American Modern Insurance Review: Sky-High Rates, But a Good Option For Specialty Coverage

American Modern Insurance Review: Sky-High Rates, But a Good Option For Specialty Coverage

Editor's Rating

High rates make this specialty insurer only worth a look for buyers with unusual insurance needs.

Good for

  • People who live in old, historic or low-value homes
  • Residents of coastal areas
  • Owners of rental properties

Bad for

  • People who can get affordable coverage elsewhere
  • Homeowners in New York or Florida
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Editor's Rating

High rates make this specialty insurer only worth a look for buyers with unusual insurance needs.

Good for

  • People who live in old, historic or low-value homes
  • Residents of coastal areas
  • Owners of rental properties

Bad for

  • People who can get affordable coverage elsewhere
  • Homeowners in New York or Florida
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American Modern Insurance is a specialty insurance company, offering insurance to homeowners who can't find adequate coverage from mainstream companies. Home insurance shoppers are very unlikely to find the lowest premiums for insurance at American Modern. However, the company has satisfactory customer service reviews, which puts it ahead of some other specialty insurers.

American Modern Customer Service Ratings and Reviews

Overall, we found that American Modern has about average reviews for its customer service. The company has a rating from the NAIC of 1.17, meaning that it received slightly more complaints than can be expected relative to its size. The most common issue cited in customer complaints were delays in processing and paying out claims. However, smaller and more niche insurance companies are known for having substandard service, since there is limited competition. As such, American Modern's ratings should be considered satisfactory given its market position.

American Modern insurance has excellent financial ratings. It received an A+ rating from A.M. Best, meaning that the company has very strong financial practices and that customers should not be concerned about the company's ability to pay out future claims.

American Modern Homeowners Insurance Quote Comparison

We gathered quotes from American Modern and three leading homeowners insurance companies to understand how its prices compared with its competitors. American Modern had the highest annual premium for home insurance of all the companies by far—American Modern's rates were often twice as expensive as the best-priced competitor we found. This comes as no surprise, as American Modern's focus on the specialty insurance market means that it charges higher rates to all customers in exchange for more lenient restrictions on who it covers.

Graph showing costs of American Modern homeowners insurance and competition

American Modern Homeowners Insurance Coverage Options

American Modern's base homeowners insurance coverage is more limited than what is considered a standard homeowners insurance policy. It only covers specific named perils for your home and your personal property—this level is often called HO-2 coverage. Additionally, the structure of your home and the items in it are only covered up to their actual cash value (ACV). For example, if a set of golf clubs originally valued at $500 are destroyed in a fire, but they have depreciated to be worth only $250 at the time of the fire, American Modern would pay you $250 to replace them.

However, you have the option to extend your coverage to cover open perils (HO-3), meaning that you're protected against everything except specific exclusions, such as earthquakes and floods. Customers may also choose to extend their coverage to replacement cost value (RCV). In the golf club example above, you'd receive $500, enough to buy a set of brand-new clubs.

Other Specialty Home Coverages From American Modern

American Modern offers several different types of specialty home coverage for properties that can't be covered under typical homeowners insurance because they are susceptible to different risks than standard homes. For example, a vacation home that is unoccupied for much of the year is less likely to have a cooking fire, but may sustain more damage in a storm because no one was there to board up the windows. American Modern offers the following special types of property insurance coverage:

  • Vacation Home Insurance: Coverage is available for high-end vacation homes, which are often insured to the same limits as regular full-time homes, due to their high value; as well as for more rustic cabins and cottages, which typically carry lower levels of coverage.
  • Mobile and Manufactured Home Insurance: American Modern provides coverage for manufactured homes, which are not eligible for coverage under most standard homeowners insurance policies.
  • Landlord Insurance: This coverage is for people who own a multi-unit building and rent it out to others.
  • Vacant Property Insurance: American Modern's vacant property insurance protects a home you own that is unoccupied for a long period of time, such as a house undergoing renovations or if your house is vacant before you sell it.

American Modern Insurance Requirements

As American Modern often deals with customers who are disqualified from getting homeowners insurance elsewhere, the company has specific minimum requirements for homes they'll insure. Their standard homeowners policy requires that your home be a single- or two-family building, in average or better condition, and regularly maintained. However, there is no home age limit, so owners of older homes will be able to get coverage.

American Modern Homeowners Insurance: Our Thoughts

American Modern home insurance is a niche product by nature. Rather than provide insurance applicable to the broadest category of homeowners at the lowest possible rates, American Modern offers what's often referred to as "specialty insurance." Specialty insurance is for people who can't get insurance from mainstream insurers, either because the rates quoted are too high, normal insurers won't provide the type of coverage the homeowner needs or the insurance company simply refuses to take them on as a customer.

Who Needs Specialty Home Insurance?

There are a number of reasons your home might not qualify for insurance from other companies. It might be because your home is in a high-risk location, like on the coast; because it's very old, historic, or just low-value; or because you have made a high number of insurance claims in the recent past.

It can be helpful to think of American Modern as similar to an auto body shop that specializes in exotic cars. While the shop will likely able to fix a mass-market sedan, it is liable to charge you much higher rates than you can find elsewhere. But if you have an unusual car, it's worth paying extra for the service that matches your needs.

Similarly, the premiums for American Modern Insurance are very high compared to typical insurance companies, and if you can get the right coverage from another insurer, you will probably save money by doing so. But if you have insurance needs that a normal insurance company won't cover, such as a historic home or a pet that's been deemed dangerous, American Modern could be your best option.

Specialty insurance companies have a reputation for poor customer service; they have carved out a niche so specific for themselves that their customers have no choice but to select them. That's not the case with American Modern. While it doesn't have industry-leading service, it has customer service that should meet expectations.

A drawback to considering American Modern home insurance is that quotes are not available online. While the company does provide an online quote request form to minimize the difficulty of receiving a quote, you'll still have to wait for an agent to contact you to find out your rates. And homeowners in Florida and New York will have to try other insurers, as American Modern does not provide insurance in those states.

Also, unlike many insurance companies, American Modern Insurance Group doesn't offer any discounts to its customers, such as for bundling multiple policies, paying in advance or signing up early. So there is little opportunity to mitigate the company's high rates with a discount or price cut.

Bottom Line: For people with specialized homeowners insurance needs, American Modern's excellent financial ratings and customer service that's better than some competitors make it a good choice. But anyone who can get coverage from a standard insurer should look elsewhere.

Matt is a Technical Writer at ValuePenguin who works on distilling the complex details of insurance into accessible advice. He previously created educational content at Grovo Learning and MarketSmiths Content Strategists. Matt's consumer-focused analysis of insurance has appeared in publications like CNBC, Yahoo Finance and the Miami Herald.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.