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Is Your Homeowners Insurance in Shape for Summer?

This may be a good time to check up on your homeowners insurance coverage.

Hurricane season begins on June 1. Even if you don't live in a coastal region, tornadoes, floods, fires or earthquakes could threaten your domicile. So it pays to be prepared.

First and foremost, you need to make sure your homeowners insurance coverage is in place. Buy your coverage from a strong insurer to avoid the financial nightmare of your insurer going out of business exactly when you need it the most. Ratings' list of the 20 strongest homeowners insurers is made up of large and medium-sized companies that are well capitalized, have been consistently profitable during the past five years, have done a good job of predicting claims and setting aside adequate reserves and are operationally stable.

Many of the companies on this list are not household names, so you may not recognize them, but if you're shopping for homeowners insurance you should check them out. It's easy enough to see where they offer coverage by going to their Web sites.

If you're interested in insurers that aren't on the list, you can find them in our Insurance Ratings Screener.

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The two largest insurers on the list are United Services Automobile Association (USAA) and Allstate Insurance Company, a unit of Allstate. They wrote $1.6 billion and $3.3 billion, respectively, in homeowners' premiums in 2007. Both companies write homeowners and auto insurance throughout the U.S.

USAA (including its A+ affiliate on the list, USAA Casualty Insurance Company) coverage is available only to military personnel and their children.

The third A+ rated insurer on the list is the Inter-Insurance Exchange of the Automobile Club. This company is affiliated with the nationwide auto club, AAA, offering many types of insurance products in addition to auto and homeowners insurance.

Alfa Insurance Corp. and its A- affiliate on the list, Alfa Mutual, operate in 13 states in the Midwest and Southeast including Alabama, Mississippi, Georgia, Ohio and Florida. The companies are part of a larger group containing a total of nine affiliates.

If you are more comfortable going with a household name, the largest insurers in the nation are also well-rated. Here are the insurers that wrote at least $1 billion in homeowners' premiums nationwide in 2007.

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If you live in a coastal area, you will likely have a difficult time finding affordable coverage even from the major carriers. You may have to purchase a policy from a state-run program or a start-up company that has recently entered the market. In the latter case, you will be going with a company with no experience in the market making it difficult or impossible to evaluate its financial strength.

This won't matter much if we're lucky enough to survive a third year without a major hurricane, but in the case of a costly disaster, the company could very well not have the resources to pay claims. Ratings evaluates the financial strength of insurance companies based on capitalization, profitability, reserve adequacy, liquidity and operational stability. The ratings are updated each quarter based on statutory financial statements filed with state regulators. All ratings are available free of charge on the Insurance Ratings Screener.

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