The Cheapest Homeowners Insurance Companies in 2021

The Cheapest Homeowners Insurance Companies in 2021

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While affordable rates certainly take priority for many home insurance shoppers, it doesn't matter how cheap your insurance is if you can't get coverage when you need it. We focused our search for affordable coverage on insurers who met our minimum standards for effective coverage, dependable service and financial strength. Find out which companies provide the best cheap home insurance, or compare your local options with the tool above.

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When everything is going well, it can be difficult to see the value of homeowners insurance — but in the event of an accident or disaster, you'll want reliable service and sufficient coverage to recover your losses. We compared quotes from a selection of companies to help you find home insurance that's not only affordable but also effective.

Cheapest insurer for most homeowners: Travelers

If you're set on the cheapest rates possible, start with Travelers — but your experience may vary depending on your location and coverage amount.
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Our analysis found that in most cases, Travelers delivered cheaper homeowners insurance rates than any of its major competitors. In the states we surveyed, the quote from Travelers came out to an annual premium of $1,050. Travelers also offers policyholders a number of discounts to help keep the cost of insurance affordable:

  • Multi-policy discount, with a savings of 12% for customers with an auto policy plus three other policies.
  • Home-buyer discount, for customers who have bought a home within a year before their policy starts.
  • Loss-free discount, for policyholders who have not filed a claim.
  • Protective device discount, for homes with devices like smoke detectors, fire alarms, sprinkler systems, home security systems and smart home technology installed.
  • Green home discount, for homes certified by the Leadership in Energy and Environmental Design (LEED) organization.
  • AM Best Financial Strength Rating: A- (Excellent) to A++ (Superior) (varies by state)
  • J.D. Power rank: 16th out of 23 home insurers
  • Unique value: Cheapest home insurance rates overall

Read the full review

However, this affordability comes with a few caveats.

We aren't claiming that Travelers is the cheapest overall insurer in each state — simply that it's the most affordable option among the insurers we found were available in every state. You may be able to find cheaper rates from a local provider in your state or region.

Shoppers should also be aware that Travelers' affordable rates may come with poor customer service. The company scored only 803 out of 1,000 points on J.D. Power's 2020 Customer Satisfaction Index, placing it in the bottom half of the insurers included in the rankings. That said, Travelers is unlikely to default on any claims you make. Its most common Financial Strength Rating of A++ from AM Best indicates a "Superior" ability to meet its financial obligations, although the company's rating dips to A- in Florida.

Ultimately, we find that Travelers home insurance is the best place to start comparing rates for your policy, but it shouldn't be the only insurer you check. Other large insurers — or even local companies — might offer both a decent rate and solid service.

Best home and auto bundle: State Farm

If you need to insure a car as well as your home, State Farm's bundle discount might be your most affordable option.
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  • AM Best Financial Strength Rating: A- (Excellent) to A++ (Superior) (varies by state)
  • J.D. Power rank: 7th out of 23 home insurers
  • Unique value: Best bundle discount we found

Read the full review

If you're shopping for lower rates on auto insurance as well as for homeowners insurance, then State Farm is probably the best insurer to start with. When we calculated the discount that each insurer offers customers who bundle auto and home coverage, the quotes from State Farm showed the greatest potential savings.

According to our research, the home insurance rates calculated from State Farm went down by 22% to 30% when we added an auto insurance policy. In nearly every ZIP code, the discount for bundling with State Farm was greater than with any other insurer we analyzed.

In addition to a solid bundling discount, State Farm offers the following discounts to policyholders:

  • Home alert protection discount, for customers who have added fire, smoke or burglar alarms, or any other kind of home monitoring system.
  • Roofing discounts, for customers who use certain impact-resistant products on roof renovations.

Choosing State Farm for your homeowners insurance offers other advantages besides competitive discounts. It's not only the largest insurer for American homeowners, but also received a score of 829 out of 1,000 from J.D. Power — above the national average of 823. This means that State Farm is also one of the top choices for anyone who values excellent customer service from their home insurance company.

Best for veterans: USAA

Besides its low rates for home insurance, USAA provides customers with excellent service and a one-stop shop for many other financial needs.
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  • A.M. Best Financial Strength Rating: A++ (Superior)
  • J.D. Power rank: 1st out of 23 home insurers
  • Unique value: Low pricing and great service for military and veterans

Read the full review

USAA was the best low-cost homeowners insurance option for veterans, active service members and their families. Although its membership is limited to people who can prove a personal connection to the armed services, USAA combines an excellent reputation for customer service with rates that often beat other home insurers.

In our search for the cheapest home insurance rates, we found that estimates from USAA landed in the middle of the pack for each state we examined. The average annual premium for homeowners insurance with USAA was just under $1,300. Keep in mind that this number may be far from what you see in your own quote if your location, property structure and coverage limits are significantly different from the profile we used. You may be able to get your rates down by asking about USAA's home insurance discounts:

  • Bundling discount, with 10% savings for customers who also take out a car insurance policy.
  • Protective device credit, for policyholders who have installed an ADT home security system.
  • Claims-free discount, with 10% savings for customers who make no claims for five or more years.

Even in states where USAA wasn't the absolute cheapest option for homeowners, we felt that the company's superior customer service reputation more than made up for that fact. And its affordable rates for auto insurance, combined with its solid bundling discount, could help shoppers significantly reduce their premiums. In addition, USAA offers a wealth of consumer-friendly options in other areas like deposit accounts and loans that make it a great place for qualifying members to consolidate all their finances.

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How to compare homeowners insurance quotes

While these companies offer excellent value, your own best rates may vary depending on a number of factors, including where you live, the value of your house and the amount of coverage you purchase. We recommend the following steps as you compare quotes from providers near you:

  1. Assemble all relevant personal information. This includes details about your house, your personal property and your insurance history. Tracking down information about your home and doing a full home inventory of your personal property can take time, so give yourself sufficient lead time.
  2. Identify how much coverage you need. Your coverage needs can change from year to year, particularly if you've done home renovations or acquired expensive personal items like jewelry or fine art. ValuePenguin recommends purchasing dwelling coverage limits that match the replacement cost value (RCV) of your house rather than its actual cash value (ACV). Your premiums will be more expensive, but you will be spared extensive out-of-pocket expenses if your home is destroyed in a covered incident.
  3. Compare quotes from at least three providers. We generally urge shoppers to get quotes from at least three companies, if not more, before purchasing a policy. Insurance policies can vary by hundreds of dollars, so comparing rates is the best way to ensure you're getting a solid deal. Make sure you request quotes for the same coverage limits so your comparison is accurate. You don't want to pay for a policy that seems like a great deal, only to later discover that your coverage rates are lower than expected when you file a claim.

How to lower your homeowners insurance rates

The average cost of homeowners insurance is $1,445 per year, but shoppers can use a number of strategies to reduce their premiums.

Comparing rates from multiple insurers and asking each one about discounts increases your chance of scoring a good deal. However, you can also raise your deductible to get a lower monthly premium. Just make sure that you choose an amount you could reasonably afford to pay should an unexpected event damage your home.

If you're willing to make a long-term investment in your home, consider updating your roof with impact-resistant materials or installing smart alarm technology that can help prevent a burglary or fire. Many insurers will offer you a discount if you make these improvements, as they increase your safety and decrease your likelihood of needing to make a claim.

How we found the cheapest home insurers

State regulations and geographic location have major effects on the business of selling home insurance. As a result, the cheapest option differs depending on where you live. Even in an industry that's dominated by a few major companies with national reach, the most affordable home insurance company in one state may be expensive or simply unavailable in another.

Because of these factors, we limited our goal to identifying the cheapest option among major home insurers who are available to homeowners in the five largest states. ValuePenguin's analysis used publicly sourced insurance rate filings obtained by Quadrant Information Services. We created a common profile to represent the average U.S. homeowner and used it to collect quotes from California, Texas, New York, Florida and Illinois. Our theoretical shopper was looking for a standard HO-3 policy to cover a home worth $200,000 — the national median value for owner-occupied properties.

What does this mean for our results? For anyone living in the other 45 states, it's entirely possible that you may find cheaper homeowners insurance from local companies we didn't survey. It also means that you may not have access to the insurers we recommended above. Finally, the rates we discovered are best used for comparative purposes — your own quotes from these insurers may be different.

Frequently asked questions

Which company has the cheapest homeowners insurance?

We found consistently affordable rates at Travelers, State Farm and USAA, though every homeowner will find different rates based on where they live and how their home is made.

What determines home insurance prices?

The most important factors that determine your home insurance cost are the cost to rebuild your home, where it is and how susceptible it is to damage, such as from a wildfire or hurricane.

Will my home insurance go up after a claim?

Most likely, yes. Past claims history is one of the factors insurers use to set home insurance rates. In order to keep your rates low, you should consider paying for minor claims out of pocket.

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.