Best Home Insurance Companies Of December 2022

Your house and all the valuables inside add up to a big investment that deserves quality protection, which is why choosing the right homeowners insurance is vital. We evaluated large insurers nationwide to help you find the best home insurance.

Cheapest Homeowners Insurance

You could save hundreds if not thousands of dollars simply by shopping around for home insurance. All it takes is knowing what coverage you want and some time to request quotes from homeowners insurance companies.

Our research found that the average home insurance rates vary by as much as $1,600 from the lowest to most expensive, among the companies we analyzed.

Here are the cheapest homeowners insurance companies.

Cheapest average cost for homeowners insurance

Home insurance company Average annual cost

Progressive $1,236

Lemonade $1,461

Auto-Owners $1,518

USAA* $1,667

Erie $1,668

Source: Quadrant Information Services, based on dwelling coverage of $300,000.*USAA is open only to members of the military, veterans and their families.

 

What Is Homeowners Insurance?

Homeowners insurance pays to repair or rebuild your home, and repair or replace personal belongings, after damage from a wide variety of “perils” which is insurance jargon for “problems.” Problems covered by home insurance include fire, tornadoes, falling objects (like a tree), lightning, windstorm and hail, vandalism and theft.

Home insurance also pays for lodging and other expenses (like restaurant meals) if you can’t live in your home due to a problem covered by your policy. It also covers other types of problems—for example, medical bills if someone is hurt on your property or repair bills if you accidentally damage someone else’s property.

 

What Does Home Insurance Cover?

Home insurance covers your house, other structures on your property like barns and fences, and your belongings. It also provides liability protection and coverage for additional living expenses if you’re forced out of your home due to damage.

A standard home insurance policy contains these valuable coverage types.

Dwelling coverage

The dwelling section of a home insurance policy covers your house structure. The dwelling coverage amount should reflect the cost to rebuild the house based on the construction and labor costs in your area. Dwelling coverage is not based on the real estate market value of your home.

There’s related coverage for other structures such as a fence or unattached garage.

Personal property coverage

Personal property coverage pays to repair or replace your personal belongings if they are damaged or destroyed. This encompasses furniture, clothes, kitchenware, house decor such as curtains and everything you have packed away in boxes in your basement or attic.

The coverage amount for personal property is usually set between 50% to 70% of the dwelling coverage amount. For example, if your dwelling is insured for $250,000 and your contents coverage is set at 50%, you’ll have $125,000 in contents coverage. You can buy more personal property coverage if you need it.

Liability insurance

While it’s easy to focus on the material items like your house and belongings, homeowners insurance includes crucial coverage for liability.

This liability insurance pays for injuries and property damage accidentally caused by you to others. For example, if a guest trips on your sidewalk and gets hurt, liability insurance can pay their medical bills. Liability insurance also pays for a lawsuit judgment if you’re sued, and your legal defense costs.

If your liability insurance is inadequate, you could be on the hook for any amount over the policy limits. For the best homeowners insurance, a general rule of thumb is to buy enough liability insurance to cover your net worth, or what can be taken from you in a lawsuit.

Umbrella insurance is an inexpensive way to add more liability insurance.

Additional living expenses coverage

Also known as “loss of use,” additional living expenses coverage can pay for extra expenses like hotel bills, restaurant meals and pet boarding if you can’t live at home while it’s being repaired due to damage covered by the policy.

The amount you have for additional living expenses coverage is typically set at a percentage of your dwelling coverage amount, but you can buy more if you don’t think it’s enough.

Related: What Does Homeowners Insurance Cover?

 

Is Homeowners Insurance Required?

Homeowners insurance isn’t typically required unless you have a mortgage. Mortgage lenders see your home as their investment, too, so they expect you to take care of the property and that includes having home insurance.

Mortgage lenders may require a mortgage escrow account for both home insurance costs and property taxes, so you stay current on your insurance and tax payments.

Once you pay off your mortgage, you generally aren’t required to have home insurance, but it’s still a good idea to maintain coverage.

 

Is it a Good Idea to Bundle Home and Auto Insurance?

Bundling home and auto insurance is generally a good idea because of the discount. Bundling refers to purchasing both your home and car insurance policies through the same company. Insurance companies typically offer bundling discounts of between 5% and 25%, depending on the company.

The advantages of bundling are the discount and dealing with only one insurance company for both your home and auto insurance. This can make it easier to manage your insurance policies.

There are times when bundling home and auto insurance may not be the best option. A homeowners insurance company may offer one of the best bundling discounts, but could still pay more for coverage overall if the insurer has one of the highest rates.

That’s why it’s important to request quotes for the same levels of coverage—with all applicable discounts factored in—when you’re shopping for homeowners insurance.

 

Best Home and Auto Insurance Bundles

Our analysis found that bundling home and auto policies saves policyholders an average of 14%, with State Farm providing the most generous average bundling discount of 23%. Here are the insurance companies with the best average bundling discount savings.

Best home and auto bundle discounts

Home insurance company Average annual cost

State Farm 23%

Auto Club of California 20%

American Family 18%

Farmers 18%

Allstate 15%

Erie 15%

Nationwide 15%

Source: Quadrant Information Services

 

Many Homeowners Don’t Know They Already Have Coverage

Many homeowners misunderstand their home insurance coverage. This includes a large portion who don’t know that they already have coverage for common problems, according to a survey by Forbes Advisor. For example:

• 40% of homeowners didn’t know that water damage from a burst pipe is covered by a standard home insurance policy.

• 61% didn’t know that damage from a wildfire is covered.

When homeowners don’t know what’s covered, they may not make insurance claims for damage they’re entitled to get compensation for.

Other Home Insurance Considerations

• “Schedule” high-value items. Certain types of items, such as jewelry, have “sub-limits,” meaning your insurance company will only pay up to a certain amount for those items. For example, a standard home insurance policy usually has a $1,500 sub-limit for theft of jewelry. To properly insure valuable items, consider “scheduling” them. When you schedule personal property you insure items separately for their full value, and the coverage in your home insurance policy can then be used for everything else, such as clothes, rugs and kitchenware.

• Consider getting replacement cost instead of actual cash value (ACV) coverage. Replacement cost pays to replace an item with a brand-new version, whereas ACV reimburses you for an item’s depreciated amount. Have a five-year-old TV that was destroyed in a fire? Then you would be reimbursed for a five-year-old TV under ACV coverage. Choose replacement cost coverage if you’re looking for the best homeowners insurance.

• Buy endorsements that fill specific gaps. Endorsements are add-ons. They are a good way to tailor your home insurance policy and fill in any coverage gaps. For example, some insurance companies sell increased coverage for landscaping, home systems breakdown, and water backup and sump overflow.

• Buy additional insurance for certain natural disasters. Even the best homeowners insurance plans can unravel if certain natural disasters hit, such as floods, earthquakes and landslides. These problems aren’t covered by standard home insurance. They require special policies such as flood insurance and earthquake insurance.

 

What Does Home Insurance Not Cover?

A standard home insurance policy excludes several types of problems, such as:

• Ordinance of law, such as a government requirement to demolish, repair or rebuild your home to meet local ordinances

• Earth movement, including earthquakes, landslides and sinkholes

• Water damage, including floods and water backup from sewers and drains

• Power failure

• Neglect, such as a failure to maintain heat

• War

• Nuclear hazard

• Intentional loss

• Government action, such as a seizure of property

• Wear and tear

• Smog, dry rot, rust or other corrosion

• Discharge, migration, seepage, escape or release of pollutants

• Smoke from agricultural or industrial operations

• Mechanical breakdown or a latent defect that causes property damage

• Shrinking, settling, expansion or bulging of bulkheads, pavement, footings, foundations, patios, walls, floors, roofs and ceilings

• Vermin, rodents, birds or insects

• Damage caused by an animal you own