Home Insurance
Protect your home and belongings from damage, theft, and liability.
Typical cost: $1,200 – $3,500 per year
What Is Home Insurance?
Home insurance, also known as homeowners insurance, is a form of property insurance that covers losses and damages to your residence along with furnishings and other assets inside the home. It also provides liability coverage against accidents that occur on the property or within the policy's scope.
Most mortgage lenders require borrowers to carry homeowners insurance as a condition of the loan. Even if you own your home outright, a policy protects what is likely your single largest financial asset from catastrophic loss due to fire, storms, vandalism, and other covered perils.
How Home Insurance Works
A standard homeowners policy (HO-3) covers the structure of your home, personal belongings, liability for injuries or property damage you cause to others, and additional living expenses if your home becomes uninhabitable. You pay a premium—monthly or annually—and in return the insurer agrees to pay for covered losses up to the policy limits, minus your deductible.
Types of Home Insurance Policies
- HO-1 (Basic Form): Covers only named perils such as fire, lightning, and windstorm. Rarely sold today.
- HO-2 (Broad Form): Covers named perils plus additional events like falling objects and weight of ice and snow.
- HO-3 (Special Form): The most common policy. Covers dwelling on an open-peril basis and personal property on a named-peril basis.
- HO-5 (Comprehensive Form): Provides open-peril coverage for both dwelling and personal property.
- HO-8 (Older Home): Designed for older homes where replacement cost exceeds market value.
What Affects Your Premium?
Premiums depend on your home's location, age, construction type, replacement cost, chosen deductible, claims history, credit score, and proximity to a fire station. Installing security systems, smoke detectors, and impact-resistant roofing can help lower your rates. Shopping around and bundling with auto insurance are common strategies for saving money.
What's covered
Dwelling Coverage
Pays to repair or rebuild your home's structure if damaged by a covered peril such as fire, wind, or hail.
Other Structures
Covers detached structures on your property like garages, sheds, and fences—typically up to 10% of dwelling coverage.
Personal Property
Reimburses you for belongings stolen or destroyed, including furniture, electronics, and clothing.
Loss of Use
Pays additional living expenses like hotel stays and meals if your home is uninhabitable during repairs.
Personal Liability
Covers legal fees and damages if someone is injured on your property or you accidentally damage someone else's property.
Medical Payments
Pays medical bills for guests injured on your property regardless of fault, typically up to $5,000.
Debris Removal
Covers costs to remove debris from your property after a covered loss.
Ordinance or Law
Pays extra costs to bring your home up to current building codes during reconstruction.
Specialized coverage
Explore specific home insurance options.
Condo Insurance
Coverage tailored for condominium owners and their unique needs.
Townhouse Insurance
Protection for townhouse owners including shared wall coverage.
Mobile Home Insurance
Specialized coverage for manufactured and mobile homes.
Vacation Home Insurance
Coverage for second homes and seasonal properties.
New Construction Insurance
Protection for newly built homes during and after construction.
Historic Home Insurance
Specialized coverage for older and historic properties.
Pros and cons
Advantages
- Protects your largest financial asset from catastrophic loss
- Covers liability claims if someone is injured on your property
- Pays for temporary living expenses if your home is uninhabitable
- Personal property coverage extends to belongings anywhere in the world
- Required by mortgage lenders, so it also protects your loan standing
- Bundling with auto insurance often yields significant discounts
- Peace of mind against unpredictable natural disasters and theft
Considerations
- Flood and earthquake damage require separate policies
- Premiums can rise after filing claims
- High-value items like jewelry often need additional riders
- Deductibles mean you pay out of pocket before coverage kicks in
- Maintenance-related issues and gradual wear are never covered
Frequently asked questions
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