Guest Blog - The Best Home Insurance Companies of 2021

Money.com gave us some great feedback on who, in their opinion, is the best home insurance companies of 2021.

To find the best homeowners insurance companies in the nation, Money.com conducted over 400 hours of research, interviewed experts in the fields of insurance and risk management, vetted 19 companies, and analyzed over 400 data points.

The data they analyzed included customer satisfaction ratings, complaint ratios, financial strength ratings, and coverage options.

Below they’ll explain why they think insurance customers should start their search for homeowners coverage with the companies they selected.

4 Best Homeowners Insurance Companies

Here are Money’s 4 top picks for the best home insurance you can get right now:

Lemonade: Best Online Insurance Company
Erie Insurance Company: Best Range of Coverage Options
Allstate: Best for Claim-Free Homeowners
Amica Mutual: Best for Customer Service

Lemonade Insurance: Best Online Insurance Company

Lemonade Insurance made our list because of its innovative approach to homeowners insurance, its fast claims payment, and its social conscience.

Lemonade is an online-only insurance company specializing in homeowners and renters coverage.

Lemonade uses artificial intelligence to provide seamless and fast service to policyholders and potential customers alike.

Getting an estimate takes only a few minutes and is as simple as filling in some information, choosing the coverage you want, and getting a quote. If you do need some help, Lemonade has a team of insurance professionals available to guide you through the process.

This ease of use doesn’t stop once you buy a policy. What makes Lemonade truly stand out is its approach to policy premiums and claim payments. You can file a claim using the smartphone app if you experience a covered loss. Often, you can get a claim paid the same day.

And unlike so many other insurers, Lemonade keeps its finances transparent and easy to digest. The company takes a flat fee out of your annual premiums for administrative costs and leaves the remaining money to pay claims.

Because Lemonade treats your premium money as yours and not theirs, if you do file a claim for a covered loss, in many cases you’ll get paid in a matter of minutes.

When you don’t file a claim, Lemonade doesn’t keep all of your premium dollars as profit. Through the Lemonade Giveback program, the company will pay up to 40% of your unused premiums to a charity you choose when you enroll in coverage.

The only downside to Lemonade is that its insurance policies are not available in all states. Also, since Lemonade does not write auto insurance, you can’t get a bundling discount.

Lemonade and COVID-19:

Lemonade is allowing customers going through financial hardship to defer premium payments for up to 60 days without losing coverage. They have also extended their grace period to 60 days for those customers who have already fallen behind on their payments.

Also, in response to the pandemic, the Giveback program is routing all charitable donations to Direct Relief, a non-profit organization whose mission is to provide relief to those affected by poverty or emergency situations.

Third Party Ratings

• Demotech Financial Stability Rating: A

• Benefit Corporation: Certified Public Benefit Corporation and Certified B-Corp

• J.D. Power Ranking: NA

• NAIC Market Share: NA

• Complaint Ratio: NA

• AM Best Rating: NA

Erie Insurance Company: Best Range of Coverage Options

Even though it’s not available in all states, we chose Erie Insurance Company as a top pick because of its unique range of coverage options.

Homeowners insurance policies from Erie can provide Guaranteed Replacement Cost. To the casual home buyer looking for coverage to satisfy the mortgage lender’s requirements, these words may not mean all that much.

But if you had to file a claim because of lost or stolen personal belongings or because a fire or storm destroyed your home, this feature could make a huge difference.

Here’s why: Many insurers limit the amount they will cover for rebuilding your home if it’s destroyed, but through its Guaranteed Replacement Cost option, Erie could help you rebuild your home the way it was before the incident, without a cost limit.

Another option Erie offers is Full Roof Replacement coverage. This allows you to receive the full replacement cost of a roof that was destroyed by a peril such as hail or a windstorm.

When covering roof replacements, many insurers depreciate the amount you will receive to account for the roof’s age, which leaves you with a big out-of-pocket expense to make up the difference.

Here’s yet another way Erie stands out from some of its competitors: by allowing homeowners to customize their coverage deductible for such perils as storm coverage.

Some companies limit the range of deductibles for this coverage, but Erie offers wide flexibility. That allows you to shape the deductible to the risk you’re comfortable taking and the premium you’re prepared to pay.

As with any other company, though, a lower deductible will lead to a higher premium (and a higher deductible can save money on premiums).

Erie also offers several policy bundles with varying coverage limits and specialty coverages — including protection for service lines and equipment breakdown.

Discounts with Erie include a 16% to 25% reduction for bundling car insurance in with your home coverage, as well as savings for those who install automatic sprinklers, smoke detectors, and security systems.

You also get a discount if you get a quote from the company between 7 and 60 days before your policy renews. However, these discounts may vary by state and are dependent on other eligibility requirements.

Finally, Erie shines for its customer service. J.D. Power ranks it No. 6 in its Property Claims Satisfaction study, and it also has a low complaint ratio of 0.27 (1.00 is the industry median.)

Together, all of these factors make Erie Insurance Company our top homeowners insurance company of 2021.

Homeowners in only 12 states can get coverage through Erie: Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin (along with Washington, D.C.).

Erie and COVID-19:

During the COVID-19 pandemic, Erie Insurance is being more flexible with payment dates and may waive some penalties and fees. You can request deferred payments by logging into your account.

If you have an ErieSecure Home policy, your identity recovery coverage is being expanded to your extended family members. This policy now also includes gift card reimbursement coverage, which reimburses you if you purchase a gift card for any business which you later can’t use. For more information, visit their blog.

Third Party Ratings

• J.D. Power Ranking: #6

• NAIC Market Share (2018): 1.68%

• Complaint Ratio: 0.27

• A.M. Best Rating: A+

Allstate: Best for Claim-Free Homeowners

Allstate is the second-largest homeowners insurance company in the U.S. by market share, but that’s not the reason this well-known company landed on our list of top providers.

We picked Allstate in large part because of the ways they reward homeowners who take good care of their property and are claim-free.

The company gives new customers credit for a good claims record with their previous insurers. If you switch to Allstate and you didn’t file a claim with your previous insurer, you can get credit for that prior history, in the form of an additional rebate, when you renew your Allstate policy after spending the year claim-free.

Allstate will also lower your deductible amount for every additional claim-free year with the company. After five years without a claim, the Rateguard option even locks in your premium against increases. These options make Allstate an unusually rewarding choice for people who have a history of not filing claims.

Allstate also offers a program, known as HostAdvantage, for people who sometimes share their home or lease it out for the short term. This coverage option protects you against theft and damage to personal property by your guests.

While this type of coverage isn’t unique to Allstate, it adds to the other factors that make the company one of our top picks.

Why all this emphasis on going claims free? Because a lot of homeowners treat their home insurance policies like catastrophic coverage. They never plan to file a claim unless the worst happens — a fire or serious storm damage, for example.

With Allstate, you could save money over time if that’s your claims-filing philosophy.

Allstate also offers additional discounts to policyholders who sign up for automatic payments, install security systems or fire protection devices at home, are over the age of 55 and retired, and have a smoke-free home, storm shutters, or a hail-resistant roof.

Allstate and COVID-19:

Allstate is allowing customers to defer up to two payments with no penalty. Additionally, since stay-at-home orders may be increasing our exposure to identity theft, Allstate has offered free identity protection coverage to all U.S. residents, regardless of whether they’re Allstate customers. Visit their website for details.

Third Party Ratings

• J.D. Power Ranking: No. 7

• NAIC Market Share (2018): 8.39%

• Complaint Ratio: 0.71

• A.M. Best Rating: A+

Amica Mutual: Best for Customer Service

We chose Amica Mutual primarily for its stellar customer service. The company has topped the J.D. Power Property Claims Satisfaction Study for nine consecutive years, which points to an unusual commitment to helping customers deal with the aftermath of potentially catastrophic losses.

One tool Amica uses in this effort is its Contractor Connection database, which lists thousands of vetted, licensed, and insured contractors. This feature not only helps you identify someone you can trust with home repairs but also guarantees their work with a five-year warranty.

Another way Amica stands out from the competition is through its status as a mutual insurance company. That means when you buy an Amica policy, you are buying company shares. As a shareholder, you may receive dividends when the business is doing well, and you can choose to receive those funds as cash or apply them towards your insurance premiums.

Buying into a mutual company may cost a little more at the outset, but in many cases, the dividends could mean savings in the long run.

Amica offers discounts to customers who have been with the company for at least two years as well as those who are claim-free for at least three years, sign up for electronic statements and automatic payments, and bundle their homeowners with condo, renters, or umbrella, or auto policies.

Amica and COVID-19:

Amica offered a penalty-free grace period earlier in the pandemic. Now it works with customers to establish repayment plans and keep coverage in place on a one-on-one basis. Check out their FAQ for more information.

Third Party Ratings

• J.D. Power Ranking: #1

• NAIC Market Share (2018): 0.91%

• Complaint Ratio: 0.22

• A.M. Best Rating: A+

Other Home Insurance Companies They Considered

As we analyzed home insurance companies, we emphasized financial stability and strong customer satisfaction ratings, plus the variety of coverage options each company offered.

The insurance providers we selected excelled in all of these categories, but that doesn’t mean there aren’t other home insurance providers that can offer the right coverage, price, and customer service for you.

The following companies just missed making our top picks.

Hippo

With a technology-forward approach and an emphasis on the modern needs of homeowners, Hippo has become a popular option for home insurance. Hippo says it can provide a quote in 60 seconds, allowing customers to buy a policy in under five minutes.

Hippo offers “four times the coverage limit than traditional policies” for home office equipment such as computers and printers, and enhanced coverage for other types of electronics and appliances.

Hippo also includes coverage amounts for workers in the home such as housekeepers and sitters. A unique feature of its policies is a complimentary smart home monitoring system for customers who buy Hippo home insurance.

As part of the claims process, Hippo provides a dedicated claims concierge as a single point of contact who will be with you every step of the way, advocating on your behalf with service providers, and taking care of any reservations or accommodations needed while the claim is in process (such as hotels and arranging transportation or other covered living expenses).

Hippo did not make our cut of best home insurance because it does not have a J.D. Power or an NAIC rating. Further, although the company has expanded its service area to include 31 states, it’s still not available in large markets such as Florida, New York, North Carolina, Louisiana, Michigan, and Massachusetts.

State Farm

As the largest home insurance provider in the country, State Farm offers homeowners a wide variety of insurance coverage options, including several bundling options designed to save their customers’ money on their premiums.

This massive company handles 22,000 claims per day and has an excellent rating in the National Association of Insurance Commissioner’s complaint index.

State Farm was barely excluded from our top picks due to two third party ratings: Its financial rating and its 2020 JD Power U.S. Property Claims Satisfaction Study. We picked companies with an A.M. Best rating of A+ or higher, whereas State Farm just missed with a rating of A.

As for its JD Power ranking, State Farm ranks just below the industry average. If these ratings improve, we envision State Farm being a strong contender as a top pick in home insurance.

USAA

USAA is a highly rated insurance provider with a multitude of insurance options for military members and their families.

USAA holds a top financial rating of A++ from A.M. Best, has an extremely low complaint index rating, and holds the highest customer satisfaction rating in JD Power’s 2020 Property Claims Satisfaction Study (although because it requires membership, the company doesn’t qualify for ranking in the survey).

The only reason we didn’t include USAA is because of its membership limitations. Since it serves only military members and their families, we couldn’t recommend it as a universal choice for all consumers.

However, if you do qualify for membership in USAA, it would be hard to find a better home insurance choice.

Farmers Insurance Group

Farmers Insurance offers a wide range of policies, including specialty coverage packages for seasonal or vacation homes, vacant properties, and rental properties. The company offers three policy packages that can be easily customized to fit your needs.

In terms of customer satisfaction, Farmers has a very low complaint index and ranks third in JD Power’s Property Claims Satisfaction Study.

Where Farmers falls a little short is in its financial rating. It holds an A rating from A.M. Best, which is not bad but lands just below our cutoff rating of A+. Improvement in this area would move Farmers into consideration for our top picks.

Liberty Mutual

In addition to their catchy slogan, Liberty Mutual allows you to select the types of coverage you want in your home insurance policy à la carte. You can also qualify for several discounts, as well as choose additional coverage options for standard policies like Inflation Protection.

However, it takes more than a slogan to become one of our top picks. Liberty Mutual falls short in three third party ratings: it has a financial rating of A from A.M. Best, which is just below our cutoff, and also ranks just below the industry average in JD Power’s Property Claims Satisfaction Study.

The company has a fairly high complaint index, almost twice as high as companies with a similar market share. Improvements in these three areas would move Liberty Mutual higher up our list.

Travelers Group

Travelers Group has been in the market for over 100 years and offers a wide variety of home insurance coverages and add-ons that enable you to customize your policy.

This company offers many discounts including a Green Home benefit that can save you 5% on your premiums. Travelers holds an A++ rating from A.M.Best, making it one of the top insurance companies in terms of financial stability, and has a fairly low complaint index.

Where Travelers Insurance stumbles is in terms of customer satisfaction. The company is ranked below the industry average in the JD Power’s Property Claims Satisfaction Study.

While this doesn’t mean you’ll automatically have a bad experience with this company, it’s an area that needs improvement if Travelers is to become one of our top picks.

Methodology: How we Chose our Best Homeowners Insurance Companies

To find the best homeowners insurance companies in the nation, we looked closely at customer satisfaction according to J.D. Power’s U.S. Property Claims Satisfaction Study as well as the National Association of Insurance Commissioners’ (NAIC) complaint index data for property insurance.

We also looked into each company’s financial strength and ability to pay out claims based on A.M. Best Ratings and the NAIC’s 2019 Property/Casualty Market Share Report.

Finally, we spoke to industry experts to understand where the market is heading and which companies are offering competitive pricing through new technology.

More Details

Homeowners Insurance Companies by Market Share

1. State Farm: 18% – Great support from local agents

2. Allstate: 8.4% – Best for claim-free homeowners

3. USAA: 6.58% – Coverage for military families

4. Liberty Mutual: 6.49% – Multiple opportunities to bundle with other policies

5. Farmers: 5.72% – Declining deductibles and other benefits

6. Travelers: 4.08% – Large array of discounts

7. American Family: 3.91% – High degree of customer satisfaction

8. Nationwide: 3.12% – Policies replace with brand new items, not by value

9. Chubb: 2.88% – Extended replacement cost pays to rebuild home, even if damage exceeds policy limit

10. Erie Insurance Company: 1.68% – Best range of coverage options

11. Auto-Owners Insurance: 1.64% – Multiple add-ons like equipment breakdown and sewer backup

12. Progressive: 1.59% – Extra discounts for alarms and safety devices

13. Universal Property: 1.17% – Home, renters, condo, and landlord insurance

14. MetLife: 1.07% – Guaranteed replacement on both home and property

15. AIG: 1.06% – Great for high-value homes

Building the Right Homeowners Policy

There are several different types of homeowners insurance policies, and which one is right for you will depend on the level of coverage you want. The most common policy is the HO-3 policy, also known as “special form” policy, which includes coverage for the dwelling itself, your personal property within it, and for personal liability.

The HO-3 is an “open peril” policy when it comes to dwelling coverage, meaning it covers anything that’s not explicitly excluded from coverage by the policy.

Compare this to the HO-1 policy, the most basic type and generally obsolete by now, which covers damages caused by only 10 named perils, which are numbered in the policy.

An HO-5 policy is called a “comprehensive” policy because it expands the coverages offered by the HO-3, especially when it comes to personal property.

HO-3 policies cover only “named perils” that cause losses to your personal property. Damage to your personal property from any peril not named in the policy will not be covered.

HO-5 policies cover everything—which is why they are more expensive than HO-3 policies.

What ISN’T Covered by Homeowners Insurance

When it comes to dwelling coverage, it’s easier to talk about what isn’t covered, since the most common policies are those HO-3 open-peril policies. In general, most policies will not cover losses to the structure caused by the following perils:

Depending on where you live, there may be additional exclusions. For example, homeowners insurance policies issued for coastal homes in Texas don’t cover wind or hail damage. For that, you need to sign up for wind and hail coverage with the Texas Windstorm Insurance Association (TWIA).

Many insurance companies also put limits on losses and liability claims caused by some dog breeds, for example.

Also, please note that homeowners insurance policies do not provide flood insurance. You’d need a special policy for that. The Federal Emergency Management Agency (FEMA) provides flood insurance which some mortgage lenders require you to buy if you live in an area prone to flooding.

Determining Your Coverage Limits

After making sure your policy covers the perils from which you need the most protection, it’s time to think about your coverage limits.

Deciding on those for your dwelling itself is the most important aspect of this decision.. You’ll likely have to choose between covering your home’s “actual cash value” or its “replacement cost.”

• Actual cash value: Actual cash value calculates the value of your home minus depreciation, taking into account any existing damage or wear. With this option, if your home is completely destroyed, you’ll only receive a settlement for your home’s value when it was lost.

• Replacement cost: The home replacement cost, by contrast, reflects the amount that would be needed to rebuild your home to be as similar as possible to how it was before.

As you can imagine, the home replacement cost is invariably higher than the actual cash value, which is why it’s the most expensive coverage option. It’s also most often recommended.

“A lot of people have the following misconception when buying insurance, ‘Well, if I bought my house for a million dollars, I need to make sure that I have a million dollars in coverage,’” said Dmitriy Golodriga, a San Francisco-based insurance broker.

This thinking is flawed, said Golodriga.

“Every situation is different. If you bought a home, you need to know how much it would cost to rebuild it.”

When it comes to personal property coverage, you may have more leeway. If a thief steals your television, for example, the cash value should be fine, assuming it’s a fairly standard set. If, on the other hand, the TV was a rare state-of-the-art model that you’d want replaced with the exact same unit, you might want to spring for replacement cost coverage.

In any case, to make the most out of your policy, you should make a detailed inventory of all your belongings and their value, before coverage begins, and submit that to the insurance company to ensure it will all be covered.

Golodriga reminds his clients to include all valuables, like engagement rings and collectible art pieces. Depending on their value, these objects may require additional coverage; otherwise, they will not be covered at all under your standard policy.

We also spoke with Daniel Schwarcz, a professor of law and insurance, and a regulation expert, at the University of Minnesota, to find out how to determine coverage limits for personal liability coverage.

Personal liability protects you if you are sued by someone who suffers bodily injury or property damage for which you may be responsible.

For example, if someone falls and breaks their leg on your doorstep, they may be able to sue you and your insurance company for the damages, and you may not have to pay out of pocket because your homeowners insurance will pay out instead, as well as cover legal fees and other costs.

To determine your personal liability coverage limit, Schwarcz recommends looking at your assets and income.

“You want to have… at least as much liability insurance coverage as your net wealth or somewhere in the range of… three to five times your income,” he said. “At the end of the day, what you really want is [for] the liability insurance to be generous enough that no one’s gonna come after your personal assets.”

In some cases, you may also need to get additional liability coverage beyond what is offered by the standard homeowners policy. If you’re a high-income individual, own a dog included in the insurance company’s restricted breeds list, or have a higher-than-average likelihood of being severely impacted by a liability lawsuit for whatever reason, you should look into an umbrella policy.

Umbrella liability coverage protects you against a liability claim that exceeds the regular limit of your policy. Its name derives from the fact that, like an umbrella, it extends widely, and protects you not only from hefty homeowners’ claims but those from your auto and even watercraft policies.

Getting the Best Price for Homeowners Insurance

All these coverages can add up to a pretty hefty premium, so when shopping for homeowners insurance, you should make a point to ask about discounts. Each company will have its own options for helping you lower your costs, but the following are the most common discounts:

Some insurers may also include a discount for living close to a fire station, having a house newer than 10–50 years old, signing up for an insurance policy within a year of purchasing your new home, and renewing your insurance policy before it expires.

It’s tempting to choose a higher deductible as a way to get the best rate on home insurance coverage. Just make sure you could afford to pay the higher deductible if you needed to file a claim.

The Best Way to Buy Homeowners Insurance

The convenience of shopping for insurance online is appealing, and some newer insurers even operate entirely online. That said, there’s also a lot to recommend about starting your shopping with an insurance broker or agent.

Insurance brokers charge a brokerage fee, but they are not beholden to any insurance company, meaning they can cast a wide net to find you the best insurance company to suit your needs.

There are two types of insurance agents.

• Independent agents: Like brokers, independent agents can work for multiple insurers.

• Captive agents: These agents work only for one company and will not likely show you policy options from separate companies.

Both agent types receive a portion of the premium you pay to the insurer when you sign up for a policy through them — meaning you don’t have to pay a fee out of your own pocket to use them.

Whatever way you choose to shop, the licensed insurance professional you enlist can help match you with the right insurance provider and help you build the right policy for you, because of their specialized knowledge.

Choosing the Right Homeowners Insurance Company

Even if you use an agent or broker, aim to receive or gather quotes from several different insurance companies. Their respective premiums will, of course, provide one important way to choose among these. But if you’re prepared to do a little more work, consider other aspects of the company and its service, too.

If a company is on our list of top homeowners’ insurers above, our recommendation will provide the necessary information. If the insurer isn’t listed, consulting the same sources we did will allow you to assess the company for such attributes as financial strength and quality of customer service.

1. Start with JD Power’s 2020 U.S. Property Claims Satisfaction Study, which compares companies on various aspects of customer satisfaction.

2. Then look at the underwriter’s complaint data from the National Association of Insurance Commissioners (NAIC).

3. And then calculate its complaint ratio by adding up all complaints lodged against each company, and then dividing that number by the company’s market share, as calculated by the NAIC.

4. After that, consult A.M. Best financial strength ratings to see if the insurer has a decent or better credit standing and so has a high likelihood of being able to to pay out any claim you make.

Insuring for Disaster: Climate Change and Homeowners Insurance

Some of the biggest challenges facing homeowners today are the effects of climate change on their property. According to the Insurance Information Institute (Triple-I), insured losses due to natural disasters cost around $58 billion in 2018.

From wildfires and hurricanes to droughts and floods, natural disasters have cost governments, insurers, and individuals over $200 billion in the last 10 years in an upward trend — in 2013, natural disasters cost the U.S. only $15.3 billion. Scientific evidence shows that climate change is not only increasing the frequency of natural disasters but raising their intensity as well.

The consequences of climate change are far-reaching, and we’re starting to see its impact on the insurance industry.

A 2019 article on The Daily Beast warned that the increase in natural catastrophes could lead to “climate redlining,” where homes located in high-risk areas will either be too costly to insure or un-insurable at all.

Indeed, many states now have to offer their own last-resort property insurance because some residents, such as those along their coasts, are unable to get traditional insurance. If homeowners are unable to insure their properties, at least at reasonable cost, the economic impact of disaster damages they might have to bear could be enormous.

And, as real estate agents in California are now learning, expensive-to-insure properties are nearly impossible to sell.

Moving forward into a future that some experts now describe as “climate-weirded,” what will happen when insurance companies are increasingly unwilling or even unable to insure risky properties?

“What often happens is that risk is pushed into public sector programs,” said Carolyn Kousky, executive director of the Wharton Risk Center at the University of Pennsylvania. “I think the really big question of climate change is: how is the public sector going to react and what type of programs are they going to put in place to ensure the availability of insurance?”

We’ve already seen the consequences of climate change on insurance coverage. For example, according to the Triple-I, after Hurricane Andrew in 1992 — which cost $25 billion in insured losses — insurers were forced to take unprecedented measures, from canceling and not renewing policies to requesting large rate increases.

Regulators stepped in and halted these measures, which led to stricter underwriting practices that left many properties uninsured. Eventually, Citizens Property Insurance, a residual market carrier created by the Florida legislature in the aftermath of Hurricane Andrew, became the largest property insurer in Florida by selling insurance to homeowners who couldn’t get it elsewhere.

In California, after the Northridge earthquake of 1994, insurers paid out more in claims than they had collected in premiums over the preceding 30 years. Since earthquake coverage was a mandatory part of homeowners insurance, many carriers decided to stop offering homeowners policies. The subsequent housing crisis led to the founding of the California Earthquake Authority, another residual market carrier.

Insurance Options in Disaster-Prone Areas

For homeowners in climate-risky geographical areas, often the only choice is to obtain insurance through a Fair Access to Insurance Requirements (FAIR) plan. These plans afford insurance to owners of properties at high risk for wind, wildfire, earthquake, and other types of damages.

But these programs are by no means a perfect solution. Last-resort insurance policies, like those offered by FAIR plans, can be expensive. The Wall Street Journal reported in 2020 that California FAIR plans have relatively low coverage limits, which force homeowners to purchase supplemental policies, and premiums can be exorbitant, especially if you live a long way from a firehouse.

Another possible solution to the problem of increasing premiums and unavailable coverage is the use of climate data to help insurance companies and homeowners manage risk.

Companies like Jupiter Intelligence and First Street Foundation (Kousky is on the latter’s board of directors) are working to create large data sets to help governments, private companies, and individuals understand the risk to infrastructure from the effects of climate change.

According to Matthew Kahn, a Bloomberg Distinguished Professor of Economics and Business at Johns Hopkins University, that kind of data could help insurance companies price premiums according to the actual risk each property faces instead of making assumptions about vast tracts of land based on outdated information, such as FEMA flood maps.

Greater clarity about the effects of climate change on a particular area or property could also help insurers incentivize homeowners to take protective measures. In an interview with Money®, Kahn said that “being able to price-discriminate and… to charge safer houses less… would provide an incentive to households and to homeowners to take precautions, like putting their home on stilts to get quoted lower insurance premiums.”

Insurers would play a key role in affecting public policy and consumer action towards mitigating climate risk. “More homeowners would put their flood-risk homes on stilts if they’ve received an insurance discount for doing so,” Kahn Added.

And vice versa in, say, the event that climate data lets developers know that a home built in a high-risk area will result in outrageous premiums. Those insights could lead to a reduction in new construction in high-risk areas, which would result in reductions in property damage and loss of life.

“Real estate developers might build fewer condos in a risky place if they knew they’d have trouble getting them insured, or that buyers would have trouble getting them insured,” said Kahn.

Better data could also help homeowners know whether they should buy in a specific location, and that’s data that consumers simply don’t have access to today.

“[We need to be] recommending to consumers that they do the extra digging to really understand that disaster risk of where they’re thinking about buying a home, and not only what that is today, but where it’s going,” says Kousky of the Wharton School.

“I think [homeowners] expect that their realtor or their insurance agent or someone is going to just spoon-feed that information to them, which we probably should be, but we’re not,” Kousky adds.

The lack of data has a genuine effect on people’s lives, she says: “There’s story after story of people who bought homes and had no idea how risky that area was, and regretted it afterward. And that’s really a sad situation.”

Insurance Options in Disaster-Prone Areas

For homeowners in climate-risky geographical areas, often the only choice is to obtain insurance through a Fair Access to Insurance Requirements (FAIR) plan. These plans afford insurance to owners of properties at high risk for wind, wildfire, earthquake, and other types of damages.

But these programs are by no means a perfect solution. Last-resort insurance policies, like those offered by FAIR plans, can be expensive. The Wall Street Journal reported in 2020 that California FAIR plans have relatively low coverage limits, which force homeowners to purchase supplemental policies, and premiums can be exorbitant, especially if you live a long way from a firehouse.

Another possible solution to the problem of increasing premiums and unavailable coverage is the use of climate data to help insurance companies and homeowners manage risk. Companies like Jupiter Intelligence and First Street Foundation (Kousky is on the latter’s board of directors) are working to create large data sets to help governments, private companies, and individuals understand the risk to infrastructure from the effects of climate change.

According to Matthew Kahn, a Bloomberg Distinguished Professor of Economics and Business at Johns Hopkins University, that kind of data could help insurance companies price premiums according to the actual risk each property faces instead of making assumptions about vast tracts of land based on outdated information, such as FEMA flood maps.

Greater clarity about the effects of climate change on a particular area or property could also help insurers incentivize homeowners to take protective measures. In an interview with Money®, Kahn said that “being able to price-discriminate and… to charge safer houses less… would provide an incentive to households and to homeowners to take precautions, like putting their home on stilts to get quoted lower insurance premiums.”

Insurers would play a key role in affecting public policy and consumer action towards mitigating climate risk. “More homeowners would put their flood-risk homes on stilts if they’ve received an insurance discount for doing so,” Kahn Added.

And vice versa in, say, the event that climate data lets developers know that a home built in a high-risk area will result in outrageous premiums. Those insights could lead to a reduction in new construction in high-risk areas, which would result in reductions in property damage and loss of life. “Real estate developers might build fewer condos in a risky place if they knew they’d have trouble getting them insured, or that buyers would have trouble getting them insured,” said Kahn.

Better data could also help homeowners know whether they should buy in a specific location, and that’s data that consumers simply don’t have access to today.

“[We need to be] recommending to consumers that they do the extra digging to really understand that disaster risk of where they’re thinking about buying a home, and not only what that is today, but where it’s going,” says Kousky of the Wharton School.

“I think [homeowners] expect that their realtor or their insurance agent or someone is going to just spoon-feed that information to them, which we probably should be, but we’re not,” Kousky adds.

The lack of data has a genuine effect on people’s lives, she says: “There’s story after story of people who bought homes and had no idea how risky that area was, and regretted it afterward. And that’s really a sad situation.”

Home Insurance Companies and COVID-19

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Since then, millions of cases have been confirmed in the United States.

The spread of this disease has affected every sector of the economy, causing states to impose lockdowns and closings of non-essential businesses and triggering high unemployment.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted on March 27, 2020, to provide different forms of relief to businesses and consumers, such as expanding unemployment insurance benefits to freelancers and gig workers, suspending student loan payments, and issuing stimulus checks to individuals.

Although the CARES Act doesn’t include provisions aimed at helping people with their insurance costs, insurers are still stepping up to help their customers. Measures may include returning a portion of personal auto insurance premiums to customers, providing free identity protection, and the opportunity to enroll in special payment plans. We’ve included the relief measures promised by our top insurance providers within their listings above.

Even if your insurance company hasn’t explicitly announced measures to help, or those programs have now expired, you could still get a favorable response if you ask.

“Carriers are being much more lenient on a case-by-case basis,” said Dmitriy Golodriga, a San-Francisco based insurance broker.

“[Insurance companies] understand that the circumstances that we’re in are very unique and we’re all going through it together…,” he said. “Right now is about the best possible time to call and talk to carriers and ask them if there’s anything that can be done.”

For more information on how COVID-19 could impact your finances, check out Money®’s special coverage.

Your Homeowners Insurance Questions Answered

Could I be denied homeowners insurance because of my dog?

Yes. Unfortunately for dog owners, most insurance companies will not cover, or will limit coverage, on homes which include certain canine breeds. It’s not personal. Insurers base these decisions on the higher number of liability claims they’ve experienced when a dog of one of these aggressive breeds is present in the home.

If your dog is of a breed that’s on the list, the insurance company could outright refuse to sell you or renew your policy. Alternatively, a home insurance provider might continue the coverage but on the condition that claims related to or caused by your dog would not be covered.

For example, if your Doberman Pinscher bit the mailman, who then sued for damages over the incident, your personal liability under your homeowners insurance policy would not cover the claim.

The list of restricted breeds varies by insurance company. But here, according to Psychology Today, are some dogs commonly associated with behavioral problems, and so might show up on your company’s bad-breeds list:

• Pit Bull Terrier

• Staffordshire Terrier

• Rottweiler

• German Shepherd

• Presa Canario

• Chow Chow

• Doberman Pinscher

• Akita

• Wolf hybrids

• Mastiff

• Cane Corso

• Great Danes

• Alaskan Malamute

• Siberian Husky

Some insurance companies do offer a third option. According to the American Kennel Club, a dog of a restricted breed may be covered under a home’s liability insurance if it undergoes (and passes) the AKC’s Canine Good Citizen program.

This 10-step test assesses how well your dog responds to commands and how generally well-behaved they are.

Some exotic pets can also cause trouble for your insurance coverage. If you have or plan to have a dog of a breed known to be aggressive or an unusual and potentially hazardous pet such as a tiger or snake, you might want to inquire with the insurance company about its effect on your coverage.

If possible, check with your home insurance company before you acquire the animal.

Will my low credit score affect my homeowners insurance rates?

It can. In most states, insurance providers can check your credit score when you apply for coverage. Insurers check your credit history because they have noticed a correlation: Policyholders with lower credit scores have a higher likelihood of filing an expensive claim.

If you’ve had credit problems in the past that you’ve since fixed, make sure your insurance agent runs your score again to make sure you’re getting the best rate possible on your home and auto insurance. An old credit score could still be inflating your premiums.

Homebuyers in California, Maryland, and Massachusetts don’t have to worry about this because their state governments don’t allow home insurance policies to consider the applicant’s credit history.

How can I protect my home and mitigate the risk of fire, water and wind damage?

Don’t wait for a disaster to happen before making your home safer. Many steps you can take now will disaster-proof your home and lower the risk of catastrophic damage in the future.

We spoke to experts from the Insurance Institute for Business and Home Safety (IBHS) and the National Association of the Remodeling Industry (NARI) to bring you tips for mitigating disaster damage in your home.

Mitigating Fire Damage

• Keep a space of at least 5 feet around your home that’s free of materials that are prone to catch fire

• Keep the rest of your yard clear of flammable debris, too, like leaves.

• Cut back any overhanging branches that could land on your roof.

• Install fire-resistant siding and roof tiles.

• Close the eaves of your roof.

• Install fine-mesh screens in the vents of your house to prevent embers from igniting fires inside the structure.

Mitigating Wind and Water Damage

• Install wind-rated doors and windows that can resist high-force winds. Those can help prevent water damage inside the house and protect the structural integrity of the building.

• Install a sealed roof deck, which will protect the interior of your home if the roof cover is torn off by high winds.

• Inspect your roof often for leaks, missing flashing, and loose tiles, and secure fittings like gutters, vents, and chimneys that could cause further damage if they were to come loose.

• Replace plastic or aluminum gutters and spouts with more durable steel gutters.

More Details: Compare Coverage Before Renewing Your Policy

According to a 2016 survey by the Insurance Information Institute, around 93% of homeowners have some kind of homeowners insurance policy, whether basic or comprehensive.

However, when it comes to renewing their policy, the Institute study shows that only 44% of homeowners shop around to compare their existing policy with those of other insurance companies.

This means more than half of homeowners simply renew their existing policy annually without checking on how it stacks up against what other insurers are offering. That lack of research could easily result in overpaying for coverage.

Our list of best homeowners’ insurers streamlines the shopping experience. We looked through dozens of insurers and coverage options and narrowed your choices to the best ones, based on a series of attributes.

We started our research by seeing how insurance companies stacked up in JD Power’s 2020 U.S. Property Claims Satisfaction Study. This survey measures customer satisfaction with such processes as claim settlement, claim servicing, First Notice of Loss (FNOL), estimation, and repair. We eliminated all companies whose scores in the survey fell below the industry average.

That eliminated all but eight national insurers. To further narrow the field, we took into account each underwriter’s complaint ratio for homeowners insurance based on data from the National Association of Insurance Commissioners (NAIC). We calculated the complaint ratio by adding up all complaints lodged against each company, and then dividing that number by the company’s market share, as calculated by the NAIC.

The complaint ratio allows us to evaluate large and small companies by the same standard. Companies with a complaint ratio above 1.00 were eliminated as having a worse record than most (According to the NAIC methodology, 1.00 is the industry average, so companies with ratios higher than that have higher-than-average incidence of complaints.)

After that, we eliminated companies with A.M. Best financial strength ratings of below A+. While a rating lower than that isn’t by any means a sign of impending financial doom, we favored companies with the strongest credit standing and so the highest likelihood of being able to pay out on any claim.

That narrowed down our list to three insurers, which we then further vetted by assessing the quality and comprehensiveness of each company’s coverage offerings, quote process, claims process, and customer service.

You can find the full article here: https://money.com/best-home-insurance/