#1 Overall
Lemonade
6.5
Overall
Score
- Fast, Affordable, and Hassle-Free
- Homeowners Insurance Starting at $25 per Month
- Financial Stability Rating of A-Exceptional
Best Home Insurance
75 Companies | 1,990 Real Customer Reviews
#2
State Farm
6.1
Overall
Score
- Covers Accidental Direct Physical Loss
- Clear Coverage Terms
- Manufactured Homes Policies Available
#3
Policygenius
6.0
Overall
Score
- Policies from Top Insurers
- Work with Salaried Licensed Agents
- Continued Annual Help
#4
USAA
6.0
Overall
Score
- Coverage for Military Uniforms
- Must Meet Eligibility Requirements
- Home Sharing Coverage Available
#5
Allstate
5.7
Overall
Score
- Extensive Optional Coverage Add-Ons
- Offers Renters, Landlord, and Condo Insurance
- 10% Loyalty Discount
#6
Farmers
5.5
Overall
Score
- $50 Deductible Credit Each Year
- ADT Home Security Discounts
- Related Cosmetic Damage Coverage
#7
Progressive
5.5
Overall
Score
- HomeQuote Explorer® Tool
- Helpful Savings Opportunities
- Unclear Financial Strength
#8
GEICO
5.4
Overall
Score
- Convenient Quotes
- Savings Opportunities
- No Claims-Free Discount
#9
Travelers
5.2
Overall
Score
- Green Home Coverage and Discount
- High Financial Strength Ratings
- Amazon Alexa Features
#10
Erie Insurance
5.2
Overall
Score
- Monthly Price: Undisclosed
- States Available: 11
- Time in Business: 1925
Important Things to Know About Home Insurance
Congratulations on your home! Buying a home is a major milestone and a large investment. As a homeowner, you're taking full responsibility for your property, and that includes protecting it with insurance.
There are several types of homeowners insurance and levels of coverage. As you look at coverage options, use our guide with what you need to know about home insurance including key terms and frequently asked questions.
Key Terms
Claim: When damage occurs to your home or belongings, you can file a claim with the insurer to receive a payout to help cover repairs or the loss.
Deductible: What you have to pay out-of-pocket for repairs before the insurer will start making payments.
Limit: The maximum your insurer will pay on claims for your policy. You can set the limits for your policy as you decide how much of each type of coverage to buy.
Premium: The monthly fee you pay for coverage.
Types of Home Insurance
There are eight types of home insurance. These policies are designed for specific types of homes or offer different levels of coverage.
Four types of homeowners insurance are for single family homes:
- HO-1 or basic form — Covers named circumstances or perils (e.g. explosion, fire, smoke, riot/civil commotion, etc.) and only offers the actual cash value of the home.
- HO-2 or broad form — Includes coverage for additional named circumstances beyond HO-1 (e.g. freezing, weight of ice, etc.) and offers replacement cost coverage for the home.
- HO-3 or special form — Covers all perils except those listed in the policy (e.g. water damage, neglect, war, etc.) and offers replacement cost for dwelling and actual value for belongings.
- HO-5 or comprehensive form — Similar to HO-3 but offers replacement cost for dwelling and belongings and offers higher coverage limits for itemized valuables
The other types of homeowners insurance are for specific types of homes or living situations.
- Condo insurance (HO-6 or unit-owners form) — Designed to cover additional needs specific to condos and are customizable based on what's already covered with HOA fees.
- Mobile or manufactured home insurance (HO-7 or mobile home form) — Designed for trailers, travel trailers, fifth-wheel trailers, single-wide or double-wide manufactured or mobile homes, sectional homes, modular homes, park model homes, and RVs.
- High-risk homes (HO-8 or modified coverage form) — Generally for older homes that would have expensive repairs and covers specific circumstances listed in policy at actual cash value.
- Renters insurance (HO-4) — Covers personal property, liability, and additional living expenses if you have to leave due to a natural disaster.
Types of Coverage
Home insurance includes several different types of coverage. Understanding each type of coverage will help you determine what you need as you shop for a homeowners insurance policy.
- Dwelling coverage — Covers home's structure including attached structures.
- Contents coverage — Covers personal belongings. You may need to add coverage for specific, valuable items.
- Personal liability coverage — Offers protection if someone not living with you is injured on your property. You can also get additional liability insurance by purchasing an umbrella policy.
- Additional living expenses — Covers expenses like rent or hotel costs while home is replaced if home is destroyed or unlivable.
Keep in mind that you won't find flood or earthquake coverage in a typical homeowners insurance policy. If there are situations that you'd like insurance coverage for that are not included in your policy, like earthquakes, you can buy flood insurance or earthquake insurance separately.
Coverage Levels
You can have different levels of coverage within your home insurance policy. These coverage levels include the policy's coverage limit, which is the most the insurer will pay on claims.
The type of coverage also makes a difference to your policy. Your homeowners policy can include the following levels of coverage:
- Actual cash value — Covers the actual value of your home and belongings and takes depreciation into account.
- Replacement Cost — Covers the cost of replacing your home and belongings. These costs are higher than the actual value coverage because replacing your home involves rebuilding.
- Guaranteed or Extended Replacement Cost — Increases the policy's coverage limit for replacement cost.
Discounts
You can find discounts with most insurers to save on your homeowners insurance rate. Bundling discounts are common, so buying home and car insurance from the same insurance provider can help you save.
It's common for the home insurance industry to offer discounts for having a new roof or a discount for having a good quality roof. You can find discounts for home security since these systems reduce the risk of theft. Some insurers also offer discounts for being claims-free for a certain number of years.
Some insurers offer more uncommon discounts with its homeowners insurance coverage. For example, Farmers offers career-based discounts for doctors, teachers, firefighters, engineers, and more. AAA offers discounts to its members for having AAA membership and maintaining it.
There are many ways to lower your home insurance rate through discounts. Keep these savings opportunities in mind as you consider companies.
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Home Insurance Frequently Asked Questions
What is the best home insurance company?
State Farm has earned the top spot on our list through receiving positive customer ratings and reviews. Learn more about State Farm home insurance.
How does homeowners insurance work?
Homeowners insurance covers your liability, belongings, and your dwelling. You pay a monthly premium for this coverage. If your home experiences covered damage, you can file a claim with your home insurance provider.
If your claim is approved, you'll receive a payout up to your policy's limit. You will also have to pay your deductible before your homeowners insurance company starts covering costs.
What does homeowners insurance cover?
Home insurance coverage includes liability, belongings, and dwelling. Some policies only offer coverage for your belongings and dwelling under specified circumstances. An example of a covered peril is fire.
Other policies cover all circumstances except those listed in the policy like earthquakes. If you want additional coverage, you'll need to consider other types of insurance.
What does homeowners insurance not cover?
Homeowners insurance usually does not cover damage from earthquakes, flooding, etc.
If you want coverage for these circumstances, you'll need to buy a separate insurance product like earthquake insurance.
What should I look for in home insurance?
As you evaluate policies, pay attention to the coverage limits, deductible, and monthly insurance premium rates. Understanding these factors will help you understand the cost and coverage offered by a policy.
You'll also want to consider the situations covered and whether your policy covers replacement costs or the actual cash value. If you can, you'll want to opt for replacement cost coverage because that will offer more protection for your future finances.
How much home insurance do I need?
The amount of coverage you'll need depends on your home and the kind of protection you want.
Most recommend getting replacement cost coverage for your home because rebuilding includes buying new materials and paying for labor.
Work with an insurance agent to assess your needs and determine how much you need.
How much is home insurance?
Since homeowners insurance rates depend on multiple factors, it's difficult to give an estimate. Work with your insurance carrier or an insurance agent to learn more.
How do I lower my home insurance costs?
Discounts on homeowners insurance vary company to company. However, there are not very many available. If your auto insurance is from the same insurer, you can usually get a discount on your home insurance.
Some insurers may offer other discounts, but these vary by insurance provider.
Adjusting the coverage limit and deductible also affect your premium rate. However, keep in mind that when you make a claim, you'll have higher out-of-pocket costs.
