From choosing a mortgage lender to picking a real estate agent, there’s a lot to consider when purchasing your first home. One of the final steps in the home-buying process is purchasing an insurance policy, and your mortgage lender usually requires it.
But finding the right policy and provider can do more than check a box: It can provide valuable peace of mind that your property will be repaired, rebuilt or replaced after a destructive event, such as a fire or storm. We at the Guides Home Team have analyzed the best homeowners insurance companies on factors important to homeowners looking to purchase a policy, such as overall coverage, brand reputation and customer service. After careful review, we have selected State Farm, Allstate and Liberty Mutual as our top picks for new homeowners due to their helpful online resources, affordable premiums and reputable coverage.
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What To Look For in a Home Insurance Company
When looking for a home insurance company, it is important to analyze each provider’s coverage details, cost and overall reputation. We explain each consideration below to help you find an ideal policy.
- Coverage: To ensure adequate reimbursem*nt in the event of a claim, your policy’s coverage limits should meet your needs. Ensure your dwelling coverage is enough to rebuild your home at current market rates in the event of a catastrophe. Similarly, assess the value of your possessions to determine how much personal property insurance you need. Try to avoid under- or over-insuring.
- Cost: Review your financial situation and choose a policy based on your budget. Affordability is important so you can continue to make on-time payments — if you do not make timely payments, your insurance coverage will lapse. Compare rates from different providers to ensure you get the best deal. We also recommend figuring out the average cost of home insurance based on your location so you know what to expect when looking for a policy.
- Reputation: A company’s reputation can help you understand important information about its financial stability, overall customer service and claims-handling experience. You can assess an insurer’s claims handling and customer satisfaction through sources like J.D. Power and Associates, and look at AM Best ratings to learn about a company’s financial stability. For customer reviews, you can look at the Better Business Bureau (BBB) or Trustpilot.
5 Best Home Insurance Providers for First-Time Buyers
After in-depth research, we found the following to be the best homeowners insurance providers for first-time buyers:
- State Farm: Our top pick
- Allstate: Best for discounts
- Liberty Mutual: Best for finished basem*nts
- Hippo: Best for quick quotes
- American Family: Best for married homeowners
State Farm
Best for Value
4.7
Cost: 4.6/5
Customer Experience: 4.9/5
Industry Standing: 4.2/5
Coverage: 5/5
Our Review
A.M. BestBJ.D. Power829/1000Annual Cost$2,200
Company Overview
State Farm has nearly 100 years of experience in the insurance industry, an impressive A++ (Superior) financial strength rating from AM Best and a higher-than-average customer satisfaction rating from J.D. Power. As a result, it scored exceptionally well in our review as a reputable pick for new homeowners.
State Farm’s website features videos and how-to guides with valuable information about the home-buying process — from shopping for a home to securing a mortgage. The site also has a comprehensive online quote tool that estimates your new home’s value and walks you through the coverage you may need. If you have any questions, State Farm connects you directly to a local agent near you who can work with you from the start of your policy through filing your first claim.
Although State Farm is our top pick for first-time home buyers, it may not be best for those looking to maximize their budget with discount opportunities since it offers fewer savings opportunities than many competitors.
Pros and Cons
Pros Has the highest J.D. Power rating of the providers in this review, indicating high customer satisfaction Provides a personal liability coverage limit option of $1,000,000, which is higher than many competitors Offers additional protection, such as off-premises structures coverage and incidental business coverage, which can be purchased with your policy through a local agent Cons Customer service availability can vary depending on your local agent’s hours of operation Provides fewer discounts than most competitors in this review
Discounts
State Farm commonly offers discounts to homeowners who have a home security system installed on the property, have a recently replaced roof or purchase multiple lines with the company, includingcar insurance.
Endorsem*nts
When getting your quote with State Farm, you can add coverage endorsem*nts for water backup or sewer coverage, earthquake protection, identity theft coverage, loss assessment coverage (if you’re a member of an HOA), sinkhole collapse coverage, energy efficiency upgrade coverage, home systems protection and service line coverage.You can also purchase from an extensive list of extra coverage through your local agent, depending on what they can provide.
*A.M. Best ratings accurate as of July 2024
Allstate
Best for discounts
4.5
Cost: 4.6/5
Customer Experience: 4.3/5
Industry Standing: 4.3/5
Coverage: 4.6/5
Our Review
A.M. BestA+J.D. Power809/1000Annual Cost$2,027
Company Overview
As one of the most popular insurance companies in the country, Allstate serves many first-time buyers with comprehensive homeowners insurance policies. With more than 90 years of experience and an A+ (Superior) AM Best rating, it’s a trustworthy option for home buyers.
Allstate scored the highest in our review of dozens of homeowners insurance companies with an impressive overall performance. It’s our top pick for its combination of generous discounts to help homeowners save on their policy, comprehensive standard coverage, extensive list of add-ons and impressive customer service through its local agents.
However, Allstate may not be your choice if you’re looking for highly customizable policies since its coverage caps and deductibles are a bit more limited than many competitors. Additionally, its prices can sometimes be higher than competitors’ prices, depending on your home’s details and location.
Pros and Cons
Pros Provides a unique Claim RateGuard that can be added to your policy to keep rates from increasing after filing a claim Has a discount for being a home buyer, making it an excellent choice if you’re closing on a property Offers 24/7 customer service through its network of local agents Cons Requires you to speak to an agent on the phone to receive a quote in some areas Has less customizable coverage cap options than many competitors
Discounts
First-time home buyers can take advantage of plenty of discount opportunities from Allstate for things such as being a recent home buyer, setting up automatic payments, having theft or fire prevention devices, bundling with yourAllstate auto insurance policyand being a new Allstate customer.
Endorsem*nts
Allstate offers plenty of optional coverages that can be added to your policy to help fine-tune your coverage on your first home, such as green improvements coverage for upgrading to more energy-efficient equipment during a claim, extended coverage for high-value personal property, identity theft expense coverage, building code coverage, roof surfaces extended coverage, water backup coverage and building structure extended coverage limits.
Liberty Mutual
Best for finished basem*nts
4.4
Cost: 4.4/5
Customer Experience: 4.7/5
Industry Standing: 4/5
Coverage: 4.6/5
Our Review
A.M. BestAJ.D. Power789/1000Annual CostN/A
Company Overview
Liberty Mutual is the sixth-largest property and casualty insurer worldwide, standing out among competitors with a range of valuable discounts and endorsem*nts. For instance, it lets you add inflation protection coverage to your policy, which automatically modifies your coverage limits at renewal according to inflation and gives you a discount on your premium.
The company charges relatively lower premiums than other insurers. You can also lower your insurance costs by taking advantage of its large number of discounts. For example, you can earn a discount if you insure up to 100% of the cost of replacing your home or by setting up automatic payments.
Pros and Cons
Pros Wide range of valuable discounts Offers inflation protection coverage Provides helpful online resources for homeowners Cons A number of other companies get higher ratings from J.D. Power and Associates’ customer satisfaction survey Only offers basic coverages under its standard policy
Discounts
Liberty Mutual will discount your premium for many situations, including:
- Being claims-free
- Getting a quote before your current policy expires
- A recent purchase or renovation of a home
- Having a new roof
- Having wind mitigation features on your property
- Bundling different types of insurance policies, like home and auto
- Enrolling in automatic payments or paperless billing
- Insuring 100% of your home’s replacement cost
Endorsem*nts
The company lets you add various endorsem*nts, which include:
- Water backup
- Blanket jewelry
- Inflation protection
- Earthquake protection
- Personal property replacement cost
- Flood insurance
- Hurricane damage
- Wind and hail damage
- Identity theft insurance
Hippo
Best for quick quotes
4.1
Cost: 4.1/5
Customer Experience: 4.5/5
Industry Standing: 3.6/5
Coverage: 4.4/5
Our Review
A.M. BestNRJ.D. PowerNRAnnual Cost$2,348
Company Overview
Hippo is an ideal option if you want a quick estimate of your home insurance expenses – the company says it can provide a quote within 60 seconds. You must provide your address, coverage needs, personal and household details, and other information to get the quote. Hippo will also let you adjust your coverages and as a result, adjust your premium costs up or down.
You can get a discount from the insurer if your new property has smart-home devices like fire or burglar alarms. When you buy a policy, you can also earn a discount by getting a smart-home kit that includes devices like water sensors, smoke detectors and security cameras.
Pros and Cons
Pros Fast online quote process Provides extended replacement cost coverage Customizable coverage options Cons Does not offer many discounts Not available in all states
Discounts
Hippo provides discounts for the following:
- Being a new homebuyer
- Installing smart-home devices
- Remaining loss-free
- Taking theft protection measures
- Purchasing a policy through a group
- Installing a hail-resistant roof
- Insuring a home located in a qualifying homeowners association (HOA)
- Bundling your policy with a Hippo auto policy
Endorsem*nts
You can buy various endorsem*nts from Hippo, including:
Equipment breakdown
Water backup
Service line
Valuables, extra jewelry and watches
Scheduled personal property
Mortgage payment protection
American Family
Best for married homeowners
4.5
Cost: 4.4/5
Customer Experience: 4.8/5
Industry Standing: 4.2/5
Coverage: 4.6/5
Our Review
A.M. BestAJ.D. Power813/1000Annual Cost$2,668
Company Overview
American Family (AmFam) is a top insurance provider that performed well in our review compared with other providers. For more than 90 years, it has established itself in the industry, offering comprehensive coverage and quality customer service for homeowners.
We chose AmFam as a top choice for new home buyers looking for helpful online resources to assist with purchasing and managing their home insurance. Its website features extensive information about common perils, a coverage calculator, a home inventory tool, a home-buying closing-cost calculator and a detailed first-time home-buying guide.
However, AmFam is not an option for those living in or moving to 31 U.S. states. The provider is only available to homeowners buying a house in Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Nevada, North Dakota, Ohio, Oregon, South Dakota, Utah, Washington and Wisconsin.
Pros and Cons
Pros Includes some extra coverage in the standard policy, such as fungi coverage, ordinance coverage and pollutant cleanup coverage Has a higher J.D. Power customer satisfaction rating than many competitors Partners with a wildfire defense service to offer assistance to its customers during wildfires in certain states Cons Isn’t available in 31 states Doesn’t allow you to customize specific coverage limits like most competitors do
Discounts
When getting your online quote from American Family, you may be offered savings opportunities for bundling with another policy, signing up for autopay, purchasing a home younger than 15 years old, buying a recently renovated home or having parents who are currently American Family policyholders.
Endorsem*nts
In our sample quote, American Family offered us endorsem*nts for equipment breakdown coverage, identity fraud expense coverage, hidden-water coverage for water damage from a leak hidden behind your walls, extra personal property coverage for high-value belongings, personal injury coverage and service line coverage. You also may be able to purchase a flood insurance policy through your agent from the National Flood Insurance Program (NFIP).
How Much Home Insurance Coverage Do I Need?
You can use the table below to better understand how much home insurance coverage you will need based on recommendations from the National Association of Insurance Commissioners (NAIC). To determine your dwelling coverage limit, calculate how much it would cost to rebuild your home based on the average building cost per square foot in your area. Also, factor in any planned home upgrades or improvements, which can increase your rebuilding cost.
| Coverage Type | Standard Limit |
|---|---|
| Dwelling | For full protection, you should carry dwelling coverage equal to your home’s replacement value — the amount needed to fully replace or rebuild it. |
| Other structures | 10% of your dwelling coverage limit |
| Personal property | 50% of your dwelling coverage limit |
| Loss of use | 10% of your dwelling coverage limit |
| Liability | $100,000–$500,000 |
| Medical payments | Most providers offer low limits, from $1,000–$5,000 |
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What Type of Damages Does Home Insurance Cover?
Your home insurance company usually pays for damages to your home and personal property caused by unpredictable events. Homeowners insurance also includes liability protection in the event someone is hurt on your property. Below, we explain what homeowners insurance covers and common exclusions to help you understand your policy.
Covered Events
Most insurance providers cover the following events under standard policies. However, this list is not comprehensive, but rather just the most commonly covered events.
- Fire and smoke damage
- Injuries to others on your property
- Theft and vandalism
- Water damage
- Windstorm and hail damage
Common Exclusions
Insurers do not usually pay for the below events. If you want coverage, you must add an endorsem*nt to your standard policy for an extra cost.
- Earthquake or landslide damage
- Flood damage
- Intentional damage
- Normal wear and tear
- Pest infestation
How Much Should I Pay for Home Insurance?
To get an idea of how much homeowners insurance costs, it is important to understand what factors affect pricing and then compare quotes from several insurance providers. The table below outlines the average policy cost in your city so you can see what others in your area pay for home insurance.
Factors That Affect Home Insurance Rates
To determine your premium rates, insurance providers typically consider the following factors:
- Your location: Insurers calculate risk based on where you live. For example, you will pay more if your property is in an area prone to natural disasters or crime.
- Home age and condition: Insurers charge more to insure older homes in poor condition because of a higher risk of claims.
- Safety features: If your home has safety features, such as smoke or fire alarms, the likelihood of damage is lower. So, insurers can charge lower rates or offer premium discounts for installing such devices.
- Your credit score: Companies consider homeowners with a poor credit history riskier to insure. As a result, these homeowners usually pay higher premiums.
- Your claims history: Insurers may consider you high-risk if you have a history of home insurance claims, which could indicate a likelihood of filing more claims in the future.
How Can I Save Money on My Policy?
There are multiple ways to save money on homeowners insurance, including discounts, comparing quotes from multiple providers, and enhancing the safety and security of your home. Installing safety features like smoke, fire and burglar alarms can reduce the likelihood of loss, resulting in lower rates from insurers.
Common Discounts
Most insurance companies offer the following discounts to help lower your insurance premiums.
- Policy bundling: You can earn a discount if you buy more than one policy with the same insurance company, such as home and auto.
- Remaining claims-free: The insurer might lower your costs if you have not filed a claim for a specified period.
- Home safety: Homeowners with smoke detectors, burglar alarms and deadbolts can qualify for a discount.
- Autopay: You can lower your insurance costs by setting up automatic premium payments.
- Green home: If your home is environmentally friendly or energy-efficient, you may qualify for a discount.
How Does Filing a Claim Work?
The exact claims process may vary depending on your provider, but generally, you should first assess and document the damages to your home, creating a list of affected items. If necessary, file a police report. Once you have reviewed the totality of the damage, contact your insurance provider to file a claim.
The insurance company will assign a claims adjuster to inspect the damage. You will receive a payout based on your coverage limits and deductible when the insurer approves your claim. Then, you can start damage repair or replacement. Your insurance provider may also provide coverage for additional living expenses if you must relocate during repairs or renovations.
Frequently Asked Questions About Home Insurance for First-Time Buyers
The national average cost of homeowners insurance is $2,728 according to the latest Q2 2024 report we sourced from Quadrant Information Services.
No, floods aren’t considered a covered peril in any standard homeowners insurance policy. If you’re particularly worried about floods or you’re buying a home located in a flood zone — as defined by the Federal Emergency Management Agency (FEMA) — you can purchase flood insurance from the National Flood Insurance Program (NFIP) either directly from the organization or through your home insurance agent.
If you have a mortgage on the property, you’ll likely be required to purchase your homeowners insurance policy for your new home before closing. Even if you didn’t take out a loan for the home, you might still want to purchase the policy before closing to protect your wallet from unexpected events.
The purpose of your escrow account is for your mortgage lender to deposit enough money from your mortgage payment each month to cover homeowners insurance premiums, real estate taxes and mortgage insurance, ensuring it’s all paid on time. Then, the money for your policy’s premium will be distributed to your home insurance provider when it’s due.
Methodology: Our system for ranking the best home insurance companies
Our team surveyed dozens of home insurance providers and created a scoring system to assess and compare each company’s quality and service. Here are the factors that account for our provider scores according to our home insurance rating methodology:
- Coverage (28%): We analyze the comprehensiveness of each provider’s standard home insurance policy and compare optional policy endorsem*nts to determine the quality of coverage.
- Cost (27%): We compare cost data for homes nationwide to assess how competitively priced each provider is. We also consider each company’s available discounts when determining its overall cost of coverage.
- Availability and ease of use (25%): We evaluate each company’s customer service options, such as live chat, a customer support phone line, and multiple channels for filing claims and generating quotes. Similarly, we score providers based on their digital resources, such as a mobile app or online customer portal.
- Brand trust (20%): We gauge reputation by evaluating consumer reviews and third-party financial strength and customer experience ratings, including from J.D. Power, AM Best and customer review aggregators.
Companies with the best customer service exhibit 24/7 availability, useful digital tools and a quick claims-filing process. Providers that offer extensive discount options, endorsem*nts, customizable coverage options and unique features score significantly higher than those that don’t, putting them toward the top of our recommendations to readers.
AM Best Disclaimer
If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides.com.
