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Best and worst home insurance companies

The latest ranking of home insurance companies shows that just focusing on what you pay in premiums isn’t necessarily the smartest idea.

Homeowners insurance isn’t just about premium

Consumer Reports is out with a new update that names the best and worst home insurers in the business.

Before we get into this, keep in mind that the best does not necessarily mean the one with the most affordable premium!

Instead of focusing on price alone, the magazine asked more than 7,000 of its readers to rank their insurers on six metrics:

  • Ease of reaching an agent to handle the claim.
  • Agent courtesy.
  • Promptness of response and attentiveness in handling the claim.
  • Simplicity of the claims process (number of steps, amount of work etc.).
  • Damage amount: Satisfaction with company’s estimate of dollar amount of damages.
  • Timely payment: Satisfaction with timely payment by insurer.

So without further ado…

Top 10 best home insurers

5 worst home insurers

Now that you’ve seen who the readers of Consumer Reports say are the best, here’s who they report the least satisfaction with:

1. Auto Club Group

Looking at the best insurers, money expert Clark Howard is a big fan of both Amica Mutual and USAA in particular.

“Amica and USAA may not have the best premiums,” Clark says. “But remember my rule, homeowners insurance is only for use in a catastrophic situation — so it’s crucial to have the best coverage in case something does happen.”

Why you want a high deductible policy

To lower the cost of going with a top-rated insurer like Amica or USAA, try taking the highest deductible that you can handle and that your mortgage holder will allow you to have. Doing so will both lower your premium and discourage you from unnecessarily making small claims.

In fact, we can’t stress this strongly enough: You should think of homeowners insurance as ‘use it and lose it’ kind of proposition. It’s not for use except in the case of a catastrophe.

So you want to insure for a massive loss, not a little one. Having a high deductible on your policy will give you the double benefit of likely being claims-free and having lower premiums because you never make claims.

Do not go with the $500 deductible of yesteryear. It’s not worth it!

Make sure your home is properly valued for rebuild

The biggest mistake is not having enough coverage in the event you do face a total loss. You want to be sure that if your home has to be rebuilt, you’ll have enough coverage for it.

Talk with your agent or insurance company to see if you’re adequately insured. Insurers used to rebuild even if you didn’t have enough stated coverage, but that’s no longer the case. It’s up to you to stay on top of this.

If your home isn’t properly valued for insurance purchases, the shortfall between what it costs to rebuild and what your insurer is willing to pay must come out of your pocket.

Consider an umbrella policy if you’re a high net-worth individual

Just as with Clark’s advice on auto insurance, if you have a lot of assets to protect, you need to have a lot of liability coverage for your home.

That could include getting an umbrella policy that sits on top of your existing home and auto policies and covers you for a catastrophic claim.

Umbrella insurance policies are sold in multiples of a million dollars. These policies pose such a low risk to insurers that they only cost a couple hundred for the first million dollars of umbrella coverage. Then the more multiples of coverage you add on, the lower the price drops.

Clark says to think of an umbrella policy like a success tax, one that’s necessary to protect your assets.

Be careful of homeowners policy exclusions

Yahoo! Finance recently had a list of weird exclusions some insurers are now doing. Some make sense ‘ like dog attacks. But other things are unexpected, like trampolines not being covered.

Other exclusions include expensive jewelry (you will need an additional rider if you have a large amount of jewelry).

On the question of mold, that’s no longer covered by many homeowner insurance policies. Mold became a big issue, particularly in Florida, and it’s been cut out of the picture step by step, insurer by insurer.

Sewer backup is often not included in homeowner insurance policies. Clark always recommends that you buy the inexpensive rider from your insurer and add it to your policy. If it does happen to you, you want to know you are in fact covered.

Fire is still covered. That seems to be a constant year over year, which is why people sometimes refer to homeowners policies as “fire policies.”

Flood insurance: Not covered under your home insurance policy!

Flood insurance is one of those things that people routinely think they’re covered for under their homeowners policy.

But the reality is that damage from flooding is not covered under standard homeowners, renters or business insurance policies.

What will protect you in the event of flooding is an auto insurance policy with comprehensive coverage, according to the Insurance Information Institute. But because comprehensive coverage is not mandatory, not everyone has it.

So here’s a word to the wise: If you do have a comp policy, double-check with your auto insurer to make sure damage from flooding is covered.

Otherwise, you can buy flood insurance through FloodSmart.gov. The average federal flood insurance premium in 2018 is $1,062, according to the latest figures. The policy covers damage for up to $250,000.

Your policy will cover this — but you should never use it!

Home insurers are great about offering add-ons to your policy that seem like great conveniences at a great price. But should you take advantage of them? Probably not.

Your home insurance policy may have coverage for electronics, including your cell phone, in case they get fried by a sudden electrical surge or you somehow break them. Yet using this insurance can be too high voltage for your wallet.

Insurers are likely to report the use of cell phone insurance on your C.L.U.E. report as a claim, a little-known industry database that compiles all your interactions with insurers.

Having bad marks on your C.L.U.E. report will hamper you when you go to shop with other insurers. And, your own insurer may use that “claim” as a justification for hiking your premium or dropping your home insurance coverage altogether!

Maybe you’re tempted to get cell phone insurance through your wireless carrier instead. That option is preferable to getting it through your home insurer — though there is a more affordable way to get better coverage.

If you really want to save money, check out these cheaper alternatives to cell insurance through your carrier.

Best Homeowners Insurance Companies

Insurance Contributing Editor

Updated on 02/27/2018

Owning a home is a rewarding endeavor, but it’s also a huge investment. Many insurance companies offer home insurance policies to help homeowners protect the large purchases they’ve made.

Homeowners insurance policies often contain two coverages – property protection and liability coverage. Homeowners insurance policies have been around since the middle of the 20th century, and they continue to be an integral part of the home-owning experience.

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Compare Reviews for Top Homeowners Insurance Companies

National General Homeowners Insurance offers guaranteed and extended home replacement in the 48 contiguous United States. You can opt for a Green Upgrade, which allows up to $50,000 of coverage rebuilt with sustainable materials. Find out more

TrustedChoice.com connects you with an independent insurance agent who can comparison shop insurance policies for you, saving you time and money. Connect to hundreds of agents that will simplify your insurance, and your life. Find out more

State Farm is a large insurance company headquartered in Bloomington, IL. The company offers a wide range of insurance services, including homeowners insurance, to customers across the United States and Canada.

Allstate is one of America’s largest insurance corporations, and they offer homeowners insurance in addition to auto, rental, motorcycle, life, business, and condo insurance. The company is headquartered in Northbrook, IL.

USAA is a trusted insurance company that offers benefits to customers who are members of the military as well as their extended families. The company was founded in 1922, and it is based out of San Antonio, TX.

Farmers Insurance was originally founded in 1928 in Los Angeles. The company offers a wide range of insurance options, including home, auto, business, motorcycle, umbrella, and renters insurance for interested buyers.

Liberty Mutual is a large insurance company based out of Boston, MA. This trusted company has been providing customers with a selection of insurance policies such as home, auto, and life insurance since it was founded in 1912.

Well-known as an auto-insurer and emergency roadside assistance provider, AAA also provides customers with home insurance policies. The company offers condo and renters insurance, as well.

Homesite Insurance is a company based out of Boston, MA that offers homeowners insurance policies to its customers. The company offers a wide range of insurance options, from flood insurance to renters insurance.

Travelers Homeowners Insurance offers customers homeowners insurance protection to take care of their homes as well as all of the belongings inside of it. The company was founded in 1853 in Saint Paul, Minnesota.

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What to look for in homeowners insurance

Policies & coverage

Homeowners insurance policies can be lengthy and complicated, but it’s important to understand what’s covered.

  • Structure: If you ever experience the total loss of your home due to a disaster listed in your policy, you’ll want to be sure your insurance provider would pay enough to rebuild the exact same house in the exact same location.
  • Personal belongings: Furniture, clothes, electronics, collectibles and other personal items are covered if they are stolen or destroyed by an insured disaster. Most companies will provide personal belongings coverage for 50%-70% of the amount of insurance you have on the structure of your home. Each policy varies in dollar limits or off-premise coverage – so review yours closely.
  • Liability: Liability covers homeowners (and even their pets) against lawsuits for bodily injury or property damage caused to other people or other people’s property outside your home. Liability limits generally start at about $100,000, but many homeowners opt for additional coverage or increase their liability policy to cover a much broader range of incidents.
  • Temporary living expenses: Most homeowners insurance policies will pay for expenses that come up with your home is uninhabitable due to damage from a natural disaster or other event. There’s a limit, though, to how much you can spend.
  • Spoiled food: You can claim the loss of your food in addition to other damages incurred by a covered disaster, such as a major storm or tornado. If your only loss was food, though, your total loss is probably less than your deductible, meaning it won’t make sense to file a claim.
  • Stampeding wild animals: Yes, you read that right. And the next time a herd of wild buffalo comes stampeding through your fence and into your living room, you’ll be glad that your insurance has coverage. Note that insurance companies make a distinction between wild and domestic animals, so you’re out of luck if your neighbor unleashes her litter of adorable but aggressive kittens in your living room. You might also be out of luck if you live near livestock, which tend to be considered domestic, not wild. If you have concerns, double check with your insurance company ahead of time.
  • Cemetery vandalism: Grave markers generally fall under the category of “valuables” in your homeowners insurance policy, so you’re covered in the event that your loved one’s graveyard marking is vandalized.

Policies & coverage: what is not covered

There are many things that aren’t covered by minimum homeowners insurance policies, but they can often be added for an additional cost.

  • Emergency living expenses: Some homeowners may require additional coverage for living expenses if they are unable to live in their home due to a covered disaster.
  • Flood insurance: Homeowners policies don’t cover flood damage, but depending on where your home is located, you may want to consider flood insurance through the National Flood Insurance Program through a private insurer. If your home is in a flood plain, your mortgage lender will likely require this additional coverage.
  • Trampolines: Homeowners policies stay away from trampolines since they are such a high risk. Your premium will likely raise if you have a trampoline, and certain policies won’t cover injuries that result from them at all. Make sure you speak with your insurance agent before you let your kids (or yourself) loose on your backyard trampoline.
  • Pool deaths: Pools are another hazard for homeowners, and most home insurance liability policies aren’t enough to cover deaths or accidents caused by or in a pool. If you are getting a pool, you should consider raising your liability to $300,000 to $500,000 to make sure you are covered in the event of a tragedy.
  • Cash: Stashing cash under your mattress or in your coffee can isn’t just a bad idea from an investment standpoint. It can also leave you high and dry in the event of a burglary or other disaster. Generally, $200 is all that home insurance policies will cover, so you’re out of luck if you have $5,000 in cash sitting around the house that gets stolen or lost in a fire. Get your cash into a bank account now so you don’t wind up paying for it later.

Industry ratings

Homeowners insurance companies are rated by major insurance industry services including A.M. Best, Standard & Poor’s and Moody’s. Highly rated insurance companies will have a minimum rating of A- and tend to have customers who are happy with their service and coverage. The lower an insurance company’s rating, the less financially secure it is, the greater risk there is that it could be unable to pay on customers’ claims, and the less likely it will be well-liked by customers.

  • Customer service & satisfaction ratings: Insurance companies are rated by such firms as J.D. Powers & Associates in the area of customer satisfaction, which is a reflection of how well customers’ needs are met.
  • Price & policy value ratings: A valuable homeowner’s policy will provide the coverage you need at an affordable premium.
  • Financial strength ratings: These ratings measure a company’s ability to pay claims to policyholders – which indicates whether or not the company will be around when disaster strikes.
  • Claims service ratings: Insurance providers are also rated on how effectively they handle claims filing, processing, adjustments and payments.

Homeowners insurance costs can vary widely depending on the company you purchase insurance from and what types of and how much coverage you buy. Homeowners can benefit from comparing premiums and coverage costs from multiple companies before choosing a provider.

  • Deductibles: A deductible is the portion of a covered loss you must pay before your insurance company will pay. When an insurance policy has a high deductible, the insurer will generally charge less for annual premiums.
  • Premiums: Yearly homeowners insurance premiums vary widely and depend on multiple factors including, of course, how much coverage you need depending on the value of your home and the personal possessions inside of it.
  • Discounts: Many insurance companies offer specific discounts on deductibles and premiums for things such as bundling insurance, being a loyal customer, installing safety and security devices in your home, or not filing a claim for a certain period of time.

Claims services

Homeowners insurance policies are usually only needed in urgent situations, so speed is always a factor when dealing with the insurance company. Homeowners insurance companies vary greatly in terms of how quickly they can get insurance claims processed and paid.

  • Claims processing: A bureaucratic company can take a while to process insurance claims, which can be inconvenient when a homeowner needs money for a repair or help in an emergency situation. Other companies may be known for fighting policyholders over claims amounts.
  • Claims adjuster: During the claims process, the insurer’s adjuster will assess the damage caused by incident and provide a preliminary estimate of the total cost for clean up, repairs and restoration. Most homeowners insurance adjusters work directly for private insurance companies, while you can also hire an adjuster who works independently to conduct “non-sanctioned” appraisals. These public adjusters are often used by homeowners who are dissatisfied with the insurance company’s claims adjuster.

Customer service

Customer service is essential for policyholders who have questions about their coverage or require assistance during a time of emergency. Some homeowners insurance companies communicate directly with customers and do not deal with independent agents. Other companies use middlemen, who can be independent insurance agents or “captive” insurance agents (who only work for one insurance company).

  • Central customer service: Some insurance companies offer one central contact location for customer service, where all problems are heard and handled.
  • Localized customer service: Some homeowners insurance providers use individual local agents to communicate with and handle the needs of policyowners.
  • Digital customer service: Some companies use various online methods to communicate with customers, making the access to service convenient no matter where the customer is located.

Best and worst home insurance companies

The latest ranking of home insurance companies shows that just focusing on what you pay in premiums isn’t necessarily the smartest idea.

Homeowners insurance isn’t just about premium

Consumer Reports is out with a new update that names the best and worst home insurers in the business.

Before we get into this, keep in mind that the best does not necessarily mean the one with the most affordable premium!

Instead of focusing on price alone, the magazine asked more than 7,000 of its readers to rank their insurers on six metrics:

  • Ease of reaching an agent to handle the claim.
  • Agent courtesy.
  • Promptness of response and attentiveness in handling the claim.
  • Simplicity of the claims process (number of steps, amount of work etc.).
  • Damage amount: Satisfaction with company’s estimate of dollar amount of damages.
  • Timely payment: Satisfaction with timely payment by insurer.

So without further ado…

Top 10 best home insurers

5 worst home insurers

Now that you’ve seen who the readers of Consumer Reports say are the best, here’s who they report the least satisfaction with:

1. Auto Club Group

Looking at the best insurers, money expert Clark Howard is a big fan of both Amica Mutual and USAA in particular.

“Amica and USAA may not have the best premiums,” Clark says. “But remember my rule, homeowners insurance is only for use in a catastrophic situation — so it’s crucial to have the best coverage in case something does happen.”

Why you want a high deductible policy

To lower the cost of going with a top-rated insurer like Amica or USAA, try taking the highest deductible that you can handle and that your mortgage holder will allow you to have. Doing so will both lower your premium and discourage you from unnecessarily making small claims.

In fact, we can’t stress this strongly enough: You should think of homeowners insurance as ‘use it and lose it’ kind of proposition. It’s not for use except in the case of a catastrophe.

So you want to insure for a massive loss, not a little one. Having a high deductible on your policy will give you the double benefit of likely being claims-free and having lower premiums because you never make claims.

Do not go with the $500 deductible of yesteryear. It’s not worth it!

Make sure your home is properly valued for rebuild

The biggest mistake is not having enough coverage in the event you do face a total loss. You want to be sure that if your home has to be rebuilt, you’ll have enough coverage for it.

Talk with your agent or insurance company to see if you’re adequately insured. Insurers used to rebuild even if you didn’t have enough stated coverage, but that’s no longer the case. It’s up to you to stay on top of this.

If your home isn’t properly valued for insurance purchases, the shortfall between what it costs to rebuild and what your insurer is willing to pay must come out of your pocket.

Consider an umbrella policy if you’re a high net-worth individual

Just as with Clark’s advice on auto insurance, if you have a lot of assets to protect, you need to have a lot of liability coverage for your home.

That could include getting an umbrella policy that sits on top of your existing home and auto policies and covers you for a catastrophic claim.

Umbrella insurance policies are sold in multiples of a million dollars. These policies pose such a low risk to insurers that they only cost a couple hundred for the first million dollars of umbrella coverage. Then the more multiples of coverage you add on, the lower the price drops.

Clark says to think of an umbrella policy like a success tax, one that’s necessary to protect your assets.

Be careful of homeowners policy exclusions

Yahoo! Finance recently had a list of weird exclusions some insurers are now doing. Some make sense ‘ like dog attacks. But other things are unexpected, like trampolines not being covered.

Other exclusions include expensive jewelry (you will need an additional rider if you have a large amount of jewelry).

On the question of mold, that’s no longer covered by many homeowner insurance policies. Mold became a big issue, particularly in Florida, and it’s been cut out of the picture step by step, insurer by insurer.

Sewer backup is often not included in homeowner insurance policies. Clark always recommends that you buy the inexpensive rider from your insurer and add it to your policy. If it does happen to you, you want to know you are in fact covered.

Fire is still covered. That seems to be a constant year over year, which is why people sometimes refer to homeowners policies as “fire policies.”

Flood insurance: Not covered under your home insurance policy!

Flood insurance is one of those things that people routinely think they’re covered for under their homeowners policy.

But the reality is that damage from flooding is not covered under standard homeowners, renters or business insurance policies.

What will protect you in the event of flooding is an auto insurance policy with comprehensive coverage, according to the Insurance Information Institute. But because comprehensive coverage is not mandatory, not everyone has it.

So here’s a word to the wise: If you do have a comp policy, double-check with your auto insurer to make sure damage from flooding is covered.

Otherwise, you can buy flood insurance through FloodSmart.gov. The average federal flood insurance premium in 2018 is $1,062, according to the latest figures. The policy covers damage for up to $250,000.

Your policy will cover this — but you should never use it!

Home insurers are great about offering add-ons to your policy that seem like great conveniences at a great price. But should you take advantage of them? Probably not.

Your home insurance policy may have coverage for electronics, including your cell phone, in case they get fried by a sudden electrical surge or you somehow break them. Yet using this insurance can be too high voltage for your wallet.

Insurers are likely to report the use of cell phone insurance on your C.L.U.E. report as a claim, a little-known industry database that compiles all your interactions with insurers.

Having bad marks on your C.L.U.E. report will hamper you when you go to shop with other insurers. And, your own insurer may use that “claim” as a justification for hiking your premium or dropping your home insurance coverage altogether!

Maybe you’re tempted to get cell phone insurance through your wireless carrier instead. That option is preferable to getting it through your home insurer — though there is a more affordable way to get better coverage.

If you really want to save money, check out these cheaper alternatives to cell insurance through your carrier.

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