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Best Iowa Homeowners Insurance Companies

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Iowa has it all-natural beauty, flooding, blizzards, hail, and the occasional tornado. It’s imperative for those in the Hawkeye State to consider all aspects of inclement weather when considering insurance; if it falls from the sky, it could cause harm to your home.

In addition, adding flood insurance to supplement your homeowners insurance is something else that should be strategically decided amongst homeowners. For more information about homeowners insurance, check out Benzinga’s Best Homeowners Insurance Companies.

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The Best Homeowners Insurance in Iowa

Average Annual Premium in Iowa

Home insurance rates in Iowa trend lower than for much of the country, with Iowans paying an average of $853 compared to a national average of $1,132. Because home insurance rates are a reflection of individual risk and insured value, rates can vary considerably from one home to the next, even if the homes are similar. However, lower average rates can leave some room in the budget to add coverages and build a policy that protects your home more completely.

Find the Best Premium for Your Home

Everyone likes to save money. This is particularly true with insurance because the benefits seem intangible — until you have a claim. When that claim does happen, as will happen with 1 in 15 homes in Iowa this year, the money saved by choosing the lowest premium could hurt you financially if those lower rates came at the cost of reduced coverage or providing no coverage at all for some risks to your home. 

Your insurance policy, assuming that it’s a standard homeowners policy, has three main coverage areas: dwelling coverage, personal property coverage, and personal liability coverage. But while many policies are structured similarly, the details of the policy can affect how much is paid in a covered claim or whether a claim will be covered at all.

Dwelling coverage

The largest part of your policy premium pays for dwelling coverage, which insures the cost of rebuilding the house itself. Most covered claims don’t require a total rebuild, but the cost of a complete rebuild is a basis used in calculating premiums and in settling claims.

Dwelling also coverage has a few other smaller coverages associated with it, such as coverage for other structures, including sheds, fences, gazebos, etc. While there are several types of home insurance, most homeowners insurance policies sold today are either HO-2 or HO-3.

An HO-2 Policy is also called a named-peril policy because it only provides coverage for the perils specifically named on the policy. A peril is a risk, something that can damage your home. Some estimates indicate 90 percent of the perils that can lead to a homeowners insurance claim are covered by an HO-2 policy. As a high percentage, that sounds pretty good, unless your home is damaged by a peril in the other 10 percent that isn’t covered. The other common policy type is called HO-3, which insures your home against all perils except those perils that are specifically excluded. This is also called open-peril coverage or sometimes an “all-risk” policy.

Notable coverage exclusions include land movement and flooding, but there are several others. It’s important to note that HO-3 is open peril for dwelling coverage but is named peril for personal property; an HO-5 policy, which is less common, covers both dwelling and personal property on an open-peril basis. Ideally, you’ll want to purchase an HO-3 policy or an HO-5, if available.

Both policy types provide dwelling coverage for almost anything that can damage your home, excluding only a handful of perils. The dwelling coverage on your policy should reflect the cost to rebuild your home as opposed to the market value of your home — which may fluctuate. Insurers use specialized software to calculate the rebuild cost of your home, but an insurance policy is a contract and ultimately it’s up to the customer to approve the calculated figure.

If the coverage amount appears low, review the details of the home with your agent. When you have a claim, the insurance contract you agree to will govern the claim so it’s important to get it right.

Personal property coverage

Many home insurance policies provide coverage for personal property up to a default coverage limit, or an amount chosen by the insured. Default coverage limits, if left unchanged, are usually a percentage of the dwelling coverage limit.

For example, a policy with dwelling coverage of $200,000 and personal property coverage at 60 percent of the dwelling coverage would provide up to $120,000 to replace your personal belongings in a covered claim. The words to note are “up to” because there are a number of ways in which you might not be paid full value for your belongings in a covered claim. Limitations on coverage for certain valuables can prevent full payment for items such as jewelry, coins, or firearms which have fixed amount limits.

Your jewelry might be worth $10,000 collectively, but your policy will be limited to a fixed amount of $2,500, using a common coverage limit as an example. Particularly valuable items can sometimes be specifically insured on your policy, but sometimes a separate policy is needed. Coverage for personal property is also offered as Actual Cash Value or as Replacement Cost Value.

Actual Cash Value is a depreciated amount, with the insured value of items adjusted for wear and tear due to age. This is similar to how your auto insurance coverage works of you have full coverage. Replacement Cost coverage insures your personal property for the cost of replacing an item damaged in a covered claim item with the same item or a substantially similar item.

Even with Replacement Cost coverage, the preferable option, your damaged items will be compensated at actual cash value — until you provide proof of replacement — at which time, the insurer will pay the difference between actual cash value and your true replacement cost.

Notable exclusions for dwelling and personal property

Every home insurance policy comes with some exclusions, perils that won’t be covered by the policy. There are three perils in particular of which you should be aware:

  • Floods
  • Land movement (including sinkholes and earthquakes)
  • Water backup and sump pump overflow

Coverage for floods will require a separate policy. Coverage for the other two exclusions, land movement and water backup and sump pump overflow, can sometimes be added to a policy with an optional endorsement.

Personal liability coverage

Other people can be accidentally injured at your home and the property of others can be unintentionally damaged. Both of these common occurrences can lead to costly liability lawsuits. Most home insurance policies provide a minimum of $100,000 in personal liability coverage for unintentional injury to others or for accidental damage to the property of others. 

Most commonly, homeowners choose $300,000 in coverage, an inexpensive upgrade, but higher coverage options may be available. Whether you win or lose, lawsuits come with legal expenses. The good news is that most home insurance policies will pay for your legal defense and the legal costs are outside of your coverage limits.

This means that the amount available for liability coverage isn’t reduced by your legal costs.

Other coverages

Your home insurance policy might provide some other coverages related to the main coverages. For example, you might have coverage for additional living expenses, which pays for some extra expenses if your home is damaged in a covered claim and you have to go to a hotel or eat out for a while. Medical coverage is provided with some home insurance policies as well.

This coverage helps to pay for smaller injuries to others for which you may be held liable. Coverage amounts vary from $1,000 to $5,000 and you can think of this coverage as “good will”, with a goal of helping with smaller medical expenses and a benefit of avoiding lengthy and costly lawsuits. Some policies also (optionally) offer identity theft protection, which is really a separate product, but frequently included in home insurance quotes.

Deductibles

If you’ve ever had an auto insurance claim, you’re probably aware that the insurance deductible is the part of the claim that you pay. Home insurance policies often come with two deductibles: one for wind/hail damage and a separate deductible for all other covered perils.

Typically, deductibles will be $500 to $1,000 at a minimum, but they can also be a fixed percentage of the dwelling coverage. With a percentage-based deductible, a home insured for $200,000 with a 3 percent deductible makes the insured homeowner responsible to pay for the first $6,000 in damage due to a covered claim. A higher deductible can lower premiums but creates more financial exposure if you have a claim.

Discounts

Discounts can be a great way to reduce the cost of insurance and most insurers offer lots of discounts, but not all of them are automatic. You’ll want to inquire about which discounts are available to see if there are any extra discounts for which you qualify. Common home insurance discounts include:

  • Multi-policy discounts for bundling more than one policy type
  • New home buyer discounts
  • Senior discounts
  • Claims free discounts
  • Loyalty discounts
  • New customer discounts
  • Discounts for eligible groups or organizations

Discounts can save you a lot of money on insurance premiums, but be aware of how each discount is applied and what can cause your discounts to disappear, such as new customer discounts that usually expire within a few years.

With average annual snowfall totals that rival some states in the snowy Northeast and tornadoes ripping through parts of the state when the weather turns warmer, Iowa certainly has its weather-related risks. Damage from tornadoes would be covered under wind/hail coverage on your home insurance policy — and usually subject to a separate deductible.

Speaking of hail, ice falling from the sky makes a bulls-eye on roofs in the Hawkeye State, spawning an industry of roof repair businesses. Be sure to ask about your roof coverage. If the coverage for your roof is Actual Cash Value (depreciated) and you have a high wind/hail deductible, you might not be as covered as you think. 

Sinkholes, another growing problem for homeowners, are not covered by a standard home insurance policy, requiring a rider or the purchase of a special policy to cover land movement, which will also cover earthquakes. But there are some exclusions to coverage. Information provided by the Iowa state Mines and Minerals Bureau estimates there are 6,000 abandoned coal mines burrowed beneath 38 of Iowa’s counties, each mine with a network of mine shafts and underground rooms.

Unfortunately, no insurance policies are available in Iowa to cover mine subsidence, which is when underground mines cause land movement or sinkholes. However, the state does get money from the federal government allocated for filling sinkholes caused by coal mine subsidence. The U.S. Geological Survey estimates that up to 40 percent of all the land in the United States is susceptible to sinkholes due to various causes.

Flood Insurance

Average annual rainfall in Iowa is slightly above the national average of about 30 inches, but the problems start when several of those inches fall at once. In 2016, up to a foot of rain forced evacuations in parts of Cedar Rapids, Iowa’s second largest city. Floods can be extremely dangerous and damaging — and damage from floods isn’t covered by a home insurance policy.

The simplest way to understand what defines a flood is to think of a flood as water that touched the ground before entering your home. Household water mishaps may leave part of your home covered in water, but those common incidents aren’t floods in regard to insurance coverage. 

Flood insurance can be purchased through most insurance agents and premiums can range between a few hundred dollars per year and a few thousand. Like any type of insurance, premiums are based on risk and insured value. Homes at lower elevations, near bodies of water, or insured for higher amounts can have higher premiums than other homes.

Deductibles for flood insurance tend to be higher than the deductibles for homeowners insurance coverages and separate deductibles apply for the building and its contents. Be aware, flood insurance does not cover damage to finished basements. Consider any area of your home that is underground to be at risk.

Most Affordable Cities

When determining a premium for your home insurance, insurers look at many factors (sometimes thousands) that help them understand the risk of a claim. Among these factors is location — but specifically the risks associated with that location. Crime rates, proximity to water, distance from a fire station, and other considerations are all part of the premium equation.

Because insured value is also part of premium calculations, areas with smaller homes may have lower premiums than areas with larger homes and similar levels of risk. Some of the most affordable cities in Iowa for home insurance include:

  • Muscatine
  • Cedar Rapids
  • Eldridge
  • Dubuque
  • Davenport

Most Expensive Cities

Among some of the more expensive cities in Iowa for home insurance are:

  • Humboldt
  • Mapleton
  • Moville
  • Conrad
  • Sigourney

Top picks for Iowa

Pros
  • Discount for bundling
  • Access to vetted companies
Cons
  • Doesn’t directly offer home insurance
  • Mobile app doesn’t support home insurance

1. Progressive

Well known for auto insurance, Progressive also offers homeowners insurance through a group of affiliated and unaffiliated insurance companies.

Unique available policy endorsements (add-ons) include an Inflation Guard Endorsement, which makes sure your home’s insured value keeps up with the times, and a Secondary Residence Premises Endorsement, to cover a second secondary residence, such as a summer home.

Progressive advertises a discount of five percent or more for bundling home and auto insurance coverage with the company.

2. Farm Bureau

Much like the Farm Bureau in other Upper Midwest states marked by farms and rural areas, the Iowa Farm Bureau has become a valuable resource for insurance and other financial services.

Founded in 1939 to meet the unique insurance needs of farmers, Iowa Farm Mutual Insurance Company expanded its product offering over the years to include property insurance, auto insurance, and even life and health insurance.

Homeowners insurance options with Iowa Farm Mutual Insurance Company include Replacement Cost Coverage or Guaranteed Replacement Cost Coverage, which pays for repairs up to 125 percent of your home’s insured value — a lifesaver when disaster strikes a large area and construction costs spike due to increased demand. Farm Bureau Member’s Choice policies can earn a loyalty discount to help tame premiums.

Pros
  • Website provides helpful information
  • A nationwide network of over 18,000 agents
  • Sizable discount on auto policies for customers who also purchase life insurance
Cons
  • Premiums may be higher than some competitors
  • Less flexibility in term lengths

3. State Farm

Imagine an insurance company that offers all the conveniences of online service — and that also has an agent office convenient to nearly every community.

That company is State Farm, which has nearly 18,000 agents skilled in the workings of State Farm policies. State Farm agents are exclusive agents, meaning they only sell insurance for one company.

Count on this insurer for all your home insurance needs, from renters insurance to homeowners insurance to multi-unit landlord policies. Valuables can be covered with a personal articles policy, a flexible insurance product that can handle anything from remote control drones to diamond rings. Big discounts are available for bundling policies and for a claims-free history.

4. Nationwide

Unlike some of the other insurers in our roundup, Nationwide sells its insurance products through independent agents. The advantage of this structure is the available policy guidance from local agents who know your neighborhood and who can also easily compare options from Nationwide and others.

Nationwide’s home insurance policy highlights include Brand New Belongings, which is full replacement cost coverage for personal property, and Better Roof Replacement, which promises to rebuild your roof with better, stronger materials if your roof is damaged in a covered claim.

Discounts are available for bundling home and auto and Nationwide offers a special discount to seniors.

5. American Family

With American Family’s “Customize Your Policy” tool, you can design a policy to meet your needs. What can be more American than the freedom to choose? From single-family homes to home-based businesses, American Family Insurance can cover your needs.

Discounts are available for bundling home and auto as well as loyalty discounts and discounts for new home buyers. American Family agents are located throughout the Hawkeye State.

Final Thoughts

With the many expenses that come with homeownership, you can begin to wonder if a house is really an investment. But no matter which way markets take home prices, a house is a home and one of the largest purchases most of us will ever make. Not all home insurance policies are created equal and most policies can provide better coverage by reviewing the available options for the policy and making a few changes.

If you’re buying a new policy, invest the time with an agent to ask questions and fully understand your coverage before you sign the bottom line. Once you have a policy in place, review your coverage with your agent once every 12 to 18 months. Life changes quickly and our insurance needs can often change just as fast. You never know — maybe you’ll qualify for a new discount.

Frequently Asked Questions

1) Q: What are the most common types of home insurance claims?

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1) Q: What are the most common types of home insurance claims?
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Wind and hail claims top the list with nearly 40% of all home insurance claims due to these two acts of nature. Fire and lightning are the second most common, but claims due to fire tend to much bigger than claims dues to other types of risk. The possibility of a total loss is why it’s so important to insure your home for the full cost of rebuilding. Get a custom quote today.

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2) Q: If I drop my computer, will home insurance cover the cost of replacement?

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2) Q: If I drop my computer, will home insurance cover the cost of replacement?
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Home insurance policies usually cover personal property for a specific list of risks, called named perils. These perils might include fire, theft, burst pipes, and more, but dropping your laptop or TV or spilling soda on your new game console isn’t covered. See the best home insurance providers for a custom quote.

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3) Q: What does home insurance cover?

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3) Q: What does home insurance cover?
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Most modern home insurance policies cover your home for nearly all risks. However, every policy has exclusions, among which you’ll find things like neglect, wear and tear, and ordinance or law. Land movement, including earthquakes, and floods are excluded as well but can be insured with a separate policy. Personal property and liability coverage is also part of most home insurance policies. Get the best policy quote here.

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