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Currently shopping for homeowner's insurance and I'm wondering if it's worth paying 50%+ more simply because of the name/insurer size/reputation? A tiny insurer called FedNat.com quoted $900 for my home while Liberty Mutual quoted me $1500.

It seems if the insurer fails, the state jumps in so those will insurance do eventually get paid (however late). Any advice?

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Are you sure the coverage is equal?

Contact your state insurance commission to verify the smaller insurance company is real. Ask a local Independent Insurance Agent.
State protection only applies IF the insurance company participates in the state run pool which many states require for a license.
In my state, a statewide valid insurance company got clobbered in the tornado season and went under several years ago.  I did file small claim successfully from the state pool..
Filing claim and claim process may be different at state insurance pool which may have different maximum coverage cap versus what you think you are buying.
Ask Neighbors and Friends. That may give you idea what insurance company has most business in your area.

I have cut-rate homeowner's insurance. I figure the savings comes mainly from much less overhead and marketing. They may also be a little more difficult when it comes to filing and paying claims, but I'm a tenacious consumer and willing to accept a bit of that for the very significant price difference.

The reason for insurance is so that you will have funds or coverage or both at your time of need. The gimmicky, expensive ads; Super Bowl; Olympics and other sponsorships and the insurance company name mean nothing in your time of need. Check the insurance company financial strength (the most important factor) at a site like A. M. Best and then on sites like the local Better Business Bureau and with your state's insurance commissioner or regulator.

It's also a good idea to work with an independent broker who may have access to the many discounts and money-savings riders and has been thoroughly trained in how to apply them to benefit you and save your money.

Also, please consider the highest possible deductible you can afford and then stretch it a bit just a bit more and take the next highest deductible. Discipline yourself to consistently bank the savings as you will be self-insuring yourself for the deductible. If you never have a major claim, and 90% of us never do, you will have the money for whatever use you desire.

Finally, remember that insurance is for catastrophes -- not minor losses. If you lose a few shingles in a storm, don't file a claim. If a tree falls through your house, that's a claim and you file it as such.

You can track your own insurance claim history at a site called CLUE including obtaining a free copy of your record in the the CLUE database.

On BBB, it had 49 complaints in the last 3 years. while BBB rating is pretty much worthless, I found if you look at the detail, there are clues to how a company behaves. Assuming the links before are the right company, I would stay away.



A.M. Best may not rate smaller insurers (like Federated National). Those smaller insurance companies may try to appear legit using Demotech ratings which are questionable since some have gone from A-rated to insolvent in months. Depends if they are true insurers or more insurance brokers using re-insurance.

Some big box have too large overhead costs but there's plenty of reliable insurers (A.M. Best rated) doing business without TV commercials and marketing. At the end of the day, you get what you pay for. If your cut-rate insurer does not have the ability to pay out claims in case of a huge hurricane claims, doesn't matter if you're a tenacious customer when they become insolvent. So you may save money and never live to regret it going with cheap insurer. I guess that's part of risk-based pricing too. Just depends on your own tolerance for risk.

Personally, I'd shop around. There are a range of insurers between Liberty Mutual and FedNat. Personally, we've been very happy with Erie Insurance. I get 4-5 quotes every year and haven't found cheaper for this level of service. And we haven't been very good cash cows for them considering they replaced our roof for a hail storm 7 months after we signed with them, totalled a car 2 years later, etc. Haven't raised our rate somehow through those but I can't wait for some of those claims to trail off our CLUE reports, just in case lol.

exclusivelysid said:   A tiny insurer called FedNat.com quoted $900 for my home while Liberty Mutual quoted me $1500.
  These two cannot be the only two companies offering policies in your area. Shop more and you can probably get something in between (better premiums than Liberty and better reputation that FedNat).
ETA: Also, look for companies that offer affinity discount based on e.g., your employer, alma mater, professional membership, AAA, Costco etc. Make sure you bundle your auto and home for additional discount.

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