Purchasing a home is a significant investment that can evoke concerns about safeguarding your valuable asset. Home insurance plays a crucial role in shielding your finances in the face of unforeseen disasters, providing a sense of security. Discover the essentials of homeowners insurance and top home insurance providers for 2023 to ensure your peace of mind and financial protection.
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What does homeowners insurance cover?
Home insurance protects you against accidents out of your control, whether caused by mother nature or other people.
Most homeowners insurance policies protect your home against common weather events and “perils” like fire and smoke, snow and freezing, lightning strikes and windstorms, tornadoes and hurricanes, and falling objects like trees or power lines. The average policy also provides coverage for theft and vandalism and damage to your home by other vehicles.
The most popular type of policy is an HO-3 policy. This protects the following:
- Your home and structures on your property
- Your personal property
- Your living expenses and medical fees
- Your liability expenses if you’re sued
If your home itself is damaged by a covered peril, your home insurance will reimburse you for some or all of the expenses you incur making repairs or replacements.
Your personal belongings may be protected, but it depends on what they are and how they’re damaged. If, for example, you have a house fire and your clothes are burned, this would generally be covered. However, more expensive personal items might not be included.
Scheduled personal property coverage is a type of extended coverage that protects valuable possessions like jewelry, arts, antiques, and collectibles. In order to file a scheduled personal property claim, you need to know the value of the items that are damaged or stolen, which often requires an appraisal.
Your living expenses and medical fees could be reimbursed by your home insurance provider if you were to be displaced or injured by a covered disaster. Liability coverage can help you pay for legal expenses from events that take place on your property.
How coverage limits work
Home insurance coverage limits are the maximum amount of money your insurer will pay out in the event of a covered claim. Your policy will list specific limits for different types of damage, such as natural disaster damage or theft. It’s important to understand these maximums so you know what to expect when filing a claim.
Most home insurance policies have separate limits for different forms of coverage. For example, you may have a policy with a $200,000 dwelling coverage limit and a $100,000 personal belongings limit. That means your insurer would reimburse up to $200,000 to repair or replace your home in the event of a covered claim and up to $100,000 to replace your personal belongings.
Unless you have guaranteed replacement cost coverage, you would be responsible for paying the difference for any excess costs.
Remember that home insurance coverage limits are per policy, not per incident. So, if you have a $250,000 policy and you make two separate claims for $200,000 each, your insurer will only pay out a total of $250,000. You would pay the remaining $150,000 yourself.
What does homeowners insurance usually cost?
The average price of homeowners insurance depends a lot on where you are and how houses are valued in your area.
The national average rate for home insurance in 2023 is $158 per month, according to Policygenius. This comes out to just shy of $1,900 per year. With that said, home insurance premiums vary greatly from state to state. Take a look at the examples below.
The top three most expensive states for home insurance are:
- Oklahoma: $4,230 annually
- Nebraska: $3,741 annually
- Kansas: $3,094 annually
The top three cheapest states for home insurance are:
- Hawaii: $486 annually
- Vermont: $900 annually
- New Jersey: $904
But insurance premiums vary a lot by home too.
Insurance rates are determined by a variety of factors that can affect how much it would cost to cover damage to your home. This means everything from when your house was built and how large it is, where it’s located in relation to hazards and first responders, and local crime rates can influence the price of your policy.
Almost every home insurance company will give you a free quote if you answer a few questions about your insurance needs. This doesn’t cost you anything and has no impact on your credit score. You can also talk with an insurance agent if you have questions about what kind of policy is right for you.
Best homeowners insurance companies for 2023
When shopping for homeowners insurance, it’s essential to consider factors such as coverage options, customer satisfaction, and financial stability of the company. State Farm, one of the largest insurers in the country, offers a variety of coverage options to fit different needs and budgets. They also have a high customer satisfaction rating, making them a top choice for homeowners.
Best overall: Lemonade
Pros
- Affordable policies
- Simple claims process
- Can update policy or cancel at any time
Cons
- Not offered in all 50 states
- Few extended coverage options
Lemonade isn’t your typical homeowners insurance company. As a certified Public Benefit Corporation and B-Corp, Lemonade prioritizes social impact and donates to nonprofits like the ACLU, American Red Cross, and The Trevor Project with the help of its policyholders.
To do this, Lemonade takes a flat fee from your insurance premiums to pay your claims. Then, they donate unclaimed money once a year to a non-profit you choose yourself when signing up for a policy. This program is called Giveback and it allows Lemonade to lower the odds of fraud and donate up to 40% of unclaimed premiums to charitable causes.
Lemonade is also one of the most affordable homeowners insurance companies out there. Homeowners insurance policies start at just $25 a month or $300 a year for basic coverage. You can update your policy to edit or add coverage at any time and easily file claims from the mobile app.
Lemonade offers standard personal property coverage for weather events and theft, liability coverage if you’re ever sued, and accidental injury coverage if someone gets hurt on your property. The process is 100% online so you don’t need to speak with an insurance agent unless you want to.
Most mortgage lenders accept Lemonade, so you can pay for your insurance out of escrow or with a credit card. And if you already have insurance with a different company, Lemonade will help you get out of your old insurance and make the switch.
Lemonade also offers renters, auto, pet, and term life insurance. You can get a multi-policy discount if you take out more than one type of insurance with this provider.
Best for customizable coverage: Allstate
Pros
- Many extended coverage options
- Variety of discounts available
- Offered in all 50 states
Cons
- Higher base prices than other companies
- More complicated signup
Allstate is the second-largest homeowner’s insurance provider by market share and premiums with more than 10.5 million active customers, according to the Insurance Information Institute. It’s also our pick for the best homeowners insurance company if you want to build the perfect policy for yourself.
In addition to basic property coverage for your home and personal belongings and limited liability coverage, Allstate gives you more options than most for extra coverage. Add-ons include:
- Water backup – for water damage caused by your drain or pump systems
- Identity theft restoration – for fees related to stolen identity
- Yard and garden – for landscaping items and structures
- Green improvement reimbursement – for energy-efficient replacements of lost/stolen/damaged items
- Scheduled personal property – for high-value items not otherwise covered
If you choose Allstate, you’ll work closely with an insurance agent to customize your policy. You can speak with them over the phone or in person at a local office.
Allstate’s website includes tons of resources explaining how homeowners insurance works, along with detailed information on some of the more complicated aspects of choosing insurance.
Allstate’s prices start at about $82 a month or $980 a year and there are many discounts you may qualify for. For example, you can save on your premiums by enrolling in autopay, bundling home and auto, or being a new homeowner.
Allstate also offers renters, condo, life, motorcycle, auto insurance, and more.
Best for new homeowners: Hippo
Pros
- Simple claims process
- Preventative support
Cons
- Not offered in all 50 states
Taking out a homeowners insurance policy for the first time ever is a lot different from taking out your second or third policy. We recommend Hippo to the first-timers out there.
Hippo is a relatively new home insurance company. Founded in 2015, this company currently provides insurance to over 200,000 U.S. homes. Policies offer high coverage limits at reasonable rates, and everything from signing up to filing claims is done completely online.
Hippo Home Care and Smart Home Tech are just a couple of ways Hippo helps homeowners prevent accidents. Hippo Home Care is an app that gives you a personalized home health profile to tell you where maintenance and updates could make your home safer. This service is included free with every policy.
Smart Home Tech offers leak sensors, motion detectors and cameras, and smart smoke alarms through Ring, SimpliSafe, and Notion. If you decide to opt into a smart home kit, you’ll receive a discount on both your home insurance policy and your new systems.
We chose Hippo as the best homeowners insurance for new homeowners because it includes preventative support and educational materials.
Hippo puts a lot of emphasis on technology in their homeowners insurance policies, offering more coverage than the average insurance company for tech and digital equipment in your home like computers and appliances.
Plus, this company has a quick and easy signup process and you can get a quote in a minute or less. Hippo homeowners insurance policies start at around $900 per year or $75 a month. Unfortunately, you can’t get Hippo in every state.
Best for in-person support: State Farm
Pros
- Offered in all 50 states
- Access to local agents
- Many extended coverage options
Cons
- Complicated or slow claims processing
State Farm is one of the top home insurance companies and the largest insurance provider in the United States. With a JD Power rating of 834, State Farm ranks number three in customer satisfaction for homeowners insurance.
If you like the idea of managing your insurance in person, State Farm could be the best company for you. There are more than 19,000 dedicated State Farm agents across the U.S., and that probably includes at least one in your community. If you ever want to talk about your policy and insurance needs live, you can visit these offices.
This is one of the best homeowners insurance companies for anyone who values personal, one-on-one support.
State Farm provides replacement cost coverage for your dwelling and property as well as living expense, liability, and medical expense coverage options. You can extend your replacement dwelling limit to cover up to 20% over your estimated replacement cost for a higher premium.
You can also add on extra coverage for perils like earthquakes and cyberattacks and expenses for energy-efficient replacements. And unlike other providers, State Farm does not have dog breed restrictions for liability coverage eligibility.
An insurance policy will start at around $83 a month or $1,000 per year with State Farm. State Farm doesn’t offer as many rate discounts as some other providers, but you can still save through bundling, going claim-free, and taking security and preventative measures like roof repairs. State Farm home insurance is available in all 50 states.
Best for discounts: Progressive
Pros
- Offered in all 50 states
- Variety of discounts available
Cons
- Average customer service
- Extended coverage options are limited
Progressive is a popular insurance provider known for offering a variety of discounts.
This company might make sense for you if you’re already a Progressive auto customer. By getting your home and auto insurance from the same company, you can qualify for a multi-policy discount. According to Progressive, customers save an average of 5% when they bundle their home and auto insurance.
You can also get discounts for:
- Installing safety systems
- Paying your annual premium in full
- Receiving email communication
- Having a new-build home
- Getting an insurance quote at least ten days before starting your policy
- Purchasing a new home or switching from renters insurance
Like State Farm, Progressive also has local agents scattered around the country. In fact, there are over 38,000 independent Progressive insurance agents who can help you understand and update your home insurance policy. If you prefer getting help online, you can also call, chat with, email, or direct message a customer support representative.
Progressive offers a limited number of coverage add-ons. These include coverage for water back-ups if your sump pumps or sewer systems cause damage to your home and/or property and personal injury coverage for lawsuits against you that don’t fall into the category of physical damage or bodily injury. For example, false arrest, wrongful eviction, and slander.
Without discounts, policies start at right around $70 a month or $815 a year. This puts Progressive on the low end by price. And if you qualify for rate reductions, this could just be one of your cheapest options.
You can get Progressive homeowners insurance in any U.S. state and Canada.
Summary
Homeowners insurance saves money and safeguards homes from disasters. Choosing the right policy is personal; it’s about finding the best fit for you. Explore the top 8 home insurance companies of 2023 for guidance on your first purchase or policy change.
When it comes to protecting your home, having a reliable and comprehensive insurance policy is crucial. And with so many options available, it can be overwhelming trying to find the right one for you. However, for military members and their families, USAA offers a top-notch home insurance option that is catered specifically to their needs.
USAA requires its customers to be active or retired military personnel or honorably discharged in order to purchase a policy with them. This allows for a strong sense of community and understanding among USAA members as they all share similar backgrounds and experiences.
