Cheap Home Insurance Companies

Home insurance is a necessary portion of the costs involved in owning a home.

For most of us, our home is the biggest investment we will ever have and well worth protecting adequately with insurance. In 2011, the average premium in the United States was $978 annually. Premiums vary depending upon the hazards involved in your state.

For example, Florida’s home insurance premiums are higher because the state has a higher incidence of hurricanes than usual, and Mississippi has a higher incidence of tornadoes, again leading to higher premiums.

cheap home insurance companiesTo determine cheap home insurance companies in your area, research is necessary.

Price is not the only criteria for determining the cost of home insurance because paying for insurance and then not being able to collect damages in the event of a loss can be less than cost-effective.

Use the FREE quote comparison tool above to start searching instantly!

Look for the following information about your home insurance company:

  • Actual premium
  • Financial and credit rating of the insurance company you choose
  • Complaint ratio for the particular insurance company chosen, both on the state level and national level
  • Perils covered under physical damage and liability coverage

Premiums for Home Insurance

It is necessary to compare premiums through quotations by requesting them from various insurance companies. The rates for home insurance are determined by the following:

  • Cost of rebuilding your home in the same location – no insurance for the land
  • Materials that make up your home – frame construction, brick construction, roof makeup
  • Age of your home
  • Quality of fire protection in your area
  • Your personal claims history
  • Pets – aggressive dogs may prevent burglaries but may also present a threat to visitors
  • Coverage
  • History with your home insurance company

Financial and Credit Ratings for Insurance Companies

Financial and credit ratings as well as complaint ratios can help assure you that your insurance company will be able to pay a claim even though a catastrophic loss affects the entire area. Examples of this are hurricanes, tornadoes, widespread hailstorms, and other natural disasters. There are several ways of examining these credit ratings and complaint ratios:

  • Contact your state’s insurance department
  • National Association of Insurance Commissioners (NAIC)
  • A.M. Best Ratings
  • Standard and Poor’s Ratings Services

Coverage- Perils- Purchased

It is possible to purchase levels of coverage that provide protection against more or fewer perils. Ordinarily, on a private home that is less than twenty years old, individuals purchase the Special Form (HO-3) of homeowners insurance, which gives the following property coverage:

  • Fire, smoke, explosion, wind, hail, lightning, civil unrest, and vehicular damage
  • Vandalism and theft
  • Falling objects and trees
  • Weight of ice, snow, sleet
  • Sudden and accidental rupturing or overflowing of an HVAC system or household appliance, as well as freezing and rupturing of pipes.
  • Other perils except flood, earthquake, war, nuclear accident, and other things specifically excluded.

Lower levels of coverage are available at a lower price.

Usually the amount of coverage related to property varies according to the amount of insurance purchased for the dwelling because, typically, the limits are a percentage of the amount of coverage on the house:

  • Building – replacement or actual cash value
  • Other structures such as fences, sheds, and separate garages – 10% of the dwelling amount
  • Personal property (contents) – 50% of the value of the dwelling
  • Loss of use – 20% of the value of the dwelling

The difference between replacement cost coverage or actual cash value coverage is significant. Replacement cost is the cost of rebuilding or repairing your home, using similar materials.

finding cheap homeowners insuranceActual cash value is the value of the dwelling less wear, tear, and depreciation.

Often actual cash value does not pay enough to fully repair the damage or replace the property.

The home insurance policy is what is referred to in the insurance industry as a package policy, which indicates that both damage to property and liability coverage are provided.

Liability coverage is set by the policyholder.

Ordinarily $100,000 is the limit for legal liability for injury.

This is a type of liability that follows the individual purchasing the insurance and their family members where they go rather than being restricted to the premises of the dwelling.

Increasing the liability limits is rather inexpensive so the cost of increasing this coverage to $300,000 is cost-effective.

The person purchasing the insurance sets medical payments coverage. A limit of $500 to $5,000 is reasonable. Medical payments pay for injuries occurring on the property for most reasons.

The injured party does not have to sue or bring a claim to receive payment for injury under this coverage.

Saving Money on Home Insurance Policies

So many variables apply to home insurance that it is almost impossible to recommend the cheapest home insurance policy. The best way of determining cheap and reliable home insurance is to do the following:

  • Comparison shop – get several different quotations
  • Set the amount of coverage as rebuilding costs – not what you paid for the dwelling
  • Increase deductibles. Insurance should be to pay for catastrophes not for maintenance and upkeep. Be careful about that.
  • Purchase home and auto policies from the same insurer for a discount
  • Review credits with your insurance agent – many companies offer additional credits that are unique to the company
  • Review your insurance annually – go through the process of quotations and investigation of insurance companies as advised.

Top Ten Writers of Home Insurance in the U.S. by Premium Volume

The following companies are listed with the Insurance Information Institute as the top ten insurance companies by volume in the United States. Mentioning these in no way indicates a recommendation of any of the companies.

Choosing one of these companies must be subject to the quotation and diligence mentioned before:

  • homeowners insurance averageState Farm Mutual
  • Allstate Corp
  • Liberty Mutual
  • Farmers Insurance Group
  • USAA Insurance
  • Travelers Insurance
  • Nationwide Mutual
  • American Family Mutual
  • Chubb Corp
  • Citizens Property Insurance

Purchasing Insurance

Be cautious about purchasing insurance solely upon the basis of premiums. Investigate and compare costs, coverage, deductibles, and policy forms as well as the status of the insurance companies.

Reputation in your community can give you information about the quality of the coverage you purchase.

Be sure to compare quotes instantly using the FREE tool at the bottom of this page!