Looking for the best homeowners insurance? The top home insurance companies aren’t always those with the cheapest premiums.
Best Home Insurance: It’s Not Just About the Premium You Pay
When it comes to sorting out the best from the worst homeowners insurance companies, price isn’t the most important factor.
You’ve also got to consider a company’s reputation with both customer complaints and customer satisfaction after you make a claim on your property. After all, customer service and satisfaction can make a huge impact on an insurance provider’s reputation.
If you’re looking for the best homeowners insurance, here’s who to check out and who to avoid.
Best and Worst Home Insurers: Table of Contents
- Clark’s Top Picks for Home Insurance
- Consumer Reports: Top 10 Best Homeowners Insurance
- Consumer Reports: 4 Lowest-Rated Home Insurance Companies
- J.D. Power: Top 10 Best Homeowners Insurance
- J.D. Power: 5 Lowest-Rated Home Insurance Companies
- Clark’s Advice for Getting the Best Homeowners Insurance Policy
Clark’s Top Picks for Home Insurance
As a homeowner, you only want the best home insurance coverage. Just as with his top picks for car insurance, money expert Clark Howard recommends two companies in particular for home insurance — Amica Mutual and USAA.
But surprisingly, the reason he loves them doesn’t have to do with their cost.
“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 to your home.”
USAA scored the highest out of more than two dozen insurers on the J.D. Power 2021 U.S. Home Insurance Study and clinched the number two spot on a similar list from Consumer Reports. Not to mention, they’ve also scored high for car insurance coverage.
(Editor’s note: Because not everyone can be a USAA customer, the insurer does not officially rank on the J.D. Power tally.)
With USAA, most of the insurance coverage and other financial services it offers are only available to those in the military, those who are veterans or those who are affiliated with the military through direct family ties.
So while it is a great insurance provider, that may eliminate USAA from consideration for a lot of people.
2. Amica Mutual
Amica Mutual has no restrictions on who can become a customer. But because Amica Mutual is a mutual company, the insurance rate tends to be very expensive the first year you join.
That’s because there are no shareholders like there are with other public companies. When you sign up for Amica Mutual homeowners insurance, you become a part owner of the company.
So your first year of membership is higher because you’re “buying into” the mutual company.
But the wealth the company generates flows back to owners in the form of an annual dividend, which is typically between 5% and 20% of the premium you paid that goes back in your pocket!
Consumer Reports: Top 10 Best Homeowners Insurance Companies
Consumer Reports is a trusted publication that Clark watches closely for its rankings of the top home insurance companies.
Instead of focusing on price alone, the magazine asked nearly 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
Here are the winners and losers, according to the magazine:
(#1 is best)
- Amica Insurance
- Auto-Owners Insurance Group of Companies
- Erie Insurance Group
- State Farm
- Auto Club Group
- Nationwide Mutual Insurance Company
- Farmers Insurance
Consumer Reports: 4 Lowest-Rated Home Insurance Companies
Nobody wants to get stuck with a company that does a poor job with customer satisfaction and with handling customer complaints!
Now that you’ve seen who the readers of Consumer Reports say are the best, here’s who they report are the worst homeowners insurance companies:
(#1 is worst)
2. Liberty Mutual
1. American Family
J.D. Power: Top 10 Best Homeowners Insurance Companies
Before deciding on a home insurance policy, it helps to look at the best and worst insurance companies. Another study Team Clark watches closely to determine the best and worst homeowners insurance companies is J.D. Power’s annual home insurance tally.
Recently, J.D. Power surveyed nearly 12,000 customers across the country to determine the rankings for its 2021 U.S. Home Insurance Study.
Amica made the top spot, followed closely by the Automobile Club of Southern California (AAA).
USAA actually scores higher than both Amica and the Automobile Club of Southern California. However, because USAA only serves a limited audience with military ties, it was not officially eligible to rank in the J.D. Power study. Therefore, the top honors went to another insurer.
J.D. Power scores home insurance companies on a 1,000-point scale. The segment average was 825. Take a look at the results:
|2. Amica Mutual||854|
|3. Automobile Club of Southern California (AAA)||840|
|4. Erie Insurance||835|
|5. State Farm||835|
|6. Automobile Club Group (AAA)||834|
|7. American Family||831|
|8. Auto-Owners Insurance||831|
|10. COUNTRY Financial||830|
* Not rank eligible
J.D. Power: 5 Lowest-Rated Home Insurance Companies
OK, so you’ve seen the insurers that J.D. Power says offer the best homeowners insurance policies. Now here’s who they report are the worst homeowners insurance companies:
(#1 is worst)
5. Liberty Mutual
2. The Hartford
Clark’s Advice for Getting the Best Homeowners Insurance Policy
The cost of home insurance coverage varies widely by state and region. But if you feel like you’re not getting the coverage you want for the money, here are a few pointers to keep in mind when shopping for a new homeowners insurance policy…
High Deductible Policies Offer Dual Benefits
Take the highest deductible that you can handle and that your mortgage holder will allow you to have. Doing that will both lower your premium and discourage you from unnecessarily making small claims.
That last part is very important, according to Clark.
“You should think of homeowners insurance as a ‘use it and lose it’ kind of proposition,” the consumer champ says. “It’s not for use except in the case of a catastrophe.”
If you use your policy frivolously, other insurers may not want to do business with you when you need to shop around and switch insurers in the future.
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. If your home isn’t properly valued in the event of a catastrophic loss, the shortfall between what it costs to rebuild and what your insurer is willing to pay will have to 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.
Be Careful of Homeowners Policy Exclusions
There are about a dozen different oddball exclusions that some home insurers are now doing. These things are not covered by most home insurance policies:
- Sewer backup
- Construction work damage
- Jewelry/fine art
- Termite infestation
- Stolen/destroyed cash
- Trampoline accidents
- Dog attacks
- Pool accidents
As a general rule, you can always get an additional rider on your policy to cover many of the scenarios above.
Unless, of course, you’re talking about flooding. In that case, it’s not a rider you need; the federal government makes flood insurance coverage available through the National Flood Insurance Program.
This is important when looking for a home insurance quote to ensure you’re getting the coverage you need, or additional coverage.
There’s a fine line between the best and worst homeowners insurance companies — and it isn’t always cost.
Making a decision about the best home insurance company includes weighing considerations about customer satisfaction and the number of complaints the reviews suggest they have.
Especially important is a company’s reputation for making its customers whole again after a catastrophic loss — which is the whole point of insurance.
So while the homeowners insurance rate matters, it might be more beneficial to pay attention to how customers are treated when shopping for the best homeowners insurance company for you.
“If you’re with a poorly ranked insurer, there’s no question: Shop the market to find a lower price and fire them! That’s a win-win. You can get higher quality at a lower price,” Clark says. “On the other hand, if you’re with the two elites of the insurance industry — Amica and USAA — I say you should stay with them even if it’s more costly.”