For millions of Americans, a home is the biggest investment of their lives. And purchasing a homeowners insurance policy from State Farm is the best way to protect that investment, according to a new analysis from Insure.com.
The company was at or near the top in terms of overall claims satisfaction, financial stability, discounts offered and other factors.
What are the top home insurance companies?
- State Farm
- American Family
It should be noted that USAA often ranks as a top insurer, but it offers coverage only to military members, and veterans and their families, so was scored but not included in the rankings.
To compile its rankings, Insure.com’s editors analyzed J.D. Power’s U.S. Property Claims Satisfaction Study, A.M. Best credit ratings, National Association of Insurance Commissioners’ complaint data and Quadrant’s insurance-alignment, which tracks how closely an insurance company’s insurance score — a number the insurance industry uses to assess the probability an individual will file a claim — matches a consumer’s self-assessed credit score level. The editors also considered average premiums, the amount insurers discounted new homes and the amount insurers discounted homeowners insurance when bundled with car and other insurance. Each data point was assigned a weight and then the companies were ranked.
For many people, State Farm and Auto-Owners might be the best bets. State Farm scored highest in the multi-policy discounts category, while Auto-Owners ranked second in the new home discounts category.
While these companies are the top overall choices, they might not be the best bet for everyone. Other insurers can make more sense for you depending on your situation and needs.
For example, those who are buying a new home might want to consider a policy from Travelers, which earned the highest rating for new home discounts. On the other hand, if you are thinking of bundling your homeowners and auto insurance with the same provider, Nationwide is worthy of consideration. It finished second — to State Farm — in the multi-policy discounts category.
But other top insurance companies have their strengths. What follows is a look at each of the insurers on our list.
State Farm is one of the largest sellers of home and property coverage in the U.S. It also writes policies for small business, life, health, disability, and liability coverage. If you are a homeowner, it even offers personal articles coverage that helps protect valuables such as keepsakes, expensive equipment and health-related devices, such as hearing aids.
Auto-Owners Insurance — despite its name — also sells homeowners insurance coverage. A network of 48,000 licensed agents in 26 states represent the company. The company sells optional guaranteed home replacement cost coverage that reimburses you for the full cost of replacing your home in the event your coverage is too low. In addition to auto and homeowners insurance, it sells life insurance and business insurance.
AIG operates in 80 countries and jurisdictions, selling homeowners coverage and life insurance, as well as retirement solutions and other financial services. The insurer touts its custom-built homeowners policies that it says are designed for “fine homes.”
Types of Progressive coverage you can purchase include home warranty protection in the event of mishaps such as a faulty water heater or air conditioner. You also can purchase condo, renters and even flood insurance through Progressive. The company also sells vehicle, property, commercial and personal insurance.
Allstate has more than 113 million policies in place. It sells home, auto, life and other types of coverage through brands such as Allstate, Esurance, Encompass, SquareTrade and Answer Financial.
The company says it is the first major insurer to offer extra coverage to those who are home-sharing hosts. The program — known as HostAdvantage – reimburses owners for any losses incurred by renters.
For nearly a century, Nationwide has provided insurance coverage, including homeowners, auto and life insurance, as well as specialty coverage for things like accident-medical and identity theft insurance.
With its Brand-New Belongings coverage, you get a check for the depreciated value of a covered item. After you buy a replacement or have the original repaired, Nationwide sends you a check to cover the difference.
Erie Insurance offers policies in 12 states. It sells home and property, auto and leisure, business and more. The company pledges guaranteed replacement cost coverage, even if you need to rebuild your home from the ground up. It also offers service-line protection coverage in case there is damage to underground service and utility lines near your house.
American Family sells property, vehicle, personal and commercial policies. One of the company’s biggest perks is its Diminishing Deductible program, which credits you with $100 off your deductible each year, up to your policy maximum limit, if you maintain the policy.
Chubb says it is the world’s largest publicly traded property and casualty insurance company. It operates in 54 countries and territories. The company’s Masterpiece homeowners coverage offers a slew of benefits, including extended replacement cost coverage that provides extra funds when you need them — even for upgrades that are necessary due to modern building codes.
Travelers has been around for more than 165 years. It sells many types of insurance, including home, auto, and umbrella liability coverage. A wide variety of discounts are available to those who purchase a homeowners policy, including up to 12% if you bundle policies with Travelers and up to 10% when you shop early for a policy.
Farmers says it serves 10 million households with 19 million individual policies in the U.S. It offers home, vehicle, life and business coverage in addition to other forms of insurance. Its Smart Plan Home coverage is divided into three tiers — standard, enhanced and premier — depending on your needs.
Compare home insurance companies side by side
Best home insurance company for military and veterans: USAA
USAA offers more than a dozen insurance products, from home and auto to life and umbrella liability. The company has 11 million members who not only purchase insurance products from USAA, but also banking, investment and retirement services.
But not everyone can take advantage of what the company offers. To be eligible, you must be one of the following:
- Someone serving in or who has received an honorable discharge from the military
- An eligible family member to a service member or former service member
Choosing the right homeowners insurance policy
While these rankings are a great starting point for searching for coverage, you shouldn’t stop there if you want to get the best homeowners insurance.
“Shop around and talk to local agents, brokers or companies doing business in your area,” says Karen Collins, assistant vice president for personal lines for the American Property Casualty Insurance Association. “Local agents or companies will understand your local market and be able to give you a variety of choices.”
Educating yourself about your own insurance needs is an essential part of choosing homeowners insurance. But you are unlikely to get the best deal on a great policy if you fail to compare quotes from various providers.
There are several ways to round up quotes. One is to visit the websites of a handful of insurance providers – or to call them – and request quotes from each. A less time-consuming way to gather quotes is to go to a site like Insure.com and to gather quotes from several companies all at once.
To get quotes, you will need to plug in certain information, such as your:
- ZIP code
- Marital status
- Homeowner status
Other information also may be required to get the most accurate quotes.
If you are looking for more ways to save, remember that many companies offer homeowners insurance discounts that can bring down the cost of your coverage.
Best companies for multi-policy discounts
According to this year’s Insure.com analysis, the top three companies for multi-policy discounts — which offer a price break for having more than one type of insurance coverage with a company — are:
- State Farm: 5
- Nationwide: 4.73
- Farmers: 3.93
Best companies for new home discounts
The top insurers for new home discounts are:
- Travelers: 5
- Auto-Owners: 4.44
- American Family: 4.26
In compiling our rankings, Insure.com analyzed data from three major sources:
- J.D. Power’s U.S. Property Claims Satisfaction Study
- A.M. Best credit ratings
- National Association of Insurance Commissioners’ complaint data
Our editorial team also considered Quadrant’s insurance-alignment, which tracks how closely an insurance company’s insurance score — a number the insurance industry uses to assess the probability an individual will file a claim — matches a consumer’s self-assessed credit score level.
Finally, we considered average premiums, the amount insurers discounted new homes and the amount insurers discounted homeowners insurance when bundled with car and other insurance. We assigned a weight to each data point before reaching our conclusions.
Frequently asked questions about home insurance
What are some common mistakes people make with their home insurance?
Purchasing the right home insurance policy is a crucial way to protect an investment that can amount to hundreds of thousands of dollars — or more. But even if you find a great policy, your work is not done.
American Property Casualty Insurance Association’s Collins says your home insurance needs can evolve over time, so you need to update your policy occasionally. For example, a common mistake is failing to update your coverage after upgrading or remodeling your home.
“Homeowners should always update their policies after doing home improvements or updates in the home,” she says. “If you update flooring or countertops, or expand the square footage of your home, make sure your policy reflects those new features.”
She adds that the cost of rebuilding a home is climbing, thanks to inflation and supply chain issues. So, it might be a good time to talk to your insurance agent and discuss whether you should upgrade your coverage.
What types of things does home insurance not cover?
Home insurance protects you from many of the biggest threats to your home. But some types of damage are not included in your policy coverage.
For example, a homeowners policy will not cover you in the event of a flood. To get such coverage, you will need to purchase a separate flood insurance policy.
A homeowners policy also will not cover earthquake damage. Again, you will need to purchase separate coverage to be protected in the event of a temblor.
If you are unsure about what your homeowners insurance does and does not cover, talk to your agent.
What is the difference between replacement cost and actual cash value insurance?
When shopping for home insurance, it is important to know the difference between replacement cost coverage and actual cash value (ACV) coverage.
Replacement cost coverage reimburses you for the amount necessary to repair or rebuild your home at today’s costs. The depreciated value of your home is not considered.
By contrast, actual cash value coverage pays out an amount equivalent to the depreciated value of your home. So, if your roof is damaged, you would receive a check for its depreciated value, not for an amount equivalent to the cost of replacing a roof today.
Experts generally urge homeowners to get replacement cost coverage whenever possible.
How can you save on homeowners insurance?
Some people may struggle to afford the cost of homeowners insurance. Fortunately, there are things you can do to lower those costs.
“Homeowners — and renters — can lower their premium by raising their deductible and bundling coverage with their auto insurance or other coverages,” Collins says.
Talk to your insurer about other possible discounts, such as receiving a price break for installing security or alarm systems, she says.
Here’s where to start to get the best deals when shopping for home insurance.