Life can throw curveballs your way when you’re a homeowner. Hailstorms, fires, floods and even someone plowing their car into your house are possibilities — though they might seem remote. That’s why having enough hazard insurance built into your homeowners policy is essential. We’ve researched the best hazard insurance so you’re covered no matter what happens.
The Best Hazard Insurance Companies:
- Best Overall for Hazard Insurance: Amica
- Most Affordable for Hazard Insurance: Allstate
- Best for Working with a Local Agent: State Farm
- Best for Additional Coverage: Erie
- Best for Highest Limits: Farmers
What Hazard Insurance Covers
Hazard insurance is the portion of your homeowners insurance policy that covers your home’s actual structure, including the roof, bare walls, floors and ceilings. It protects your home from damage caused by:
- Vehicles or aircraft that crash into your home
- Weight of snow, ice and sleet
- Tree branches and other falling objects
- Fires and smoke
- Civil uprisings and riots
Average Cost of Hazard Insurance
Hazard insurance is a part of your homeowners insurance policy. Your mortgage lender may require you to have a hazard insurance policy, but that typically means a homeowners policy will protect you and your home from unexpected hazards.
The cost of your policy can significantly vary, even from what your next-door neighbor is paying. The Federal Reserve Bureau estimates that the average homeowners insurance premium can range from about $300 to $1,000 a month. But your policy actually can be less expensive than that.
It depends on several factors such as where your home is located, how old it is, your credit score and your insurance score and the types of coverage you select. For example, you may live on a coastline, where flooding or hurricanes are likely. That may mean you need flood insurance, a type of hazard insurance. Or you may live where hurricanes occur more frequently, so you will need a separate policy to cover damage that may not be covered in your homeowners policy.
Additional riders for those types of hazards will most likely cost more.
When it’s Worth it to Get Covered
Hazard insurance is included in your homeowners policy if you have a mortgage. However, you may live in a home you inherited, purchased with cash or paid off after 15 or 30 years. In those cases, homeowners insurance is not required by a bank or other lending institution. It’s still essential to protect your investment from damage and loss caused by fires, storms or other calamities.
You won’t be safeguarded from a plethora of hazards, including explosions, tornadoes, hurricanes, thunderstorms, hail or wind damage. That means you’ll be forced to pay out of pocket to repair damages.
What to Look for in a Hazard Policy
While it’s mind-boggling to think about the possibility of having to rebuild your house or substantially repair it, the reality is that anything can happen. So it’s essential to make sure your policy will cover anything that may happen to your home, and that you compare home insurance. Here’s what you should look for in a hazard insurance policy:
- Guaranteed replacement clause: Make sure you have enough coverage to rebuild your home in the unfortunate circumstance you have to do so. Many carriers will pay only 120% to 150% of your home’s value. If your home has expensive features such as a handcrafted fireplace mantle or custom cabinets, you may need to purchase extra coverage.
- Loss-of-use clause: If something major happens to your house, it can take several months or even more than a year to rebuild or repair it. That’s why it’s important to make sure you have coverage that pays for you to stay in a hotel or an apartment for that long. A loss-of-use clause will pay for your living expenses that exceed your everyday living costs. Normally, this insurance pays up to 20% of your home’s coverage. However, you can pay for more coverage if you need it.
- Prepare for disasters: Since average homeowners insurance policies don’t cover damage caused by earthquakes, floods, storm drain or sewer damage, you must have additional hazard insurance to cover those calamities. Flood insurance costs an average of $372 a year or more so you have to purchase it through the Federal Emergency Management Agency (FEMA). You can buy earthquake insurance through a private carrier.
Our Picks for the Best Hazard Insurance
You want a reliable and trusted company to be there for you when a circumstance arises that requires you to tap your hazard insurance policy. We picked the best hazard insurance based on rankings in J.D. Power’s 2018 Home Insurance Study, the latest available data. Here are our top 5 picks for the best home insurance.
1. Amica: Best Overall
For 17 consecutive years, Amica has won “Highest Customer Satisfaction Among National Homeowner Insurers” in the J.D. Power U.S. Home Insurance Study.
In the 2018 J.D. Power study, it won top ranking across the board. That means it stands above all other carriers in the nation in every category, including price, policy offerings, overall satisfaction, billing and policy information, interaction and claims.
Amica is available in every state in the nation and offers several discounts. Owning a home security system, multi-policies, making automatic payments, customer loyalty and receiving your bill and policy information electronically are some ways to save money on Amica premiums.
2. Allstate: Most Affordable
Allstate earned “about average” in every category in the J.D. Power’s 2018 U.S. Home Insurance Study but it consistently ranks high among carriers that offer the nation’s lowest home insurance rates.
Allstate services policies in every state and Washington, D.C. Besides its low rates, Allstate also offers a slew of discounts for multi-policy holders, newly constructed homes and additional riders to protect against fire and theft. The company offers up to 20% savings for remaining claims-free policies when you switch from other carriers, signing up for a new policy before your existing policy expires and for enrolling to have automatic payments deducted from your bank account.
Allstate even offers savings if you’re at least 55 and retired, whether you have a smoke-free home and other discounts. Allstate is also praised for its online information and education tools that customers can access for free.
3. State Farm: Best for Working with a Local Agent
Sometimes you want a personal touch. State Farm insurance, available in every state in the nation, has more than 19,000 independent contractor agents and 65,000 employees who serve more than 83 million accounts and policies across the nation.
That means no matter where you live, an agent is likely somewhere near you, and you’re welcome to visit an office, sit down and talk face-to-face. That means a lot when you often can’t get a human being on the phone at other companies. State Farm also offers a healthy number of discounts to help you save money. One way is to have a roof made from impact-resistant materials.
4. Erie Insurance: Best for Additional Coverage
Erie Insurance is financially stable with a superior A.M. Best rating and it received high scores in the J.D. Power’s 2018 Home Insurance study. Compared to many of its competitors, it stood out for its low premium prices. When surveyed, customers rated the nation’s 9th largest homeowners insurance carrier highly for its prices, particularly for coverage levels.
Erie allows its customers to select coverage options tailored to fit their budget and needs. Besides basic homeowners insurance, you can purchase additional coverage to protect you from flooding, water backups, sump pump overflows and earthquakes. Erie also offers around-the-clock customer service, guaranteed replacement cost and 24/7 claims support so someone is available for you when it’s critically important.
5. Farmers: Best for Highest Limits
Rounding out our top 5 carriers is Farmers Insurance. It’s on the list because of its high scores on the J.D. Power 2018 Home Insurance Study and its 2019 superior AM Best rating for its financial strength. You can select standard, enhanced and premier policy coverage tiers for Farmers. Standard coverage provides protection for your basic needs and its enhanced policies offer higher coverage levels.
But the premier policies include the highest coverage limits and can include guaranteed replacement cost coverage from your home with some requirements. Like other top carriers, Farmers has discounts for customers who are claims-free. If you remain claims-free for 5 consecutive years, you may be offered $50 toward your deductible annually as long as you have your policy as well as claims forgiveness.
Protect Your Valuable Asset
Your home is your safe haven and the only place where you can totally be yourself. So protecting it with a solid home insurance policy is a must. Unless you understand your policy and what it covers, you can wind up being shocked that a disaster you’ve just experienced isn’t covered.
A traumatic, trying ordeal isn’t the time to learn about your policy’s coverage. So before you sign on the dotted line, know every detail on your policy to ensure you have adequate protection.
Compare carriers, features and benefits. Also, make sure you have enough hazard insurance to protect you against disasters when your basic homeowners insurance will not.