Congratulations on your new home! If you’re like most Americans, it’s the largest asset you’ll ever own. And although homeowners insurance is meant to protect that asset, learning the intricacies of a new policy can be like walking a tightrope for the first time…while blindfolded.

That’s why we spent more than 45 hours researching different insurance providers to find the best homeowners insurance in Kentucky. We looked for companies with a plethora of coverage plans, friendly agents, and strong financial standing. We found several Kentucky insurance companies that checked all the boxes.

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The Best Homeowners Insurance in Kentucky

Freshome’s Recommendations: Amica, State Farm, Allstate, Kentucky Farm Bureau, Liberty Mutual, Nationwide.

With the quotes, we tried to secure an HO3 policy, the most common type of homeowners insurance policy. It covers dwellings and other structures on an closed perils condition, while personal property is covered on a named peril basis. Typically, it offers the most coverage against the most common types of damage (more details on HO3 policies below).To get started, we got quotes from the top homeowners insurance providers in The Bluegrass State. We looked at a one-and-a-half story, single-family home in the Squire Oak neighborhood of Lexington. Squire Oak has above-average school districts and low crime rates (which will decrease your premium). The home had a market value of $155,900 — the median in our state — and the replacement value of the home (the cost to rebuild it from the ground up) came in around $139,000.

With this, all of the companies we recommended have J.D. Power Overall Satisfaction ratings of three stars or more, A.M. Best Financial Strength Ratings of B+ or better, and a high financial strength rating from Moody’s and/or Standard & Poor’s.

When selecting your own provider, check out their financial backing. It’s critical to know your insurance provider has enough financial backing to pay out in case of a national emergency, and with J.D. Power’s Overall Satisfaction rating, you can see if companies paid out claims nicely or with a fight (something that’s definitely better to know before you sign).

Our Quotes
Amica$625 Per Year
Allstate$900 Per Year
State Farm$1,278 Per Year

Another important thing to mention is that there are countless factors that can impact insurance quotes, specifically replacement value estimates, and the amount of coverage the plan offers. My quotes varied greatly, largely because each provider offered me a different amount of coverage (i.e., don’t just get a policy with Amica because it has the lowest premium. Sometimes a low premium can mean lower coverage). We strongly encourage you to get your own quote, and make sure you understand it before signing up.

Although our quotes are from Amica, Allstate, and State Farm, we encourage you to look up other providers as well. Kentucky Farm Bureau is one of the largest insurance providers in the state, so call around for quotes. Sometimes, independent insurance agents can be a great asset in helping you select the best homeowners insurance policy, so if their fees are reasonable, this could be a great option as well.

What You Should Know Before Getting a Quote

The first important thing to understand about homeowners insurance is what’s covered. Your policy should protect you across six different areas — dwelling, other structures, personal property, loss of use, liability, and medical payments.

Your dwelling and other structures coverage should always be based on the replacement value of your home, not the market value. Market value is almost always higher than replacement value, but your insurance is meant to protect your home if damaged, so it should be protected for the amount it costs to replace the home.

Policy Types

All homeowners insurance should protect you against the six aforementioned coverage terms, but the amount for which you are protected, and the terms, differ. Most homeowners choose to insure their home and outside structures, like decks and detached garages, against the replacement value of their home on a closed peril condition. Most homeowners insurance policies, excluding HO5 policies, include such a condition, which means it covers your home against most common damages, and anything not covered will be explicitly listed in your agreement.

Most homeowners opt for an HO3 policy because it offers standard closed peril protection for dwelling and other structures, but personal property is protected on a named basis. This way, you can specify which personal belongings you want insured, and get exactly what you need.

Michael Thrasher, an analyst at NY-based consumer-centric research firm Value Penguin, said making an itemized list of the personal belongings you want insured is critical to being protected in the event of a claim.

“Homeowners might have adequate coverage for their personal belongings, but they need to have a detailed, itemized list of the things covered,” Thrasher said. “In the event someone needs to file a claim, insurance companies are only obligated to replace what you lost and claiming a simple ‘television’ could be valued at almost anything. However, claiming a specific television, and being able to present some form of a proof of purchase or a receipt for it, increases the chances of a more accurate claim payout.”

Avoiding Common Pitfalls

Life is busy, and it can be difficult to find the time to go over your homeowners insurance policy with a fine-toothed comb — but you should. A study conducted by Marshall & Swift/Boechk found 60 percent of homeowners were underinsured. With this, another study conducted by J.D. Power found approximately half of all homeowners do not understand their policies. We spoke with one of them.

Diane Berry, a horse farmer in New Jersey, found out the hard way that her policy limited her ability to provide her own appraiser to assess damages. As the result of a pipe burst, the floors and cabinets in her home were damaged beyond repair. Although this occurred more than a year ago, Berry is still fighting with the insurance provider to replace the cabinetry and flooring that was damaged, although it was allegedly covered in her policy, due to a tiff with an independent appraiser hired by the company.

Berry gave some advice for other homeowners to ensure others do not go through her experience:

“[When filing a claim], insist that your insurer agrees to use third-party, professional appraisers for any damage, who are unrelated to the insurer,” Berry said. “[Also], include precise language in the contract regarding what is repaired and what is replaced. Damaged furnishings should be replaced, unless they would have greater value (aestetic or monetary) being repaired or refurbished.”

That’s why it’s important to know what you’re signing and go with a reputable company. (We won’t disclose the name of the company, but it did not have the financial and customer satisfaction rankings we look for.) This brings us to the next point.

Always Shop for Your Own Quote

Some mortgage providers will often offer to obtain homeowners insurance for you and include it with your monthly payments. A lot of people opt for this option, and we believe this is exactly why so few Americans understand their insurance policies and are underinsured.

If you don’t shop for your own policy, you won’t have control over the amount of coverage, terms, provider, etc. Shop smart and always, always shop for your own quote.

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Flood, Earthquake, and Water Backup Damage Are Not Included

Kentucky homeowners are lucky in that natural disaster rarely hits The Bluegrass State. It is important to note, however, that standard policies do not protect against earthquake, flood, and water backup damage. Water damage can be an issue anywhere, even in Kentucky. In fact, according to Allstate’s Common & Costly Claims platform, water damage is the third most common claim in Kentucky, but the most expensive to repair.

RJ Weiss, CFP and licensed P/C and Health/Life agent nearby in Illinois, gave this advice when shopping for water backup protection.

“Water backup is excluded on a standard insurance policy,” Weiss said. “Most insurance policies add this coverage, known as sewer or water backup, back to your policy. But it will have a separate limit. This limit is typically frighteningly low for most homeowners. Typical limits average between $5,000 and $10,000.”

“If you have a finished basement, $5,000 may not even be enough to cover the fee for the removal of the dry wall. Let alone, reimburse you for damaged contents. Keep in mind, sewer backup isn’t limited to homes with basements. Backup of drains can occur on any floor. Causing damage to areas in your home with the highest value per square foot. So, when comparing home insurance quotes, it’s vital to review the fact that you have water backup and the limit,” Weiss added.

Shopping for the best homeowners insurance policy should not be scary, but it is important to know that risks exist. If you protect yourself against common risks, and make sure you understand your policy, you can’t go wrong.

Why Are Kentucky Rates So Low?

According to the National Association of Insurance Commissioners (NAIC) 2013 Homeowners Study, Kentucky homeowners insurance rates are 9 percent below the national average. Rates average $864 per year in Kentucky, compared to the $954 annual average.

Rates in Kentucky are low primarily because of the minimal risk of natural disaster. The state is not frequented by tropical storms, tornados, earthquakes, or floods. As such, owning a home here is affordable and poses a low risk to insurance providers.

With this, crime rates are significantly lower in Kentucky than other states. According to a recent article in Evansville’s Courier & Press, crime was 40 percent lower in our state compared to the national average. This also significantly drives down premiums for homeowners; and it sure helps us sleep easy, too.

FAQs

What are common coverage gaps?

Most homeowners insurance policies protect against damages caused by fire, wind, hail, and lightning, so anything not included in these four categories (including flood, water damage, and earthquakes) is not covered. Most policies can be added on through your existing agent. When shopping for flood coverage specifically, FloodSmart.gov is a great resource.

Should I insure other structures, like sheds?

Yes. All standalone structures, including detached garages, decks, gazebos, and sheds, would be covered under other structures. The specific policy you select will state if they are covered on a closed or named perils condition.

If your policy does not specifically cover small structures like a shed or fence, we would suggest you compare the price of replacing the item to the price of insuring it. It might not be worth the additional spike in your premium to add a shed to your policy if it is not already included. But crunch the numbers and the answer will reveal itself.

One final thought: pools are also tricky to insure. Thrasher has advice on that here.

What can I do to save money?

In a nutshell: safety features. The less risk your home poses, the cheaper your premiums. If you’re still shopping for a home, you should know these 15 things before you buy. If you already own your home and want to lower your insurance premiums, consider investing in safety features.

Homes within a mile of a fire department and 1,000 feet of a fire hydrant pose lower risk than those that are not, lowering your premium. Homes with security systems, fire alarms, carbon monoxide detectors, and newer roofs will also cost less to insure than homes without. With this, living in an area with good schools and low crime will also drop your premium.

Another thing to remember is the homeowners insurance policy also considers whether or not you are a risky insured party. If you have had numerous car accidents, insurance claims of any sort, or negative credit reports, your premium is likely to be higher.

Which level of coverage should I get?

We suggest speaking with an agent about your situation specifically. You’ll want to protect your home against its replacement value, at the very least, but opt for what you are comfortable with. This means if your personal belongings are only insured for $5,000, but you have fine art, lots of jewelry, and high-end furniture, you might want to consider adding additional coverage.

Take Action

Finding the right homeowners insurance policy for your needs is easy — once you know what to look for. Make sure you work with an agent or provider who takes the time to fully explain your policy, and do not sign until you feel comfortable with the terms. Also, don’t be afraid to shop around for a new policy when it comes time to renew. You never know what you’ll get until you ask, so always shop around for quotes to find the best homeowners insurance in Kentucky.

Good luck and happy policy hunting!

Freshome’s Recommendations: Amica, State Farm, Allstate, Kentucky Farm Bureau, Liberty Mutual, Nationwide.

Compare Homeowners Insurance Rates

To quickly find and compare rates in your area, enter your ZIP code below.

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