For most Americans, a home is the most considerable asset you’ll ever own — that is, unless you plan on buying a private jet. But according to a study conducted by Marshall & Swift/Boeckh, approximately 64 percent of homeowners are underinsured, and roughly half of all American homeowners don’t understand their insurance policies.

We set out to correct that by interviewing experts and calling around for quotes in Massachusetts. We were looking for an insurance company that had a sound financial reputation, transparent coverage, and an army of friendly and informed insurance agents at its disposal. Turns out, there’s a handful of excellent companies serving the homeowners of Massachusetts.

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The Best Homeowners Insurance in Massachusetts

Freshome’s Top Recommendations: AllstateAmicaLiberty MutualAAAUSAAChubb.

We’ve done a lot of research to find the best homeowners insurance companies. In fact, we spent more than 45 hours researching providers to determine which offered the most protection for your asset, and had the best customer reviews.

All of the insurance companies we recommend have a J.D. Power Overall Satisfaction rating of three stars or better, an A.M. Best rating of B+ or better, and a high financial strength rating from Standard & Poor’s and/or Moody’s. We used financial strength and customer satisfaction to determine top companies, for two reasons. First, your insurance provider should have enough financial backing to pay out in case of a national emergency. Secondly, you should know that if you ever need to file a claim, your insurance provider won’t give you a hard time about it. Homeowners insurance is supposed to protect your largest asset against damage, so it’s important to select a provider that will have your back.

The Quotes

Our Quotes
Allstate$970 Per Year
Amica$1,304 Per Year
Liberty Mutual$1,515 Per Year

Our quotes were based on the median home price in Greater Boston. We selected a single-family home in the Boston suburb of Lexington with a market value of $650,000. The home had two stories, three bedrooms, and a detached garage. The replacement value of the home was between $225,000 and $390,000 (we’ll explain this below), and we attempted to get an HO3 policy, because it offers the most protection against the most common risks of homeownership.

Quotes vary greatly. In speaking with insurance experts, we learned minute details such as the type of fireplace you have and your insurance history could change your policy premium. The only way to know how much your policy will cost is to call for a quote.

What You Should Know Before Getting a Quote

There is a lot to know when it comes to finding the best homeowners insurance. So let’s break it down. Homeowners insurance should protect your home across six variables including dwelling, other structures, personal property, loss of use, liability, and medical payments.

Dwelling refers to the replacement cost of the structure of your home. Other structures refers to things like a detached garage and deck. Personal property protects your personal belongings. Loss of use offers you coverage for up to a year if you have to temporarily relocate. And liability and medical payments insure against injuries that occur on your property. It is important to have coverage in each of the six categories, and to ensure the dwelling and other structures coverage is based on your home’s replacement value, not its market value.

Replacement Value vs. Market Value

One of the most important things to understand is the difference between market value and replacement value of a home. Clint Houck, the general manager at Margo Insurance, said it’s one of the most misunderstood concepts for new homeowners.

“One of the biggest points of confusion when shopping for home insurance is the answer to ‘How much should I insure my home for?’” Houck said. “There are two values to a home—market value and replacement cost.

Market value is how much your home can sell for in the current market. This takes into account the general economy, how desirable the neighborhood is, school districts, etc. These factors can dramatically inflate the costs of purchasing homes – just look at Silicon Valley for an example – but do not actually affect the cost to rebuild your home if damaged. Always make sure your home is insured for replacement value, otherwise, you may be underinsured or overpaying for insurance.”

Most insurance companies will calculate replacement value for you, using their own in-house factors. Some providers also insure you for an additional 25 percent above their estimation, just in case the rebuild is more expensive than anticipated (hence the huge difference in coverage from our home example). When shopping for your own policy, make sure you understand what’s covered and that you are comfortable with the quoted replacement value.

Types of Policies

The most common type of homeowners insurance policy is an HO3 policy. An HO3 policy is a combined open and named perils policy, with the dwelling policy open perils, and the personal property named. These types of policies cover damage against everything that is not specifically named on a predetermined list of exclusions, and will thus protect you against everything that is not specifically listed. Any personal property you want insured can be added individually. An HO3 policy is intended to protect you against the most common damages.

There are other policies, including the closed HO2 and HO3 policies, and the all-open HO5 policy. The policy numbers reflect a sliding scale of coverage, from all-closed policies to all-open policies. This gives you the freedom to select the amount of coverage you would like against specific types of damage. An HO8 policy is popular in Massachusetts, as it covers damage against restoration costs for older, historic properties. Speak with an insurance agent to determine the best policy for you.

There are other things to keep in mind when shopping for the best homeowners insurance in Massachusetts. Steve Roy, CEO at Elliot Whittier Insurance in Massachusetts, said homeowners near the coast might have more difficulty finding a policy, and should shop with an agent experienced in the coastal market.

“A large percentage of homeowners in Massachusetts live on or near the coast,” Roy said. “Most traditional insurance companies are not interested in insuring coastal homes due to frequent exposure to storms.”

Gabrielle Lupton at Obrella said homeowners should also make sure their policies cover restoration costs if they live in older homes. She also encouraged homeowners to shop around.

“Since the average age of homes in [Massachusetts] is close to 50 years, adding a policy that covers restoration costs on older homes like an HO8 policy will be crucial to getting the best coverage,” Lupton said.

“A common pitfall most homeowners suffer from is that they get oversold into policies they don’t need, so don’t be afraid to shop around and find an agent that will work for you - specifically one locally. Local agents will be more informed on the unique risks involved in the area of your new home. It’s important to remember that once you have purchased a policy your relationship with your agent shouldn’t end. Check in annually to review your policy,” she added.

Flood, Earthquake, and Water Back-Up

Another important thing to know when shopping for homeowners insurance is flood, earthquake, and water back-up protection do not come standard. These are additional policies you will have to add on.

Water back-up can be extremely damaging to your home and it can be an issue just about anywhere. Thankfully, protection is relatively inexpensive to obtain as an add-on to your existing policy. The agent at Liberty Mutual quoted me $85 for the year to add it on – a marginal amount compared to the $10,000+ of damage that could result from a water back-up issue.

Earthquake and flood damage are also worth considering. If you’re in Boston, you might want protection against flood damage, especially if you live near the coast. If you’re unsure of the common risk factors in your area, Allstate has a great free tool that can help. The Common & Costly Claims tool allows you to look at the most frequent policy claims in your area.

What’s Different About MA?

Massachusetts is a lovely state with rich history, and homeownership prices reflect this. Some areas in Greater Boston, including Lexington, are considered historic areas. So the price of homeowners insurance is a bit higher because rebuilding costs are affected by niche building regulations and materials.

If you are concerned with saving money on your insurance, equip your home with safety features. The less risk your home poses, the lower your quote will be. Common safety investments include smoke and carbon monoxide detectors, central station-connected security systems, and fire extinguishers in the home.

When you call for your quote, have your home details handy, including square footage, the year built, the year the roof was last replaced, and type of fireplace. If you’re still shopping around for your home, read through these 15 things to consider before you sign the deed.

Why Are Massachusetts Rates a Little More Pricey?

According to the National Association of Insurance Commissioners (NAIC) 2013 Homeowners Survey, the average price of homeowners insurance in the U.S. is $954 per year. Massachusetts prices are 10 percent higher, at $1,104 per year. While MA prices aren’t significantly more expensive, the fact that most homes are more than 50 years old and near the coast keeps our homeowners insurance slightly more expensive than other states.

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FAQs

What are common coverage gaps?

Most homeowners are surprised to discover standard policies do not protect against flood, earthquake, or water back-up damage. Common coverage includes protection against wind, fire, hail, and lightning damage. If you live in an area where water or earthquake damage is a risk (and water damage is a risk in The Bay State), look into adding it onto an existing policy.

Should I insure my home against its market value or replacement value?

You should always ensure your home against its replacement value – the cost of replacing your home from the ground up (including labor and materials). Despite building costs, most homes are worth much more than the replacement cost, but insurance is meant to protect your home in case of damages. As such, your insurance policy should be based on the amount it costs to rebuild your home, not its market value.

How do I select the right provider?

Selecting the right insurance provider requires much more than comparing premiums. It’s not only important to research customer satisfaction when filing a claim, but also to research the financial strength of the company you are considering. A company with a huge financial backing won’t have an issue paying out in case of a national emergency, but regional providers sometimes do.

With this, national providers usually invest in emergency response, so just in case there is a disaster in your area, your insurance company can send responders directly to your address.

In the case of the Boston Marathon Bombing, emergency responders were on the ground to assist runners and victims of the attack, but claims filed resulting from the attack went largely unpaid. One study found damage caused by terrorist attacks is typically not covered, unless the damage falls within the standard fire, wind, hail, or lightning damage categories.

Does homeowners insurance also protect my belongings?

Typically, yes. Most homeowners insurance policies offer coverage for personal belongings, but the policy type you have will determine if your items are protected on an open or closed perils basis.

If you have tons of unique and precious valuables, such as fine art or jewelry, you might consider an HO5 policy, which has an open perils policy for both the structure of your home and your possessions. You also might want to consider an HO8 policy if you live in a historic area, as it covers most comprehensive restoration costs. Typically, an HO3 policy typically suffices for most homeowners.

Take Action

Doing a little research on the front-end can save you thousands in homeowners insurance. I encourage you to call around for quotes and work with an agent who takes the time to make sure you fully understand your policy.  Massachusetts is a beautiful state; congratulations on owning a home here! Using the tips above will help you find the best homeowners insurance policy to protect it.

Freshome’s Top Recommendations: AllstateAmicaLiberty MutualAAAUSAAChubb

Compare Homeowners Insurance Rates

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

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