Homeowners insurance kicks in when misfortune hits your house or personal belongings. Homeowners policies also provide liability coverage if someone is injured on your property.
Like all insurance, homeowners policies can be confusing. You have to sort out things like what qualifies as a covered loss. Plus, you need to look out for potential pitfalls like coverage limits and other restrictions on your policy.
When you’re looking for a homeowners insurance policy, there’s a lot to consider. Use our comprehensive guide to make your search easier.
Homeowners Insurance: How to Get the Right Coverage for the Right Price
If you’ve purchased a home (or are in the process of doing so), then you know that homeowners insurance is one of those things you have to figure out before the deal is done.
Mortgage lenders require homeowners insurance to help protect against potential loss on their investment. It’s also a lifesaver if something unexpected happens like a burglary, a slip on your front steps, or high winds that bring down a tree on your roof (that’s from personal experience).
But this isn’t the kind of decision you want to rush. This is protection for what’s likely the biggest purchase of your life—so it’s worth it to do your homework.
6 Things to Consider When You’re Shopping for Homeowners Insurance
Highly-Rated Homeowners Insurance Companies
Not all homeowners insurance companies are created equal. We’ve found five companies that consistently rank high among customers and experts. Compare prices at Policygenius.
| J.D. Power Customer Satisfaction 1 |
| Flood Insurance* |
| Home Security Discount |
| Uses In-House Underwriters |
| Amica | Geico | Allstate | State Farm | USAA |
 |
 |
 |
 |
 |
| 5 out of 5 | N/A | 3 out of 5 | 4 out of 5 | N/A |
| No X |
No X |
No X |
No X |
Renters policy only |
| Yes ✓ |
Yes ✓ |
Yes ✓ |
Only in some states | Varies |
| Yes ✓ |
No X |
Yes ✓ |
Yes ✓ |
Yes ✓ |
| View on PolicyGenius | View on PolicyGenius | View on PolicyGenius | View on PolicyGenius | View on PolicyGenius |
Data effective 11/25/2019. Offers and availability subject to change.
*Companies that don’t offer their own flood insurance help customers obtain insurance through the National Flood Insurance Program (NFIP).
How Homeowners Insurance Works
Let’s say you have a kitchen fire, or someone breaks into your home and raids the jewelry box. Unexpected events like these can leave you without a roof over your head or with a huge financial loss.
This is where your homeowners policy kicks in.
After an event, contact your insurance company and make a claim. You may have to fill out forms or provide documentation like a copy of a police report if there was a break-in.
Once you file a claim, your insurance company will assign a claims adjuster to your case. The claims adjuster assesses the damage and determines the amount of payment you’re eligible for.
That sounds pretty simple—but there are a lot of factors that impact how smoothly that process goes. And your payment can vary greatly depending on the type of policy you have, the amount of coverage, and the kind of event that occurred.
You don’t want to wait until something happens to find out your homeowners policy isn’t going to save the day.
1. Types of Homeowners Policies
Because your homeowners policy is a type of insurance, it’s complicated. Even the way the industry describes policies can be confusing.
Jargon Alert
Common Types of Homeowners Insurance Policies
1. HO-1: Basic Form—This form lives up to its name; it’s basic. HO-1 policies cover only the structure of your home. There’s no protection for your personal belongings and no personal liability coverage.
2. HO-2: Broad Form—An HO-2 policy expands on the coverage offered by the basic form. In addition to the structure of your home, specific systems like the HVAC may also be covered.
Plus, you also get coverage for personal belongings, and sometimes it includes liability insurance as well. But this is a “named peril” policy, which means it will only cover damage from events outlined explicitly in the policy.
3. HO-3: Special Form—This is the most common type of policy because it offers the broadest coverage for your house and personal belongings. Plus, you get personal liability coverage if someone is injured on your property.
It also covers attached structures, like a garage or the back deck. Best of all, coverage isn’t limited to named perils—unless something is listed as an exclusion, it should be covered.
4. HO-5: Comprehensive Form—If you want the most coverage available, this is the homeowners policy to choose. It’s considered an “open-peril” policy, which means it will cover almost anything that could happen to your house or personal property.
An HO-5 policy gives you more personal liability coverage, too. But certain things, like damage from an earthquake or flood, are still usually excluded.
Special Types of Homeowners Insurance Policies
Outside of those four basic homeowners policies, some forms deliver specialized coverage.
- HO-4: Tenant’s Form—Protection for your personal belongings if you’re a renter. More often referred to as renters insurance, it also provides liability coverage.
- HO-6: Condo Form—This insurance covers personal belongings and personal liability for condo owners. It’s supplemental to the policy held by your HOA, and will usually cover your interior walls, floors, and ceilings.
- HO-7: Mobile Home Form—Designed for manufactured homes, this policy usually covers the same things as an HO-3 policy.
- HO-8: Older Home Form—If you have an older home, where replacement costs potentially exceed current market value, this policy extends extra protection. It covers damage and repairs that require materials (like plaster for walls) that are no longer commonly used.
2. Amount of Coverage
At a minimum, you need enough homeowners insurance to cover the cost to replace your home completely. Additionally, you should estimate how much it would cost to replace everything inside your house.
When it comes to your personal property coverage, you should calculate the value of everything from appliances to clothing to things like books and collectibles.
Then you need to look at your personal liability coverage. Most homeowners policies have at least $100,000 of personal liability coverage. But some experts recommend loading up on more—up to
$500,000 if you can.
Even though it’s smart to err on the side of excess when it comes to home insurance, don’t go outside what you can comfortably afford in your monthly or annual budget.
Don't forget the deductible.
What You Need to Get a Homeowners Insurance Quote
We recommend shopping around for the best insurance rate. Here’s what you need to have on hand to get a qualified quote.
- A description of your home, including location, square footage, year built, and the type of construction.
- Information about recent improvements, renovations, and repairs.
- The insurance history of your home, including any losses in the last five years.
- The age of certain structural elements or systems, like the roof or plumbing.
- Extras like a custom kitchen or fireplace. These can add to repair or replacement costs in the event of a covered loss.
- Details about any safety features including deadbolts, smoke and CO alarms, fire extinguishers, and a security system or security cameras.
- Personal information including birth date, social security number, number of occupants, and how many weeks per year the home is occupied.
3. What is Covered with Homeowners Insurance?
The more covered perils in your policy, the more you’ll probably pay for your premium. But it’s better than getting surprised with an enormous repair bill for items not covered by your homeowners insurance.
Most homeowners policies cover damage caused by the following perils:
- Fire or smoke
- Extreme weather like lightning, hail, and wind
- Damage from the weight of ice or snow
- Freezing of systems like the HVAC
- Explosions
- Theft
- Damage caused by aircraft or vehicles
- Riots and civil commotion
- Volcanic eruption
- Falling objects
Things that are usually excluded from a homeowners policy:
- Earthquakes
- Floods
- Water damage
- Infestations of insects, birds, or rodents
- Neglect
- Settling of your home’s foundation
- Mold and fungus
- Damage from war, government action, or an ordinance or law
- Rust and other corrosion
Expert Tip
Extra coverage you might want to consider.
- Earthquake insurance
- Flood insurance
- Inflation endorsement
- Personal property endorsement for high-cost items like jewelry, furs, antiques, art, etc.
- Extra insurance to cover a home-based business
4. How to Pick the Right Insurance Company
The insurance company you choose matters—especially when it comes to your monthly premiums, the claims process, and (most importantly) the money you receive when it’s time to repair or replace something.
When you start looking at a company for homeowners insurance, consider the company’s reputation and financial stability. Check out customer satisfaction ratings, customer complaints, and financial ratings from third-party evaluators like A.M. Best.
Then get several quotes before making your final decision. To make sure you’re comparing apples to apples across multiple companies, always get quotes for the same type of policy, coverage amount, and deductible.
Make multiple quotes easy.
5. Average Cost of Homeowners Insurance in Your State
| State | Average Annual Premium |
| Alabama | $1,386 |
| Alaska | $974 |
| Arizona | $803 |
| Arkansas | $1348 |
| California | $1000 |
| Colorado | $1446 |
| Connecticut | $1455 |
| Delaware | $816 |
| District of Columbia | $1225 |
| Florida | $1918 |
| Georgia | $1200 |
| Hawaii | $1026 |
| Idaho | $703 |
| Illinois | $1042 |
| Iowa | $945 |
| Kansas | $1548 |
| Louisiana | $1967 |
| Maine | $866 |
| Maryland | $1022 |
| Massachusetts | $1451 |
| Michigan | $952 |
| Minnesota | $1340 |
| Mississippi | $1525 |
| Missouri | $1280 |
| Montana | $1130 |
| Nebraska | $1402 |
| Nevada | $742 |
| New Hampshire | $965 |
| New Jersey | $1174 |
| New Mexico | $996 |
| New York | $1309 |
| North Carolina | $1098 |
| North Dakota | $1239 |
| Ohio | $850 |
| Oklahoma | $1875 |
| Oregon | $659 |
| Pennsylvania | $927 |
| Rhode Island | $1496 |
| South Carolina | $1285 |
| South Dakota | $1125 |
| Tennessee | $1185 |
| Texas | $1937* |
| Utah | $664 |
| Vermont | $898 |
| Virgina | $966 |
| Washington | $822 |
| West Virginia | $917 |
| Wisconsin | $762 |
| Wyoming | $1120 |
| U.S. Average | $1192 |
Data from the 2018 National Association of Commissioners (NAIC) Report; data for 2016
*Due to wind-only policies from the Texas Windstorm Association, the average premium in Texas is artificially high
6. Frequently Asked Questions
Do I Have to Get Homeowners Insurance?
Yes—if you have a mortgage. Most lenders require a homeowners insurance policy. But even if you own your home outright it’s a good idea to have insurance just in case something big comes up. And with home ownership, it will.
Who Has the Cheapest Home Insurance?
Because there are so many factors that impact how much homeowners insurance costs, it’s nearly impossible to give you a list of the cheapest home insurance companies.
Here are the most common things that influence how much you’ll pay for homeowners insurance.
- Where you live
- Proximity to things like a body of water or a fire station
- The age of your home and roof
- A home-based business
- “Attractive nuisances” like swimming pools and trampolines
- Wood-burning stoves
- Pets, specifically certain breeds of dogs that are considered high-risk
- Remodeling and upgrades
- Home security and safety measures
- History of homeowners insurance claims
- Credit history
- Marital status
No one wants to pay more than they have to for home insurance. While affordable rates are desirable, we don’t recommend just going with the cheapest quote you can find.
Balance your search for a good deal with priorities like company reputation, customer satisfaction, and the number of years in business and homes covered.
How Can I Lower my Homeowners Insurance?
Even though you shouldn’t skimp on your homeowners insurance, you don’t have to pay more than necessary, either. Here are some tips to help lower your homeowners insurance rates.
- Opt for a bigger deductible.
- Bundle with auto or life insurance.
- Get an expert estimate on the true cost to rebuild your house—this is often less than the sticker price you paid for your home.
- Install a security system, upgrade door locks, or improve your fire-prevention measures.
- Storm-proof your home by reinforcing the roof or adding extras like storm shutters.
- Ask about other discounts—there might be breaks for retirees or military members.
- Keep your credit record healthy.
- Evaluate your limits and the value of covered items on an annual basis.
Is USAA the Best Homeowners Insurance?
USAA, or the United Services Automobile Association, is the premier insurance provider for current or former members of the military and their families. USAA consistently gets high marks for both affordability and customer service.
The only drawback is that you can’t get USAA insurance if you or someone in your immediate family hasn’t served in the military. But if you are in that group, this insurance company is highly recommended.
How Much Insurance Do I Need For My Home?
As a general rule you want enough insurance to cover the cost of rebuilding your house if it ended up a total loss. On top of that, you should also get coverage for everything inside your house in case it’s lost in an event like a fire or burglary.
What are the most common reasons people file homeowners insurance claims?
Even though you need a homeowners insurance policy, hopefully, you won’t have to use it. Only six percent of homes had a claim filed in 2017.² Of those claims, 98/1% were due to property damage—including loss from burglary.
Here’s a breakdown of the most common homeowners insurance claims from 2013 to 2017.²
- Wind and hail
- Water damage and freezing
- All other property damage, including vandalism and malicious mischief
- Theft
- Fire and lightning
- Bodily injury and property damage
- Medical payments and other
- Credit cards and other
Should I get a home warranty if I already have homeowners insurance?
It depends. A home warranty covers things that aren’t typically included in a homeowners insurance policy. Home warranties can help you pay to repair or replace a faulty appliance or household system like the plumbing.
If you’re buying a new home, it can be smart to get a home warranty. Sometimes sellers will include a home warranty as an extra incentive to prospective buyers.
But home warranty claims can get tricky, so make sure you understand the fine print before purchasing one on your own.
Can a security system help me get a discount on my homeowners insurance?
Yes. This is one of the easiest discounts you can get. Most insurance companies give you a discount if you have a monitored home security system.
All you need to do is submit a certificate from your security company. Because this is such a common request, many security companies provide the certificate as part of your paperwork. Otherwise, you might be able to download it online or call the company to request it.
But sometimes you don’t need a full-blown security system with professional monitoring to save money. Some insurers give discounts for security cameras, upgraded deadbolts, or smoke alarms.
Sources:
1. J.D. Power, “Home Insurance Customer Satisfaction Declines, Opening Door for Insurtech Disruptors”
2. Insurance Information Institute, “Facts + Statistics: Homeowners and Renters Insurance”
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