Compare home insurance companies
Comparing home insurance companies doesn’t take long, and it’s an important part of the insurance-buying process. It can be broken down into a few basic steps.
Check customer reviews
There are several ways to approach finding customer reviews of home insurance companies. Start by talking to people you know: family, friends and co-workers are all good sources.
“Look on the internet for service ratings and reliable claims payment practices,” Wells says.
But remember that people often choose to write a review of a home insurance company only when they’ve had a bad experience and are angry. That can make it hard to get a balanced view of how an insurance company has performed since happy customers don’t often feel the need to write a review.
Still, customer reviews are important and can help you to identify red flags, like repeated reports of the same issue.
Check with ratings agencies
Several well-respected agencies rate homeowners insurance companies, and they should be a part of your research into the company that will insure your home. The big three are J.D. Power, AM Best and the National Association of Insurance Commissioners (NAIC).
J.D. Power releases two homeowners insurance surveys each year, both of which ask real homeowners to rate their insurers. One is an overall satisfaction survey, and the other is focused on claims satisfaction. J.D. Power generally only rates the biggest insurance companies but is a trusted source.
AM Best rates insurance companies on financial stability.
“The absolute worst thing is to get an insurer that is financially unstable,” Wells says. A quick look at an insurance company’s AM Best score can tell you whether you should have any concerns about the company’s ability to pay claims or its likelihood of becoming insolvent.
“If an insurer is not rated by AM Best, I’m very leery because virtually every insurer is rated by them,” says Wells.
The NAIC gathers customer complaint information about home insurance companies and gives them a score based on whether they have more or fewer complaints than the industry average. A complaint ratio well above average may be a cause for concern.
Compare coverage offerings
Although many things about home insurance policies are standard, like dwelling coverage and personal property coverage, insurance companies can choose to include additional coverage at no extra cost. Some companies include extended replacement cost coverage as standard with every policy, for example.
Make sure you’re looking at what the insurer is adding in terms of policy perks and added benefits and take that into consideration when choosing which company to go with.
Compare home insurance rates and discounts
Rates are an important part of the picture when choosing a home insurance company, and when you’re on a budget, it can be tempting to go with the cheapest option. But Wells warns insurance shoppers to be cautious.
“You usually get what you pay for, so if the coverage is super cheap, be careful,” she says.
You should also look at the list of discounts each company offers. Discounts can bring your home insurance rates down significantly, and even a company with a higher base rate might wind up being cheaper once discounts are applied. Don’t be afraid to ask the company how to qualify for more home insurance discounts.
Things to consider when comparing home insurance companies
When comparing home insurance companies, make sure you take all of the steps above, and with all of that information, you should have what you need to make an informed decision.
For each of the home insurance companies you’re considering, ask and answer the following:
- Does this company offer the coverage and policy I need for my home?
- Does the insurance company allow me to handle my policy the way I prefer to do so, such as working with an agent, online or via a mobile app?
- When I call this insurance company, how long does it take to get a person on the phone to help me?
- How are the insurance company’s financial ratings and other third-party ratings?
- How do the home insurance rates compare to other companies for the same coverage?
- Are there any red flags in this company’s reputation that make you hesitate?
- Can you bundle home and auto and if so, how much is the discount?
- What other discounts are available?
Make sure you’ve compared several home insurance companies on these points before you make a decision.
Which homeowners insurance companies should you compare?
You should compare three to five companies, and it’s a good idea to compare some large insurers against some of the small, local companies in your area.
You can narrow them down using the steps above, removing any that don’t make the grade for financial stability and customer service before comparing prices.
A good place to start your list of insurance companies to compare is our best insurance companies list. It comprises the best major insurance companies in the U.S. Then, do a little research on the smaller companies operating in your area and compare a few of those as well. Sometimes a smaller company can offer great prices and personal service, so don’t count them out. And remember – the cheapest insurance company isn’t always the best.
While it’s a lot of work to compare home insurance companies carefully, the end result is a policy with a company you can rely on when you need it.
