lightning
Hail and windstorms
Explosions
Civil unrest
Aircraft damage
Vehicle damage
Smoke
Vandalism
Theft
Volcano eruption
H02
A step up in coverage from H01. It covers the ten basic perils plus six more which include:
Falling objects
Snow
Water discharge (not flooding)
Sudden cracking, bulging or burning of a built-in appliance
Accidental damage from electrical currents
Freezing
H03
The most popular policy. It covers all perils except for floods and earthquakes. If you’re unsure about needing flood coverage in your homeowners policy, take a look at our flood insurance guide.
H04
This is renter’s insurance, which of course doesn’t apply to homeowners. However, if you’re looking for this type of insurance, make sure to check out our reviews on the best renter’s insurance companies.
H05
The highest level of coverage. It covers most perils, the structure, and your belongings at replacement cost regardless of which included peril caused the damage.
H06
This covers condos. While condo structures and common areas are generally covered by homeowners’ associations, with an H06 you can cover your belongings and the inside of your home.
H07
This coverage is for mobile or manufactured homes, meaning homes built elsewhere and moved around or brought into a land plot after manufacture. It’s not to be confused with RV insurance, which is a type of automobile insurance (you can check out the best RV insurance companies here, though).
H08
The most limited form of coverage, but often the only one available for low-value, older homes. It’s not available in all states and does not offer full replacement costs, only actual cash value reimbursement (which takes into account depreciation).
Many insurance companies offer customizable coverage as part of their homeowners insurance policy. Identity theft protection, work-related damages, and damages caused by rodents and domestic animals are part of the extra coverage options that can be added to a homeowners’ insurance policy.
What is excluded from homeowners insurance?
Home insurance policies never include coverage for the perils listed in the table below. These require additional and different policies; however, there are also some exceptions for perils that would normally be covered.
High-risk flood areas
If your area is deemed high-risk by the Federal Emergency Management Agency (FEMA), you’ll be required to purchase flood insurance for your property as an add-on to your policy.
The National Flood Insurance Program (NFIP) provides flood insurance for 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 and how to purchase flood insurance, 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.
Also, home insurance policies in the Eastern coastal states have what’s called hurricane and windstorm deductibles. Whether you live in Florida or New York, if your house is hit by a storm, the deductible you pay won’t be the fixed amount you agreed upon for the other perils. It will be a percentage based on the coverage you chose.This is mostly regulated by state laws, so to read more about your specific state, you can start at the Insurance Information Institute.
Earthquakes
Earthquake damage is normally not covered by any home insurance policy, and is only added through a rider or by buying a completely different policy. In a place like California — probably the most prone to seismic activity in the United States — it’s important to add a rider or get a policy to cover in the case of a loss. Checking with the largest earthquake insurer in the state, the California Earthquake Authority, is a good start.
Power outages
Depending on your home insurance policy, some items — such as spoiled food or frozen pipes — may not be covered in the event of a short or prolonged power outage. However, it’s not as clear cut as floods or earthquakes, so make sure to check directly with your insurer beforehand to see what’s covered and what’s not.
In the meantime, protect your appliances with surge protectors and check if your refrigerator protection plan is still valid, which can cover the loss of food.
What is the 80% rule in homeowners insurance?
Under this rule, the insurer will only pay for the full amount of damages if you buy coverage worth at least 80% of the property’s value. If you buy coverage for less than 80% of your home’s value, the insurer will pay you only a percentage of the damages incurred.
Let’s say your home is valued at $500,000 and you buy coverage for $400,000 (80% of your home’s value). If you suffer $100,000 in covered damages, your insurer will likely pay for the full amount, minus your deductible.
If you bought coverage for $300,000, however, the insurer will not pay the full amount of damages. Instead, it will pay you the greater amount of the two following options:
The actual cash value of the building or part of the home that was destroyed, which includes depreciation, or
Based on the proportion of coverage you did buy compared to the coverage you should have bought.
So, in this example, it’ll divide the $300,000 coverage you did buy by the $400,000 you should have bought and pay a corresponding percentage of the damages. As a result, if you suffer a $100,000 loss, the insurer will end up reimbursing you 75% of that amount, minus the deductible you chose when you bought the policy.
Bear in mind that these calculations might vary from one insurer to the next.
It’s also worth noting, however, that even a policy that covers 100% of your home’s value isn’t a guarantee that an insurer will pay the full amount needed to repair your home. If, for example, there’s a fire and the cost to demolish the structure is higher than what the policy covers, you’ll have to cover the difference.
Make sure to read your policy carefully and consult with an agent if you have questions about how much coverage to get.
How much is homeowners insurance?
While the national average premium is around $100 a month (or $1,200 a year), it’s important to know that there isn’t a single established price for home insurance. Although these vary from company to company and policy to policy, here are some of the most common factors that can determine how much you pay for insurance.
Factors that impact your insurance premium
Coverage amount needed. How much coverage you choose to buy will obviously have the greatest impact on your monthly or yearly premium. This means the overall cap the insurer agrees to cover in the case of an included peril. You don’t need to cover the entire cost of your house, but you should aim to cover at least 80% of the value .
Location of your home. The location of your house determines the type of perils it could be exposed to and so this will greatly impact the rate an insurance company offers you. For example, a house in a storm-prone zone will be more expensive to insure than one that isn’t.
Style and age of the home. The overall build and condition of the house is taken into account in order to adjust the premium. If a house is fairly deteriorated or built with outdated materials, for example, its structure is at a higher risk, thus raising the price on coverage.
Square footage. No surprise here: the size of your home is used to calculate your premium. Larger homes will inevitably need more resources to fix or rebuild, and are also more prone to neglect in certain areas.
Home insurance discounts
When shopping for the best homeowners insurance, you should make it a point to ask about discounts on your insurance premium.
Each company has options to help you reduce your insurance costs. 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 newer house (the timeframe is determined by the insurer)
Signing up within a year of purchasing your home
Renewing your policy before it expires
Having a good credit score
Cash value vs. replacement cost
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, 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 how it was before (or as close to how it was as possible). Home replacement costs are almost always higher than the actual cash value, which is why it’s the most expensive coverage option.
Additional expenses to keep in mind
Depending on your living situation, standard insurance products might not be enough.
When you’re ready to choose a homeowners insurance policy, see what types of endorsements — also known as insurance riders or add-ons — each company offers. These will increase your premium, but it might be worth it if it means protecting valuable assets such as jewelry or collectibles. You can also get protection for more specific issues such as cybersecurity threats and even kidnapping.
Homeowners Insurance FAQ
How much is homeowners insurance?
The average cost for a single homeowners policy in the US is $1,200 per year or $100 per month. However, homeowners’ insurance rates vary substantially depending on your home’s specific situation, condition, how much coverage you want, and where you live.
What does homeowners insurance cover?
Most standard policies include four types of coverage: 1) dwelling coverage, which covers your home’s structure; 2) personal property coverage; 3) liability protection; and 4) loss of use coverage, in case you need to live outside of your home temporarily.
What is homeowners insurance?
Homeowners insurance is typically required by mortgage lenders, and will reimburse you for damages to your house, your personal belongings and, in some cases, your digital property, guests and more. It will only pay for damages caused by a list of causes or perils outlined in your policy, however. If there is damage to your home caused by a covered peril, the insurer will generally either pay you the current cash value of what was lost (which takes into account depreciation) or pay for the entire cost of replacing your property, depending on the type of policy you chose.
How much homeowners insurance do I need?
The amount of coverage will depend on the value of your home and the items you wish to cover, and whether you choose actual cash value coverage or full replacement cost. You should cover at least 80% of the value of the home, and to cover high-value items with additional endorsements or riders.
Do remember that these types of policies do not cover flood or earthquake damage. If you live in an area that’s prone to natural disasters — Florida and California, for example — you might want to look for additional coverage.
How are homeowners insurance claims paid?
In most cases, an adjuster will inspect the damage to your home and offer you a certain amount of money for repairs, based on the terms of your policy. The insurance company will then typically send an advance, before sending the final payment. In fact, you may get multiple checks as you make temporary payments, permanent repairs, and replace damaged belongings.
What is the best home insurance?
The best home insurance will vary based on individual coverage needs and budget. A good rule of thumb is to look for a home insurance policy that is affordable, covers most perils, and is offered by a financially sound company with a good track record of customer satisfaction.
Based on these and other factors, we determined that Lemonade, Erie Insurance, Allstate, Amica, USAA, Hippo and AIG are some of the best companies in the market.
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 based on coverage options, average premium payments, customer service, additional benefits and claim process speed.
Used J.D. Power’s 2021 U.S. Property Claims Satisfaction Study to measure customer satisfaction ratings with claim settlement, claim process, First Notice of Loss (FNOL), estimation and repair.
Considered each underwriter’s complaint ratio for homeowners insurance based on data from the National Association of Insurance Commissioners (NAIC).
Eliminated companies with A.M. Best financial strength ratings below A.
Summary of Money’s Best Homeowners Insurance of December 2021
Lemonade – Best Online Insurance Company
Hippo – Best for Fast Quotes
Erie Insurance Company – Best Range of Coverage Options
Allstate – Best for Claims-Free Homeowners
Amica Mutual – Best for Customer Service
USAA – Best for Military Members
AIG – Best for High-Value Homes
