How to Find the Least Expensive Home Insurance

It can be difficult, but not impossible, to find a balance between low-cost home insurance and high-quality coverage. After all, should something happen to your home, you’ll want to know that your insurance company will be there to help you pick up the pieces. With home insurance rates rising rapidly in some states, it can be tempting to choose the cheapest policy and leave it at that. However, your home is probably your most valuable financial asset — if something happens to it, you could end up in a bind if you cut corners on coverage. Bankrate’s insurance editorial team breaks down how to choose the best home insurance policy for your budget.

How to find the least expensive home insurance — without sacrificing coverage

When you’re comparing home insurance quotes, it’s not unusual to hone in on price. After all, average home insurance rates have steadily increased over the past few years, and potential tariffs threaten to push them even higher.

Budget is important, but choosing the right home insurance company requires considering other factors, too. Here’s what else to look for from a home insurance company.

1. Compare quotes based on coverage

The first thing you’ll look at when comparing home insurance quotes is, most likely, price. But it’s not the only number to take note of. For a fair comparison, be sure that every quote reflects the same coverage limits and deductibles. That way, you know you’re comparing premiums on an apples-to-apples basis.

These three numbers should be as close as possible across all quotes:

• Dwelling limit: Also known as Coverage A, this is how much your insurance company will pay to help rebuild your home if it is damaged or destroyed in a covered loss. Other coverage limits are calculated as percentages of your total dwelling coverage limit, so it’s one of the most important numbers in your policy.
• Personal liability limit: This can help if you or a member of your household is responsible for someone else’s injuries or property damage. It can cover legal and medical expenses, so this limit tends to be on the higher side.
• Deductible: This represents an agreed-upon amount of damage you will cover out of pocket in the event of claimable damage.

In addition to these different coverage limits, you’ll also need to know whether your quotes reflect actual cash value or replacement cost value. Actual cash value coverage tends to cost less; however, it means you’ll receive less money from your insurance company if you file a claim. Replacement cost coverage is more expensive but usually yields a higher claim payout. This is especially relevant to the dwelling (Coverage A) and personal property (Coverage C) parts of your home insurance policy.

Learn more: RCV vs. ACV in homeowners insurance

2. Discounts and higher deductibles can help lower your premium

Discounts are one of the easiest ways to get budget insurance. Most carriers offer at least a handful of discounts, and they may provide significant savings on the cost of your policy. Inquiring about discounts when you request quotes can help you see which carrier has the most relevant savings opportunities for you. Some common discounts include:

• Bundling: Purchasing your home and auto insurance from the same company may result in a discount on one or both policies.
• Security alarm: Extra security features, such as a burglar alarm or fire protection system, may earn you a discount.
• New construction: If your home was recently constructed or renovated, you could qualify for a new construction discount.
• Loyalty: If you have been with a carrier for a certain amount of time, then you might qualify for a loyalty discount.
• Claims-free: Homeowners who haven’t filed a recent claim, typically within the last three to five years, may be eligible for a claims-free discount.

In addition to adding discounts to your policy, you can further lower your home insurance cost by choosing a higher deductible. Think of it like a tradeoff with your insurer: in exchange for agreeing to pay more money out of pocket when you file a claim, you’ll get a lower monthly premium. Getting quotes for different deductible levels can help you find the sweet spot.

3. Research trusted third-party ratings

Trusted third-party ratings can provide a snapshot of a company’s quality. For example, customer satisfaction scores from J.D. Power may show how top carriers compare to one another and handle claims. AM Best and Standard & Poor’s provide financial strength ratings that indicate a carrier’s historical ability to pay out claims. Lastly, complaint indexes from the National Association of Insurance Commissioners reflect how many complaints have been filed against a company compared to the expected number for a company of its size.

How you manage your policy and communicate with company representatives is also something you may want to consider. For example, if you live in a remote area, you might gravitate toward carriers with highly rated digital tools so you can manage your policy online.

4. Ask a licensed insurance agent or broker

You don’t need to navigate the insurance shopping process completely on your own. If you’re overwhelmed or want another opinion, you can always contact a licensed insurance agent or broker. While captive agents work for just one company, independent agents and brokers usually work with multiple insurers and can help you find the policy that meets both your coverage needs and budget.

Frequently asked questions

• What is the least expensive home insurance company?
  

  If you want to find the least expensive home insurance company for your unique situation, it typically helps to compare personalized quotes from multiple home insurance providers. Obtaining quotes from a number of different insurance companies will let you compare the cost and coverage to determine which option may be the cheapest for the type and amount of coverage you need.

• Is homeowners insurance required?
  

  Home insurance is not required by federal or state law, unlike car insurance. If you have a mortgage on your property, however, it is likely that your lender will require you to carry insurance coverage. Once your mortgage is paid off, you can cancel your policy if you wish. This may not be the best course of action, though, since home insurance offers you the financial security and peace of mind that comes with knowing you will be covered if your home incurs significant damage from a covered peril.

• Are there companies that specialize in budget home insurance?
  

  While they may not advertise themselves as budget companies, USAA, Auto-Owners, Allstate, Erie and American Family tend to offer affordable rates to a variety of homeowners.  However, details specific to you and your home determine your premium. Homeowners in high-risk areas often pay more than the national average for coverage, for instance. Speaking with friends, neighbors and licensed agents in your area can give you a starting point when requesting home insurance quotes.

• How can I lower my cost of home insurance?
  

  There are several things you may be able to do to lower your cost of home insurance. In states that allow credit history as a home insurance rating factor, you may be able to save by improving your credit. You may also be able to save by carefully evaluating damage before filing a claim. If the out-of-pocket cost to repair damage is low, it may be worth repairing the damage out of pocket and avoiding potential rate hikes associated with filing a claim.

• Are smaller companies cheaper than large home insurance companies?
  

  It depends. Ultimately, since insurance rates are highly personalized, one of the best ways to find the cheapest coverage is to request quotes from several companies. If you prefer to work with smaller insurance providers or local agents, be sure to request quotes from a select few, but consider checking out larger providers, too.