Best Homeowners Insurance Plans of March 2024 (2024)

How to Choose the Best Homeowners Insurance Policy

Finding the best homeowners insurance policy for your situation can save you money and ensure that you have enough financial protection if you need to file a home insurance claim in the future.

Here are some tips to help you get started on finding the best home insurance.

1. Determine How Much Coverage You Need

Review each basic coverage type and adjust the amounts to fit your specific needs. You can then build on that base with extra coverage if needed. Here’s what that might look like:

Dwelling coverage

The amount of dwelling coverage you need depends on the cost to rebuild your home. This amount should be based on local construction and material costs. Your home insurance company can provide an estimate for the dwelling coverage amount you need, as it’s challenging to determine the right amount on your own.

You may also want to add extra coverage likeextended or guaranteed replacement cost coverage, if available:

• Extended replacement cost coverageprovides an added financial cushion to your dwelling coverage if you need to rebuild your house, such as after a fire. For example, your insurer may offer an extra 20% of dwelling coverage if your base amount is not enough to rebuild.
• Guaranteed replacement cost coveragemakes sure your policy will provide enough money to rebuild your home no matter what the cost.

Contents Coverage

Contents coverage reimburses you for stolen or damaged personal possessions covered by your home insurance policy. Creating ahome inventoryis a good way to calculate how much coverage you need. You may also want to have “replacement cost” coverage. This reimburses you the cost of new items, as opposed to actual cash value coverage, which pays only the depreciated value of your damaged items.

Liability Coverage

Liability insurance pays out to other people if you’re sued over someone else’s injuries or property damage that fall under your home insurance. You want to buy enough liability coverage to coverwhat can be taken from you in a lawsuit.

Additional Living Expenses (ALE) Coverage

ALE reimburses you for extra costs if you can’t live at home because of damage from a problem covered by your home insurance. It also pays extra living expenses if you are under a mandatory evacuation, such as an evacuation order because of a wildfire—even if your home is not damaged.

Insurance companies typically set ALE coverage at a percentage of your dwelling coverage, such as 20%, but you can buy more coverage if you need it.

Other Coverage Options

Home insurance doesn’t cover all problems you may encounter. You can fill in gaps in a policy with separate or supplemental coverage like flood insurance, earthquake insurance, water and sump overflow coverage, or home warranties for appliance and systems breakdown coverage.

2. Compare Home Insurance Quotes

After figuring out how much homeowners insurance you need, you can start comparinghome insurance quotesfrom multiple insurance companies. Comparing quotes allows you to zero in on the cheapest homeowners insurance options. Insurers’ rates can vary considerably for the same coverage, so it’s smart to compare home insurance quotes from at least three insurance companies.

You can get free home insurance quotes online or through an insurance agent. Online home insurance quote options include going to an insurance company’s website or visiting a website that offers multiple quotes at once.

An insurance agent is another option. You can get quotes from multiple companies by using an independent insurance agent. A “captive” insurance agent works only with one insurance company.

Get Home Insurance Discounts

Homeowners insurance companies offer many discounts that can reduce your policy costs.Home insurance discountsoften include:

• Claims-free discount:For not filing a home insurance claim within the last few years.
• Disaster preparedness discount:For taking steps to protect your home against natural disasters. That may include installing storm shutters and shatterproof glass if you live in an area prone to hurricanes.
• Employment, organization and association discounts:Your profession, interests or organizations could lead to savings on home insurance, depending on your insurer.
• Insurance payment discounts:For paying in full for each term or going paperless.
• Multi-home discount:If you have multiple homes, such as a vacation home, you can save by bundling the policies with the same company.
• Multi-policy discount,also called bundling discount: For buying multiple policies from the same company, such as home, auto, renters and even life insurance in some cases.
• New or renovated home discount:Home insurance companies view a new or updated home as a lower risk so usually offer a discount in these cases. You usually must upgrade wiring or plumbing to qualify for a renovated home price break.
• Roof age discount:A good roof reduces potential claims, so a newer roof can bring a home insurance discount.
• Safety and security discounts:Fire safety devices like smoke alarms, sprinklers and security devices like burglar alarms and deadbolts don’t just protect your home. They also can lead to home insurance discounts. Make sure insurers know about those enhancements so you can maximize your discounts.

3. Customize Coverage for Your Needs

A standard home insurance policy is a great foundation that will cover many of the most common problems. To build a policy that fills gaps you might still have, consider the below options.

“Schedule” High-Value Items

Certain types of items, such as jewelry, have “sub-limits,” meaning your insurance company will only pay up to a certain amount for those items. For example, a standard home insurance policy usually has a $1,500 sub-limit for the theft of jewelry. To properly insure valuable items, consider “scheduling” them. When youschedule personal propertyyou insure items separately for their full value, and the coverage in your home insurance policy can then be used for everything else, such as clothes, rugs and kitchenware.

Replacement Cost vs. Actual Cash Value

Replacement cost pays to replace an item with a brand-new version, whereas ACV reimburses you for an item’s depreciated amount. Have a 10-year-old TV that was destroyed in a fire? Then you would be reimbursed for a 10-year-old TV under ACV coverage. Choosereplacement cost coverage instead of actual cash value coverageif you’re looking for the best homeowners insurance.

Buy Endorsem*nts to Fill Gaps

Endorsem*nts are add-ons that allow you to tailor your home insurance policy and fill in any coverage gaps. For example, some insurance companies sell increased coverage for trees and shrubs, home systems breakdown, and water backup and sump overflow.

Buy Insurance for Specific Natural Disasters

Even the best homeowners insurance plans can unravel if certain natural disasters hit, such as floods, earthquakes and landslides. These problems aren’t covered by standard home insurance. It’s important to consider whether you should buyflood insuranceandearthquake insurancebased on where you live.

What Does Home Insurance Cover?

Home insurance covers your house, other structures on your property like barns and fences, and your belongings. It also provides liability protection and coverage for additional living expenses if you’re forced out of your home due to damage.

It’s smart to reviewwhat home insurance coversso you can be sure you understand how a policy works to protect you, your home and your belongings.

A standard home insurance policy contains these valuable coverage types.

Dwelling Coverage

The dwelling section of a home insurance policy covers your house structure. The dwelling coverage amount should reflect the cost to rebuild the house based on the construction and labor costs in your area. Dwelling coverage is not based on the real estate market value of your home.

There’s related coverage for other structures such as a fence or unattached garage.

Personal Property Coverage

Personal property coverage pays to repair or replace your personal belongings if they are damaged or destroyed. This encompasses furniture, clothes, kitchenware, house decor such as curtains and everything you have packed away in boxes in your basem*nt or attic.

The coverage amount for personal property is usually set between 50% to 70% of the dwelling coverage amount. For example, if your dwelling is insured for $250,000 and your contents coverage is set at 50%, you’ll have $125,000 in contents coverage. You can buy more personal property coverage if you need it.

Liability Insurance

While it’s easy to focus on the material items like your house and belongings, homeowners insurance includes crucial coverage for liability.

This liability insurance pays for injuries and property damage accidentally caused by you to others. For example, if a guest trips on your sidewalk and gets hurt, liability insurance can pay their medical bills. Liability insurance also pays for a lawsuit judgment if you’re sued, and your legal defense costs.

If your liability insurance is inadequate, you could be on the hook for any amount over the policy limits. For the best homeowners insurance, a general rule of thumb is to buy enough liability insurance to cover your net worth, or what can be taken from you in a lawsuit.

Umbrella insuranceis an inexpensive way to add more liability insurance.

Additional Living Expenses Coverage

Also known as “loss of use,” additional living expenses coverage can pay for extra expenses like hotel bills, restaurant meals and pet boarding if you can’t live at home while it’s being repaired due to damage covered by the policy.

The amount you have foradditional living expensescoverage is typically set at a percentage of your dwelling coverage amount, but you can buy more if you don’t think it’s enough.