Choosing the best homeowners insurance company
Whether you’ve been insured through the same company for a decade or you’re a first-time homebuyer, you should make sure you focus on getting the best coverage at the best value.
For example, insurance company A charges $1,300 a year to insure your home, while company B charges $1,200. But if company A includes a number of additional coverages and higher policy limits that either aren’t offered or would cost extra through company B, the higher-cost policy may be worth it.
Here are the main areas you’ll want to analyze when comparing companies and insurance policies.
Financial and customer satisfaction ratings
A.M Best rating
A.M. Best ratings indicate an insurer’s overall financial health: A++ and A+ are considered superior, while A and A- are excellent. There are five other designations for insurers: good (B++, B+), fair (B, B-), marginal (C++, C+), weak (C, C-) and poor (D).
Learn more about A.M. Best ratings.
J.D. Power score
J.D. Power measures customer satisfaction and results are listed by designation: among the best; better than most; about average; and the rest. There’s also an overall winner. Overall performance is calculated on a 1,000-point scale that accounts for policy offering, price, billing, interaction and claims.
Consumer Reports score
Consumer Reports measures customer satisfaction with insurance companies based on a number of benchmarks: ease of reaching an agent, agent courtesy, promptness of response, damage amount, and how timely the companies’ payments are.
While A.M. Best, J.D. Power, and Consumer Reports can tell us a lot about a company and how it treats its customers, the best homeowners insurance policy for you is one that provides you with the coverage you need for your specific situation. A licensed representative from Policygenius can help you compare homeowners insurance policies and quotes until you find a policy that works for you.
Certain companies have low rates because they offer high-deductible policies. To keep your insurance costs down, it may be worth looking into your insurer’s high-deductible options. Just make sure that, in the event of a loss, you can afford whatever deductible you choose.
Customer service and claims
One way to find out the quality of an insurer’s customer service is by simply reading testimonials and reviews online. Policygenius has detailed reviews of several of the top home insurance companies in the industry. Once you’re done reading up on companies, you should consider doing a little more digging.
Call the insurance company and see what the hold time is and what the service is like when you wait to speak to a representative about a general inquiry. If the hold time is three hours and they don’t seem like an accommodating group, you’re probably not going to want to deal with them after you just lost your house and file a claim.
Find out how the company handles the claims process, as the single biggest indicator of home insurance customer satisfaction is the company’s damage estimates. If they have a reputation for not covering the agreed-upon replacement costs of property or dropping customers from their policy for filing a single claim, you should probably avoid that company.
The best companies will also have several supplemental coverage options, or endorsements, that you can add to your homeowners policy.
Perhaps the most essential endorsement is replacement cost contents coverage, which reimburses you for personal property loss without subtracting the items' depreciation from the claim check. "Replacement cost will always represent better value because it makes your personal property coverage that much more usable and functional in terms of what you want it to do," said Fabio Faschi, property and casualty team lead at Policygenius. "You want your insurance to work for you, so in the event that you need to file a claim, what are you going to get back for it?"
One distinct advantage of adding endorsements——like flood and earthquake coverage——rather than seeking coverage through a separate insurer is that you have all of your coverages in one place. Furthermore, if you have, say, home and flood insurance with the same company and you need to file a home and flood claim, some insurers may only require a single deductible for coverage to kick in. Here are some common endorsements offered by insurance companies.
- Inflation guard: Increases your coverage amount every year to keep up with inflation.
- Water backup coverage: Covers your home and personal property when the sewer backs up and causes water damage.
- Scheduled personal property coverage: Provides full replacement value for valuables like jewelry, fine furs and art.
- Equipment breakdown coverage: Equipment breakdown coverage is similar to a home warranty insurance policy in that it’s designed to cover certain appliances and property types not covered by your homeowners insurance policy, like appliance breakdown.
- Identity theft coverage: If your identity is stolen, this coverage reimburses you for expenses you incur while resolving the issue.
- Business property coverage: Business property typically has low coverage limits in a standard home insurance policy—business property coverage increases those limits
- Earthquake insurance: Covers quake damage to your home. Insurance companies may offer earthquake coverage by either standalone policy or endorsement to your existing home insurance policy.
- Flood insurance: Covers flood damage to your home. You can typically get flood coverage with the National Flood Insurance Program (NFIP) via your insurance company. Some insurers also write their own private flood policies or endorsements.
A good home insurance company offers bundles, loyalty discounts, and will even reward you if you file infrequent claims, but you can also lower your monthly home insurance costs by increasing the number of safety and security features in your residence, such as:
- Smoke detectors
- Security alarms
- Sprinkler system
- Deadbolts on doors
- Fire extinguishers
- Impact-resistant windows and doors
Check with your home insurance company to see what kind of discounts are offered, or speak with a licensed representative at Policygenius who can walk you through the different ways to cut down costs on your home insurance policy.
If you’re looking for another way to save money and limit the paperwork and confusion of having policies with multiple insurers, you should look for companies that can bundle your home and auto policies.