Homeowners Insurance Coverage Explained (What You Need to Know for 2024)
Get homeowners insurance coverage explained here. Policies protect the structure of your home, personal belongings, and injured guests by covering medical costs and legal fees. Certain exclusions apply, and you must pay a deductible and monthly premiums. Homeowners insurance rates average $160/month.
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Tracey L. Wells
Licensed Insurance Agent & Agency Owner
Tracey L. Wells is a licensed insurance agent and Farmers insurance agency owner with 23 years of experience. He is proud to be a local Farmers agent serving Grayson, Georgia and surrounding areas. With experience as both an underwriter and agent, he provides his customers with insight that others agents may not have. His agency offers all lines of insurance including home, life, auto, RV, bus...
Licensed Insurance Agent & Agency Owner
UPDATED: Oct 1, 2024
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes should be easy. This doesn’t influence our content. Our opinions are our own.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.
UPDATED: Oct 1, 2024
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes should be easy. This doesn’t influence our content. Our opinions are our own.
On This Page
What is home insurance and what does it cover? Get homeowners insurance coverage explained in this guide. We explore how coverage works and the factors companies use to set premium rates.
Who needs homeowners insurance? Any homeowner with a mortgage will need insurance — most lenders require it. The most basic homeowners insurance policies cover the structure of the home and your personal belongings inside. You have to pay a deductible before coverage applies, but you can choose between replacement cost and actual cash value policies.
Find out how much homeowners insurance you need, and keep reading to learn what home insurance covers. Then enter your ZIP code to get free insurance quotes from local companies.
- Home insurance provides dwelling coverage for the structure of your home
- Policies also offer contents coverage to protect personal items in the home
- Monthly homeowners insurance premiums average $160/mo
How Homeowners Insurance Works
Homeowners insurance protects the structure of your home as well as your personal belongings. Here’s how how to read your homeowners insurance policy:
- Premiums: The monthly or annual rate you agree to pay for home insurance coverage.
- Deductibles: The amount you pay for repairs out of pocket before the insurer pays.
- Covered Losses: In return, the insurer protects your property from the named perils in the policy.
It also protects guests who are injured on your property by covering medical costs and legal fees. However, policies list specific damages that aren’t covered without a rider or endorsement.
The most basic homeowners insurance policies come in two parts. The homeowners insurance dwelling coverage meaning applies to the structure of your home, such as walls, the roof, and any built-in appliances. Contents coverage protects valuables inside the home, including furniture, jewelry, and electronics.
You can pick a policy that covers either the replacement cost or actual cash value (ACV) of your property. ACV policies are often cheaper, but you won’t get back what you paid for your house or personal items.
Read More: Lemonade Home Insurance Review
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What Homeowners Insurance Covers
All home insurance policies provide some version of these coverages unless you choose a renters policy. Scroll down for a table of different home policies.
Homeowners Insurance Coverage Explained
Home Insurance Policy Coverage
Dwelling Coverage Pays to fix or rebuild your house and attached structures, like a garage or deck
Other Structures Pays for damage to property not attached to your house, like a shed, fence, or gazebo.
Loss of Use Pays for hotels, food, and other extra costs if you can't stay in your home after a claim.
Personal Property Pays to fix or replace personal items like clothes, electronics, and furniture.
Personal Liability Pays legal fees and settlements if you're used by someone injured on your property.
Medical Payments Pays medical bills for non-household members injured on your property.
You can pick and choose more homeowners insurance coverage options based on the type of policy you buy. Learn more about all eight types of home policies.
Use the table to explore different homeowners insurance policy examples. The most common types of homeowners insurance are HO-3 and HO-5 policies.
Types of Homeowners Insurance Policies and What They Cover
Type Name Coverage
HO-1 Basic Form Only covers 10 named perils, including fire, theft, and falling objects.
HO-2 Broad Form Covers HO-1 perils plus certain water damages and electric surges
HO-3 Special Form Open coverage for all perils except listed exclusions
HO-4 Contents Broad Form Renters insurance for personal belongings, liability, and loss of use
HO-5 Comprehensive Form Same open coverage as HO-3 at replacement value
HO-6 Unit-Owners Form Condo insurance for personal belongings, liability, and loss of use
HO-7 Mobile Home Form Mobile home policy with same open coverage as HO-3
HO-8 Modified Coverage Form Historic home coverage for dwellings more than 40 years old
What does homeowners insurance cover and not cover? The 10 common perils covered by most insurance policies include fire, wind or hail, theft, vandalism, and lightning.
Other policies will cover damage caused by freezing and the weight of snow and ice, volcanic eruptions, and accidental damage to air conditioners and heating units.
What Home Insurance Doesn’t Cover
The most common home insurance exclusions are:
- Earthquake damage
- Flood damage
- Identity theft
- Termite damage
Some states require flood or earthquake riders on all home insurance policies. Since most providers don’t offer this kind of coverage, you can find a policy through the National Flood Insurance Program.
Comparing Homeowners Insurance Rates
Insurance companies use certain variables to set homeowner rates. Always compare home insurance quotes from multiple providers to find the most competitive price based on:
- Location: Living in an area prone to natural disasters like hurricanes or wildfires will raise rates.
- Crime Rates: Premiums are higher in densely-populated neighborhoods with high crime and property damage rates.
- Credit Score: Homeowners with poor credit scores pay more for insurance.
- Deductibles: Agreeing to pay more out of pocket with a higher deductible gets you cheaper premiums but costs more when you file a claim.
The value of your home has the biggest impact on premiums, and your home insurance rates will be higher if you choose replacement coverage over actual cost value.
Homeowners Insurance Monthly Rates by Provider & Coverage Amount| Insurance Company | $150,000 Policy | $200,000 Policy | $300,000 Policy | $500,000 Policy | $750,000 Policy | $1 Million Policy |
|---|---|---|---|---|---|---|
| Allstate | $112 | $132 | $176 | $140 | $185 | $220 |
| Amica | $127 | $150 | $200 | $165 | $205 | $250 |
| Country Financial | $117 | $138 | $184 | $150 | $190 | $230 |
| Erie | $114 | $135 | $180 | $145 | $185 | $225 |
| Lemonade | $107 | $126 | $168 | $135 | $175 | $210 |
| Liberty Mutual | $122 | $144 | $192 | $160 | $200 | $240 |
| Openly | $120 | $141 | $188 | $155 | $195 | $235 |
| Progressive | $117 | $138 | $184 | $145 | $190 | $230 |
| State Farm | $117 | $138 | $184 | $150 | $190 | $230 |
| The Andover | $122 | $144 | $192 | $160 | $200 | $240 |
| USAA | $188 | $221 | $294 | $250 | $310 | $370 |
The average price of a home in America is $400,000, and many homeowners pay around $160/month for $400,ooo-$500,000 in coverage. Learn how to estimate home insurance costs based on where you live.
How to File a Home Insurance Claim
Most insurance companies have an online claim portal, or policyholders can start the process on the mobile app. Still, the quickest way to file an insurance claim is directly with an agent over the phone.
When you file a home insurance claim, you need your policy number and home inventory of your items ready. Document the damage and give the agent a detailed description. Include receipts, appraisals, photos of the damage, and repair estimates from local shops to support your claim.
It helps to take a photo inventory of your personal belongings when you buy a policy so you can verify any damaged or stolen property.
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Then get repair estimates from local repair shops soon after you file so you’re prepared to negotiate with the insurance adjuster when they come to appraise the damage.
Learn More: How to File an Insurance Claim & Win It Each Time
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Homeowners Insurance Policy Explained
Home insurance covers dwellings and personal items inside the home. Homeowners are responsible for deductibles and monthly premium payments, but policies protect against common perils like fire and theft.
Basic home insurance covers property damage and theft, personal liability, loss of use, and medical payments for guests injured on your property. Compare the different types of homeowners insurance to learn more.
However, multiple exclusions apply. For example, earthquake and flood damage is never covered by home insurance unless you buy an endorsement.
Insurance endorsements will raise your monthly rates. Living in high-risk areas prone to crime or natural disasters also raises rates. Start comparing cheap home insurance quotes to get the most affordable coverage near you.
Frequently Asked Questions
What does a homeowners insurance policy cover?
Home insurance protects the structure of your home and personal belongings inside from common damages like fire, wind or hail, theft, vandalism, and lightning. Other surprising things homeowners insurance covers include riots and explosions.
What does homeowners insurance not cover?
Homeowners policies do not cover flood or earthquake damage. Other exclusions will be listed in your policy.
What is the most common homeowners insurance policy?
HO-3 Special Form home insurance is the most popular policy. Compare all 8 types of homeowners insurance to pick the right coverage for you.
What is a high-risk item in home insurance?
Insurance companies define high-risk items differently, but typically it refers to very valuable pieces of art, jewelry, furniture, musical instruments, and other rare or collectible items. Electronics like smartphones, computers, and audio-visual production equipment are also high risk.
What are the two main types of homeowners insurance?
Basic homeowners insurance policies come in two parts: dwelling and contents coverage. Dwelling coverage protects the home itself, while contents coverage applies to personal belongings.
What are the cons of homeowners insurance?
Home insurance coverage is limited. Your home isn’t protected against every type of risk or damage, and add-ons and endorsements can get very expensive. Always compare homeowners insurance quotes to find the best price on policies near you.
What are the disadvantages of filing a homeowners insurance claim?
Your monthly home insurance rates will increase at your next renewal if you filed a claim in the past year.
What endorsements should you include on home insurance?
Flood and earthquake endorsements are important to add if you live in a high-risk area.
Should you have homeowners insurance if your house is paid off?
Unless you can afford to repair or replace your home after a fire, flood, or other risk, you should always have home insurance. Find out how much homeowners insurance you need.
How do I lower my home insurance costs?
Create a thorough home inventory and only buy coverage for what you need. Reducing coverage and increasing your deductibles are two fast and easy ways to lower home insurance rates. Just be sure you’re able to afford to cover the difference if you ever need to make a claim.
What happens if you have a mortgage and no homeowners insurance?
If your mortgage lender requires home insurance and you don’t have coverage (or let it lapse), your insurance provider will buy force-placed insurance for you. These policies are often more expensive than if you compare homeowners insurance companies online.
Do I need homeowners insurance if my house is paid for?
You want home insurance to protect your belongings in case of disaster. You may not need to carry as much coverage if your house is paid off, but you want enough to cover repairs, loss, and injuries.
Enter your zip code below to view companies that have cheap insurance rates.
Secured with SHA-256 Encryption
Tracey L. Wells
Licensed Insurance Agent & Agency Owner
Tracey L. Wells is a licensed insurance agent and Farmers insurance agency owner with 23 years of experience. He is proud to be a local Farmers agent serving Grayson, Georgia and surrounding areas. With experience as both an underwriter and agent, he provides his customers with insight that others agents may not have. His agency offers all lines of insurance including home, life, auto, RV, bus...
Licensed Insurance Agent & Agency Owner
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.