What Is Homeowners Insurance?
Homeowners insurance is a package policy that protects your home, your belongings, and you from financial loss. If a fire destroys your kitchen, a thief steals your electronics, or someone trips on your walkway and sues—homeowners insurance responds.
Most mortgage lenders require it, but even if you own your home outright, protecting your largest investment makes sense.
What Homeowners Insurance Covers
Dwelling Coverage (Coverage A)
Pays to repair or rebuild your home's structure if damaged by covered events like fire, wind, or hail. This includes attached structures like garages.
Other Structures (Coverage B)
Covers detached structures on your property: sheds, fences, detached garages, guest houses.
Personal Property (Coverage C)
Covers your belongings: furniture, clothes, electronics, appliances. This protection extends anywhere in the world.
Note: High-value items like jewelry, art, and collectibles have limits. You may need scheduled personal property coverage.
Liability (Coverage D)
Protects you if someone is injured on your property or you cause damage to someone else's property. Covers legal fees and settlements.
Additional Living Expenses (Coverage E)
If your home becomes uninhabitable due to a covered loss, this pays for:
- Hotel stays
- Restaurant meals
- Temporary rental housing
What's NOT Covered
Standard homeowners policies exclude:
- Floods — Requires separate flood insurance
- Earthquakes — Requires endorsement or separate policy
- Maintenance issues — Wear and tear, mold, pest damage
- High-value items — Jewelry and art above stated limits
- Home business equipment — May need additional coverage
- Intentional damage — Acts you caused deliberately
How Much Coverage Do I Need?
Dwelling Coverage
Should equal the cost to rebuild your home (not market value). Construction costs vary by region and materials.
Personal Property
Typically 50-70% of your dwelling coverage. Take inventory to know your actual needs.
Liability
Minimum $100,000, but $300,000-$500,000 is recommended. Consider an umbrella policy for additional protection.
Deductible
The amount you pay before insurance kicks in. Higher deductibles mean lower premiums but more out-of-pocket if you file a claim.
Common Homeowners Insurance Mistakes
Mistake 1: Insuring for market value instead of replacement cost What you'd sell your home for isn't what it costs to rebuild.
Mistake 2: Assuming floods are covered They're not. And flood damage happens in every state.
Mistake 3: Not updating coverage after renovations That new kitchen or finished basement added value. Update your policy.
Mistake 4: Ignoring your home inventory Without documentation, proving what you owned is difficult after a loss.
Next Steps
Review your current coverage or start fresh. When you're ready, a licensed agent can help you find the right protection—with no pressure.