Homeowners insurance can protect far more than the building itself. A policy may help protect your home, belongings, additional living expenses and personal liability when a covered loss occurs.
InsuranceCoverage.net helps U.S. homeowners understand coverage, deductibles, replacement cost, exclusions, property risks and the questions worth asking before comparing home insurance policies.
What Do You Need to Know About Home Insurance?
Understand Coverage
Learn how dwelling, personal property, liability, loss of use and other homeowners coverages work.
Explore coverage → 02Choose Coverage Limits
Understand rebuilding cost, personal-property limits, deductibles and replacement-cost considerations.
Understand limits → 03Check Exclusions
Flood, earthquake and other losses can require separate coverage or endorsements depending on the policy.
Review common gaps → 04Compare Policies
Compare substantially equivalent limits, deductibles, valuation methods and endorsements before comparing price.
Compare correctly →What Is Homeowners Insurance?
Homeowners insurance is designed to protect against covered losses involving your home and personal property while also providing liability protection for certain injuries or property damage for which you may be legally responsible. [1]
A homeowners policy is not a maintenance plan and it does not cover every possible cause of damage. The policy language determines which losses are covered, excluded or limited.
Mortgage lenders also commonly require homeowners insurance while a mortgage remains outstanding. [1]
The dwelling, certain other structures and qualifying personal belongings.
Liability protection and additional living expenses can become important after a covered event.
What Does Homeowners Insurance Typically Cover?
Home insurance is usually a package of several separate protections. The exact policy, limits and exclusions should always be reviewed before purchase.
Dwelling Coverage
Helps pay to repair or rebuild the insured house and attached structures after a covered loss, subject to policy terms and limits. [2]
Structure of your homeOther Structures
Can cover qualifying damage to structures that are separated from the house, such as certain fences, sheds or detached garages.
Detached propertyPersonal Property
Helps cover qualifying loss or damage to furniture, clothing, electronics and other covered belongings.
Your belongingsLoss of Use
May help with additional living expenses when a covered loss makes the home temporarily uninhabitable.
Temporary living costsPersonal Liability
Helps protect against certain financial losses when you are legally responsible for covered bodily injury or property damage to others.
Liability protectionMedical Payments
Can pay certain medical expenses for people injured on your property regardless of whether you are legally liable, subject to policy terms.
Limited medical protectionLimits, deductibles, exclusions, endorsements and the cause of loss all affect whether and how much the insurer may pay.
How Much Home Insurance Do You Need?
One of the most important decisions is the dwelling coverage amount. NAIC advises homeowners to consider enough coverage to rebuild the insured home rather than simply using its real-estate market value. [3]
Rebuilding Cost
Consider current construction labor and material costs rather than relying only on purchase price or tax assessment.
Personal Property
Review whether your contents limit reflects the amount and type of property you actually own.
Liability
Choose a liability limit based on the financial exposure you want the policy to address.
Special Property
Jewelry, collectibles, art, electronics or other valuable property may be subject to special sublimits.
Replacement Cost vs. Actual Cash Value
Two policies can cover the same property but calculate a covered loss very differently.
Cost to Replace With Similar Property
Replacement-cost coverage generally evaluates what it would cost to repair or replace covered property without subtracting ordinary depreciation, subject to policy terms and limits.
Depreciation Can Reduce Payment
Actual cash value generally reflects depreciation when determining the value of damaged or lost property.
Dwelling, roof and personal-property losses can have different valuation provisions. Review the declarations, endorsements and loss-settlement sections of the actual policy.
How Home Insurance Deductibles Work
A deductible represents the portion of a covered property loss you are responsible for before applicable insurance payment. Higher deductibles can reduce premium, but increase the amount you could have to pay after a claim. [3]
Dollar Deductible
A policy might use a fixed dollar amount such as $1,000 or $2,500.
Percentage Deductible
Some policies or catastrophe-related coverages use a deductible calculated as a percentage of an insured amount rather than a simple flat dollar figure.
Multiple Deductibles
Depending on the state and policy, wind, hurricane, named-storm or other losses may have a separate deductible.
What Does Standard Homeowners Insurance Usually Not Cover?
A homeowners policy does not cover every cause of property damage. Some risks are excluded, limited or require a separate policy or endorsement.
Flooding
Typical homeowners insurance does not cover flood damage caused by rising or surface water. Separate flood insurance may be available. [1]
Earthquake
Standard homeowners policies generally exclude earthquake damage. Separate coverage or an endorsement may be available.
Wear and Deterioration
Insurance is not intended to replace ordinary maintenance or pay for gradual deterioration simply because a component becomes old.
Infestation
Damage associated with termites, rodents and other infestations is typically excluded or limited.
Home Business Property
Business equipment, inventory or liability may exceed or fall outside protections provided by a standard homeowners policy.
Special Property Limits
Jewelry, art, collectibles and similar property may have lower special limits unless additional coverage is purchased.
Home Insurance and Flood Insurance Are Different
One of the most important coverage distinctions for homeowners is flood. NAIC identifies flood as a major exclusion under typical homeowners coverage, which means homeowners exposed to flooding may need a separate flood insurance policy. [1]
Sudden covered plumbing losses and some other water-related events may be covered depending on the cause and policy wording.
Rising water, surface water and similar flood events generally require separate flood coverage.
What Affects Homeowners Insurance Rates?
Home insurance prices reflect the property being insured, the amount of coverage and the insurer’s assessment of potential loss. Rating rules also vary by state. [1]
Location
Weather exposure, fire protection, crime, catastrophe risk and other geographic considerations may affect pricing.
Rebuilding Cost
The estimated cost to reconstruct the home can materially affect the dwelling limit and premium.
Age & Construction
Roof, electrical, plumbing, heating systems and construction type can affect eligibility or cost.
Deductibles
Selecting a higher deductible can lower premium while increasing your share of a covered property loss.
Coverage Limits
Higher property, liability and optional coverage limits can increase the cost of the policy.
Claims & Other Rating Information
Claims history and other legally permitted underwriting or rating information may affect price or eligibility.
Your Home’s Location Can Change the Coverage Conversation
Home insurance is especially state- and location-sensitive because catastrophe exposure varies dramatically across the country.
Hurricanes & Wind
Coastal homeowners may need to pay particular attention to wind coverage, hurricane deductibles, flood insurance and roof terms.
Wildfire & Earthquake
Wildfire exposure can affect availability, while earthquake coverage generally requires separate protection.
Wind, Hail & Storms
Wind and hail exposure, roof settlement terms and deductibles can be important policy-comparison points.
Flood Risk Exists Nationwide
Flood exposure is not limited to coastal properties, which is why homeowners should understand the difference between home and flood insurance.
Home Insurance Endorsements Worth Asking About
A base homeowners policy may not address every risk important to your household. Available endorsements differ by insurer and state.
How to Compare Home Insurance Quotes Correctly
Two home insurance premiums should not be compared until you know whether the policies provide substantially equivalent protection.
Home Insurance Checklist
Is the dwelling limit based on a realistic rebuilding estimate?
Is the roof covered at replacement cost or actual cash value?
What deductible applies to an ordinary property claim?
Is there a separate wind, hurricane or catastrophe deductible?
Are valuable belongings subject to special limits?
How much loss-of-use coverage is available?
What personal liability limit have I selected?
Do I need separate flood or earthquake insurance?
What endorsements are included or missing?
Are all quotes being compared using equivalent coverage?
The Declarations Page Is a Starting Point — Not the Entire Contract
The declarations page generally summarizes important information such as coverage limits, deductibles, insured property and policy period. The complete policy also contains definitions, conditions, exclusions and endorsements that determine how coverage applies. [4]
Homeowners Insurance Questions
Is homeowners insurance legally required?
Homeowners insurance is generally not mandated in the same way auto liability insurance is, but mortgage lenders commonly require borrowers to maintain property insurance while the mortgage is outstanding.
What does homeowners insurance usually cover?
Typical policies can include dwelling, other structures, personal property, loss of use, personal liability and medical payments coverage, subject to limits, exclusions and policy terms.
Does home insurance cover flooding?
Typical homeowners policies exclude flood damage caused by rising or surface water. Separate flood insurance may be needed.
Does homeowners insurance cover earthquakes?
Standard homeowners policies generally exclude earthquake damage. Separate earthquake insurance or an endorsement may be available depending on location and insurer.
Should dwelling coverage equal my home’s market value?
Not necessarily. The cost to rebuild a structure can differ substantially from its real-estate market value because land value and reconstruction costs are different concepts.
What is replacement-cost coverage?
Replacement-cost coverage generally bases covered property settlement on the cost to repair or replace with comparable property rather than deducting ordinary depreciation, subject to policy conditions and limits.
Will a higher deductible lower my home insurance premium?
A higher deductible commonly lowers premium because you retain more of the financial responsibility for a covered loss. Make sure the amount is realistic for your household to pay.
Should I bundle home and auto insurance?
Bundling may qualify for a multi-policy discount with some insurers, but compare the total home and auto cost and coverage rather than assuming a bundle is automatically cheaper.
How should I compare homeowners insurance quotes?
Compare equivalent dwelling limits, valuation terms, deductibles, property limits, liability coverage, endorsements and exclusions. Only then compare the final premium.
Compare Coverage First — Then Compare the Price
Review your rebuilding needs, deductibles, property coverage, liability protection and major exclusions before comparing available homeowners insurance options.
Compare Home Insurance QuotesReferences
- National Association of Insurance Commissioners. Homeowners Insurance Consumer Resources — coverage, exclusions, costs and insurance-shopping guidance. ↩
- National Association of Insurance Commissioners. Homeowners Insurance — dwelling, other structures, personal property, loss of use, liability and related coverage. ↩
- National Association of Insurance Commissioners. Homeowners Coverage, Replacement Cost and Deductible Guidance. ↩
- National Association of Insurance Commissioners. Understanding Your Homeowners or Renter’s Policy. ↩