Home insurance guide
Home insurance, explained simply
What a homeowners policy covers, what it leaves out, what drives your price, and how to compare quotes so you're not paying more than you need to.
What a standard homeowners policy covers
Most homeowners policies are built from the same six parts. Each has its own limit, so it's worth checking every one when you review a policy or a quote.
Dwelling
The structure of your home, including the roof, walls, floors and built-in systems, if it's damaged by a covered event like fire, wind or hail.
Other structures
Detached buildings on your property, such as a garage, shed or fence. Usually set as a percentage of your dwelling limit.
Personal property
Your belongings, like furniture, clothes and electronics, whether they're at home or with you elsewhere. Valuables such as jewelry often have lower limits unless you add them separately.
Personal liability
Legal costs and damages if you're found responsible for injuring someone or damaging their property, at home or away.
Loss of use
Extra living costs, such as a hotel, meals and laundry, if a covered loss makes your home unlivable while it's being repaired.
Medical payments
Small medical bills for guests hurt on your property, usually paid regardless of who was at fault.
Common policy types
Insurers use standard form names. These are the ones you'll see most often.
Standard homeowners
The most common policy for single-family homes. The house is covered for all causes of loss except those listed as excluded; belongings are covered for specific named perils.
Comprehensive homeowners
Broader protection for both the house and your belongings. Usually costs more and is often offered for newer, well-maintained homes.
Condo
Covers your unit's interior, your belongings and your liability. The building itself is typically covered by the condo association's master policy.
Renters
For tenants. Covers your belongings, liability and extra living costs. Your landlord's policy covers the building, not your things.
What's usually not covered
These gaps catch many people out. Some can be added to your policy; others need a separate policy.
Flood
Flooding from rising water is excluded from standard policies. Flood insurance is sold separately, and there's often a waiting period before it starts.
Earthquake & earth movement
Earthquakes, sinkholes and landslides are generally excluded, depending on your state and insurer.
Wear, tear & maintenance
Insurance is for sudden, accidental damage, not gradual problems like an aging roof, slow leaks, mold from long-term moisture, or pests.
Sewer & drain backup
Water backing up through drains or a sump pump is often excluded unless you add an endorsement.
What affects your price
Two similar homes on the same street can get different quotes. These are the main factors insurers weigh.
- LocationLocal weather and wildfire risk, crime rates, and how close you are to a fire station and hydrant.
- Cost to rebuildBased on your home's size, materials and local building costs, not its market value or the land it sits on.
- Age and conditionEspecially the roof, plumbing, electrical and heating systems.
- Claims historyRecent claims on your record, and sometimes on the property itself, can raise your premium.
- Deductible and limitsA higher deductible usually lowers your premium; higher coverage limits raise it.
- Insurance scoreIn many states, insurers use a credit-based insurance score. Some states limit or ban this.
Ways to lower your premium
Small changes can add up. Before you cut coverage, try these first.
Shop around every year or two
Prices for the same coverage can vary widely between insurers, and rates change over time. Comparing is the simplest way to check you're not overpaying.
Raise your deductible
Choosing a higher deductible can lower your premium. Only pick an amount you could comfortably pay after a loss.
Bundle policies
Many insurers discount home insurance if you also buy your auto policy from them.
Make your home safer
Smoke detectors, monitored alarms, deadbolts, water-leak sensors and a newer roof can all qualify for discounts.
Ask about discounts
Common ones include claims-free, new-home, paperless, pay-in-full and loyalty discounts. Insurers don't always apply them automatically.
Insure the right amount
Set your dwelling limit to the cost to rebuild, not the home's sale price, so you're not paying to insure the land.
How to compare quotes
The cheapest quote isn't a good deal if it covers less. Line quotes up on these points.
- Match the coverage limitsUse the same dwelling, personal property and liability limits in every quote.
- Check replacement cost vs. actual cash valueReplacement cost pays to repair or replace at today's prices. Actual cash value subtracts depreciation, so you get less.
- Compare deductibles, including wind and hailSome areas have a separate wind or hail deductible set as a percentage of your dwelling limit, which can be much higher than the standard one.
- Look at what's added or excludedCheck for water backup, valuables, roof payment schedules and any exclusions specific to that insurer.
- Check the insurerLook up its financial strength rating and its complaint record with your state's department of insurance.
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Frequently asked questions
Is home insurance required by law?
No state law requires home insurance. But if you have a mortgage, your lender will almost always require it, and may buy a policy for you (often at a higher cost) if yours lapses.
How much dwelling coverage do I need?
Enough to rebuild your home from the ground up at current construction costs. Many insurers estimate this for you; check it reflects any renovations or upgrades you've made.
What is a deductible?
The amount you pay toward a covered claim before your insurance pays the rest. For example, with a $1,000 deductible and a $6,000 covered loss, the insurer pays $5,000.
Will filing a claim raise my premium?
It can. Claims, especially several in a short time, may increase your rate or affect your eligibility for some discounts. For small losses close to your deductible, it can make sense to pay yourself.
How often should I compare quotes?
A good habit is every year or two, and whenever your renewal price jumps, you renovate, or you add a big-ticket item like a new roof.
Do I need insurance if I rent?
Your landlord's insurance covers the building, not your belongings or your liability. Renters insurance covers both and is usually inexpensive.
This guide is general information, not insurance, legal or financial advice. Coverage, exclusions and discounts vary by insurer and state. Always read your policy documents.