Your home is likely the biggest financial investment you’ll ever make, and whether you’re purchasing a starter home in Trenton or a retirement cottage in Long Beach Township, you need to protect your dwelling with the best homeowners insurance in New Jersey.
According to the Insurance Information Institute, New Jersey insurance providers wrote $21.2 billion in property and casualty policies in 2017. The same year, insurers incurred $11.7 billion in losses. Nationwide, fire and lightning cause the most insurance losses, but New Jersey also has a history of natural disasters. The state sees more than an average number of hurricanes each year, with Hurricane Ivan in 2004 devastating the coastal areas and Hurricane Sandy in 2012 causing roughly $49 billion in damages to the state.
When you shop for New Jersey homeowners insurance, consider a few important factors:
- Purchase adequate coverage to rebuild your home rather than just matching your coverage to the market value of your home
- Purchase enough insurance to replace your valuable belongings, which may require a rider on your policy if you own expensive jewelry, electronics, or other valuable items
- Assess your need for flood insurance, especially if you live near a body of water
- Set deductibles that fit your budget, without compromising protection
Best home insurance companies in New Jersey
Annual premium rates are important, but you need to consider factors such as financial ratings and customer service when considering a New Jersey homeowners insurance company. J.D. Power produces an annual survey of home insurance companies. Using a five-star rating system, Power ranks companies based on pricing, policy offerings, customer interaction, claims handling, billing process, policy information and overall customer satisfaction.
- Amica Mutual: Amica Mutual earned the #1 J.D. Power rank, with five stars in all categories, making it the best homeowners insurance in New Jersey. We agree, and particularly like the generous coverage levels offered in its standard policies. If having good interactions with your insurance agent is important to you, Amica is especially well-known for excellent customer service, and Consumer Reports gives it first place on its list, based on data from nearly 7,000 satisfied customers.
- USAA: USAA also earned five stars in all categories, but it does not qualify for J.D. Power ranking because it only offers products for current and retired military members and their family members. For those who qualify, USAA offers one-stop shopping for financial products, including home mortgages, credit cards, savings and checking accounts, retirement plans, life insurance and investment plans. USAA’s rates are generally low, which makes it one of the best home insurance companies in New Jersey.
- Auto Club of Southern California Insurance Group (AAA): AAA came in third in the Power survey, with a four-star rating for overall satisfaction. AAA is a great option for folks who already have an auto club membership because they could qualify for a 10% discount right from the start. But some people can also qualify for discounts based on their age or for buying newer, well-constructed homes. When bundled with an auto policy, savings can be significant. Auto Club is also worth looking at if you are over 55, since the company has discounts and benefits for older homeowners.
- State Farm: State Farm ranked fourth in the Power study with a four-star overall satisfaction rating. We like State Farm’s flexibility when setting coverage levels and its huge portfolio of products, including insurance for boats and recreational vehicles, health insurance and term, universal and whole life policies. One of the areas where State Farm shines is in the supplemental educational material on its website, so if you’re new to the insurance world then it may pay to take a look at the company’s Simple Insights blog, which features articles on home maintenance, buying and selling your home, and homeowners insurance. Even if you don’t purchase a policy with the company, its site is a worthwhile stop on your insurance search.
- Allstate: Allstate earned seventh place in the J.D. Power survey, with a three-star overall satisfaction rating. While some other insurance companies take a low-touch approach to customers, Allstate operates agencies throughout New Jersey, and we like that. Allstate also makes the claims process easy, giving you the option to call the nationwide claims center, contact your local agent or file from your smartphone using the Allstate mobile app. We also like Allstate’s range of discounts, which can dramatically decrease your premium costs. You can earn discounts by setting up an automatic payment system, going claims-free, installing smoke or theft alarms in your home and even a 10% welcome discount just for switching to the company.
Average homeowners insurance cost in New Jersey
The national average rate for homeowners insurance is $2,305, but New Jersey residents come in nicely under that, with an average rate of $1,744 ($561 under the national average). Keep in mind that your own rate will vary, depending on factors like where in New Jersey you live and what your credit rating looks like. Even your distance from a fire hydrant can make a difference in your premium costs.
Although the prevalence of hurricanes in the summer impacts New Jersey insurance premiums, the lack of severe winter weather, which can cause catastrophic damage through the weight of snow buildup as well as wind damage, keeps costs from being too high. New Jersey also rarely sees tornadoes or earthquakes, two natural phenomena that can hike up rates.
Home insurance coverage options in New Jersey
Nationwide, the HO-3 policy is the most popular, covering losses caused by:
- Aircraft, falling objects and vehicles.
- Explosions, fire, lighting and smoke.
- Hail, wind and volcanic eruptions.
- Leaking heating and air conditioning systems, home appliances, internal plumbing and sprinkler systems.
- Riots, theft and vandalism.
- Weight of ice, sleet and snow.
Standard home insurance policies feature coverages that protect your home, its contents and your other assets. It can include:
- Dwelling coverage: This coverage pays to repair or replace your home’s structure, including attached carports and garages.
- Other structures coverage: This covers unattached structures, such as fences, guest cottages and sheds.
- Personal property coverage: Personal property insurance pays for your home’s contents, including appliances, clothing, electronics and furniture if it gets stolen or damaged.
- Loss of use coverage: This insurance helps pay your temporary living expenses if a fire, storm damage or other calamity renders your home uninhabitable.
- Personal liability coverage: This pays for injuries or awards when a court rules you are liable for an incident that occurs on your property.
- Medical payment coverage: This covers the medical expenses of a person outside your household who sustains an injury on your property.
Personal property coverage imposes limits on losses to certain types of property. For instance, your home insurance policy may limit jewelry claims to $1,500. Homeowners who have many expensive belongings should add endorsements – also called floaters or riders – to their coverage. An endorsement increases the amount of coverage for a specific type of property. You can add endorsements for items such as collectibles, firearms, furs, home office equipment and silverware.
Many insurance companies offer identity theft coverage for homeowners customers. Typically, you can purchase identity theft insurance for $25 to $65 per year, with coverage ranging from $15,000 to $30,000.
Because New Jersey homes face the risk of severe storms and hurricanes, decide whether you need to increase your coverage for hail and wind damage. Standard home insurance policies do not cover flood damage. If you own a home in a low-lying area, or a region with a history of flooding, consider purchasing flood insurance through the National Flood Insurance Program, which is administered by FEMA.
Common causes of home insurance losses in New Jersey
Storms and hurricanes pose the highest risks to New Jersey homeowners. As a coastal state that is in the direct line of impact of any hurricane moving up the east coast, home insurance losses due to wind and water damage are common. The torrential rainfall and subsequent flooding that come with summer storms and hurricanes are especially prevalent along the coast, of course, but may also impact residents who live near normally-placid streams or ponds. This is why it’s a good idea for New Jersey residents to use FEMA’s Flood Map Service Center to find out if they live on a flood plain and, if so, to consider flood insurance.
Wildfires can also impact those in more rural or heavily wooded areas. An average of 1,500 wildfires a year damage forests and the homes that are near them. This is especially true for those in the northern part of the state or the region of the Pine Barrens, where fires can spread quickly because of dry underbrush.
Fortunately, New Jersey is not a high-risk state for earthquakes, although small tremblers occur occasionally. The most severe one ever recorded in the state was a 4.8 quake in 1938. New Jersey is also far from “Tornado Alley” in the Midwest, but does occasionally see smaller twisters touching down, including five in 2019.
Frequently asked questions
What is the cheapest homeowners insurance in New Jersey?
Home insurance rates are subjective because factors such as location and construction can greatly affect premiums. To find the cheapest homeowners insurance in New Jersey, determine the amount of coverage you need, and then shop around for the best combination of value and protection.
How do I get homeowners insurance in New Jersey?
New Jersey has no shortage of home insurance companies. Top insurance providers include Allstate, Amica Mutual, State Farm and USAA. For qualified homes, you can also purchase home insurance through the National Flood Insurance Program, administered by FEMA.
What is the greatest risk to New Jersey homes?
Storms and hurricanes pose the greatest risk to New Jersey properties. It’s important to have adequate coverage for perils such as hail and wind damage.
How much personal liability coverage should I purchase?
Consider the specific features of your home when determining how much personal liability coverage you need. For example, if you own a swimming pool and like to throw pool parties, you probably need additional liability coverage in case someone sustains an injury on your property. When requesting insurance quotes, pay close attention to standard liability coverage amounts. Typically, standard coverages range from $100,000 to $500,000.