Home Insurance Questions: What Do I Need to Know?
Fact-checked with HomeInsurance.com
When you bought your home, you most likely made one of the biggest financial decisions of your life. It makes sense to protect your sizable investment, and home insurance gives you a way to do that. But it can feel confusing to understand exactly where your homeowners policy applies — and where it doesn’t.
We built this guide with that uncertainty in mind. By pulling together all home insurance questions we most frequently hear in one place, we aim to give you an extremely useful — and easy-to-use — resource. Find your most pressing home insurance question below to feel more confident with understanding your coverage.
What is homeowners insurance?
If you have home insurance questions, this is a great place to start. Homeowners insurance covers your home. But your policy doesn’t stop with the four+ walls and the roof of your house. That’s just a portion of the coverage this type of insurance offers (you’ll find coverage for your home’s structure in Coverage A). Your home policy also covers:
- Other structures on your property
- Your personal property (the stuff in your house, like clothes, furniture and electronics)
- Your personal liability and medical payments (if a neighbor slips on your front porch and sues, your policy can help with their medical bills, any legal fees and, if applicable, the settlement)
- You against loss of use (if you have to stay in a hotel after a home fire, your policy can help foot the bill)
Homeowners insurance works similarly to your car insurance policy. You get this protection in exchange for premiums (the amount you pay the insurer), and you may need to pay a deductible, or a lump sum, after a covered loss.
What are covered perils?
While it would be great if your homeowners insurance policy covered everything, that’s not the case. Instead, your policy covers certain things, or what your insurer calls covered perils. Usually, these include:
- Theft and vandalism: If someone breaks into your house and steals your stuff, your policy can pay to replace it (up to your policy limits) and repair any damage caused when breaking and entering. Most policies also cover acts of vandalism, so don’t worry if you come home to broken windows.
- Fire, smoke and lightning: Home fires, including those started by lightning, are covered under the vast majority of home insurance policies. That means you get a check to rebuild, repair any smoke damage, replace your stuff and pay for your hotel bill while you can’t sleep at home.
- Hail and windstorm: If a hail storm or windstorm damages your roof, don’t worry. Your policy can help with the repairs. But you may need to pay a separate windstorm and hail deductible.
- Civil unrest and explosions: A riot storming down your street causing property damage is not ideal, but your home insurance can help you make the necessary repairs afterward.
- Falling objects: If a tree limb falls on your roof, your home insurance policy might pay to get you back to normal.
- Vehicle or aircraft damage: If someone or something drives into your house, your home coverage steps in to cover the cost of repairs.
It’s important to read your policy to figure out exactly what perils are included in your coverage. Some things you might expect — like earthquakes and floods — are commonly excluded from home insurance coverage.
Are natural disasters covered?
This is an increasingly common home insurance question — and for a good reason. It depends on the disaster. Fires, for example, are covered under almost all home insurance policies. While hail storms and wind damage are often covered, you might have a separate deductible to pay to get your policy to kick in, especially if you live in a hurricane-prone area. And if you want to protect against floods or earthquakes, you’re going to need to purchase a separate policy.
Why do I need homeowners insurance?
If you bought your house outright, you technically don’t need insurance. But remember, without coverage, you’re on the hook for the cost of rebuilding or replacing your stuff when life brings the unexpected your way.
If you have a mortgage, your mortgage lender will most likely require homeowners insurance. It’s your lender’s way of safeguarding its investment in your home. Plus, you don’t want to be on the hook for mortgage payments without a home to show for it, so you’ll be glad to have this coverage if disaster strikes.
Will homeowners insurance cover my house if it’s destroyed?
It all comes down to what destroyed it. If an earthquake shakes your entire house apart, you’ll need a separate earthquake policy to cover the cost. But if a fire burns down your house, your policy can come to the rescue.
To determine if you’re protected against a specific natural disaster, review your policy’s covered perils. If a disaster isn’t explicitly listed there, assume you’re not covered and ask your insurance agent how to put protection in place.
What are the different types of homeowners insurance?
There are eight types of homeowners insurance, listed HO-1 through HO-8. The difference all comes down to how much coverage the policy extends to you.
HO-1 policies are known as basic form coverage and offer just that: the basics. Most people buy an HO-2 policy, called broad form coverage, or HO-3 policy, called special form coverage, for more robust protection without paying much more money. The other types of home insurance include:
- HO-4: tenant’s form (renters insurance)
- HO-5: comprehensive form
- HO-6: condo form (condo insurance)
- HO-7: mobile home form
- HO-8: older home form
When asking potential insurers your homeowners insurance coverage questions, it can help to ask about the types of policies offered. This will give you an overview of your options and the features offered by each.
Which homeowners insurance policy is best for me?
It depends on your home, your location, your budget, the materials used to build your home, the neighborhood it’s located — basically, a lot of factors go into formulating the right home insurance coverage for you. Our advice to help you find the best policy is to:
- Figure out how much coverage you need: Review your risk — like the likelihood of a natural disaster — and your coverage needs — like protection for your personal property (see “How do I assess how much ‘stuff’ I have” below) — to determine the right level of protection.
- Get multiple quotes: It can be a hassle to get a home insurance quote, but it’s a bigger hassle to pay more for your coverage than necessary. To make sure you’re getting the best price, we recommend getting a quote from 3–5 insurers.
- Review your options: Once you’ve narrowed down to a few insurers, do some research. Check the insurers’ average reviews and customer satisfaction scores (J.D. Power offers a useful annual report) to be sure you choose an insurer who won’t make you want to pull your hair out as you work with them.
How much homeowners insurance do I need?
We hate to sound like a broken record but, again, the answer is: it depends. Generally, there are three areas where you should assess your risk:
- Your home: This is fairly easy. You know the details of your home (number of bedrooms, square footage). With that information, your insurer can help you determine your home’s estimated rebuild cost. When it comes to insuring your home, you’ll insure it for rebuild cost instead of how much you can sell it for on the market.
- Your stuff: We’ll talk more about this in the next home insurance question we answer, but the best way to know how much stuff you have — and, more importantly, how much it’s worth — is to create a home inventory.
- Your liability: Depending on your finances and value of your assets, you might need more liability protection than the average Jane or Joe. If that’s the case, you should consider an umbrella policy (see “What’s an umbrella policy?” below).
Run the numbers in each of these areas to figure out the right coverage for your home and needs.
How do I assess how much “stuff” I have?
To start, build a home inventory. This is a comprehensive list of everything you own and how much it’s worth. Include receipts, credit card statements or appraisals whenever possible. This sounds like a drag to create, but more guides, apps and other resources are available than ever before.
As you total up the value of your stuff, there’s another factor to consider. Your insurance provider may allow you to choose between replacement cost value (RCV) and actual cash value (ACV). Let’s use your couch as an example. If you want to buy it new after a fire, you’ll need RCV to replace it with a new version. But if you choose ACV, your insurer will factor in depreciation of the couch you lost when cutting you a check. ACV offers less coverage, but it’s more affordable.
What other things can homeowners insurance cover?
In addition to the actual structure of your house, your homeowners insurance policy covers:
- Other structures on your property (detached garage, fence)
- All of the stuff you store in your house, garage or elsewhere on your property, plus it offers some off-premises coverage (policy limits apply) for your stuff if it’s stolen away from the house, like if someone nabs your backpack from your car or steals your luggage when you’re traveling
- Some medical payments, legal fees and settlements (up to your policy limits) if a non-household member finds you liable for bodily harm or property damage
What personal belongings does homeowners insurance cover?
Homeowners insurance covers pretty much all of your personal belongings, but there’s a catch. Your policy has specific limits on certain items, particularly the more valuable ones. You’ll see policy limits (maximum amounts your insurer will pay after a covered loss) for categories like:
- Antiques and collectibles
Read your policy limits and if there are any categories where you don’t think you have enough protection, talk to your insurance agent. Usually, you can buy an endorsement (also called a rider) to protect specific high-value items.
What is liability coverage? What are liability limits?
When you’re asking homeowners insurance coverage questions, it’s easy to gloss over the liability portion of your policy. After all, you’re only going to need it if you find yourself in a specific situation. But it’s important to understand your liability coverage.
This is the portion of your policy that can step in to cover legal fees and a settlement if you or one of your family members is held liable for an injury or property damage. It can also extend to your pets in some cases.
Your liability limit is the maximum amount your insurer will pay out to cover a situation like this.
How much does homeowners insurance cost?
It’s the answer of the day: it depends. Your insurer determines how much to charge based on your home’s risk. So if your house is expensive and your insurer would have to pay more to rebuild it, your policy costs more. If you live in an area with a high likelihood of wildfires or hurricanes, your policy costs more.
The only way to know how much homeowners insurance will cost you is to contact insurers and get quotes. Compare multiple quotes to be sure you’re getting the best price.
How do I get discounts on homeowners insurance?
This is an excellent home insurance question. Discounts vary from insurer to insurer, but you can usually reduce your cost with discounts like:
- Multi-policy discounts (if you buy your home and auto policy from the same insurer, for example)
- Claim-free discounts
- Safety features discounts (if you have a home security system or fire sprinklers)
- Good credit discounts
- Loyalty discounts (for staying with the same insurer through the years)
- Retiree discounts
Ask potential home insurers what discounts it offers to be sure you’re capitalizing on any that are applicable to you.
What’s an umbrella policy?
While this might feel like a deviation from our other homeowners insurance questions, many people buy an umbrella policy in tandem with their home policy to extend liability coverage.
An umbrella policy is excess liability insurance. If you’re worried about liability claims, shop around for an umbrella policy to offer more protection than you’ll get with a home insurance policy alone.
How long does it take to get homeowners insurance?
Usually, this process is fairly quick. Many policies can go into effect in a matter of days. Be careful to check your policy for the “effective date.” Your policy doesn’t start offering coverage until that date.
Although it doesn’t take long to get home insurance, you shouldn’t wait until a wildfire is racing your way or a string of burglaries occurs on your block. Insurers review its risk before offering you coverage and if it determines the risk is too high, it can choose not to offer you a policy.
What’s a home insurance deductible?
This is the amount you agree to pay after a covered loss. It’s usually a set dollar amount. Say a kitchen fire does $12,000 of damage to your home and you’ve chosen a deductible of $1,000. You’ll be responsible for covering the $1,000 and your insurer will write you a claims check for $11,000.
What’s a home insurance premium?
This is the amount you pay your insurer to keep your policy in place. You pay your premium as a lump sum once per policy term (once a year, for example) or in monthly installments. If you pay your premium monthly, mark your calendar. Missing a premium payment could mean losing your coverage.
It’s normal to have lots of questions when shopping for homeowners insurance. Our goal in this guide was to answer each home insurance question we hear most frequently. By now, we hope you’ve learned:
- What home insurance is and how it works
- How your home’s policy covers your house, stuff and liability
- What perils home insurance commonly covers
- How you can extend your home coverage to best meet your needs
- How to save on home insurance with discounts
Now that you know the answers to the most common homeowners insurance coverage questions, you’re ready to find the best policy for your needs and budget.