Homeowners Insurance Guide

What a standard policy covers

• Dwelling — the structure of your home itself: walls, roof, and built-in systems.
• Other structures — detached structures like a garage, shed, or fence.
• Personal property — your belongings, from furniture to electronics, often even away from home.
• Loss of use — extra living costs (hotel, meals) if a covered loss makes your home unlivable.
• Personal liability — legal and medical costs if you are responsible for someone's injury or property damage.
• Medical payments — smaller medical bills for a guest hurt on your property, regardless of fault.

Policy types

Most homeowners carry an HO-3 policy, which covers the structure against all causes of loss except those specifically excluded, and covers your belongings against a named list of perils. Condo owners use an HO-6 policy, and renters use an HO-4. The right form depends on what you own and what your association or landlord already insures.

Replacement cost vs. actual cash value

This is one of the most important choices in your policy. Replacement cost pays to rebuild or replace items at today's prices. Actual cash value subtracts depreciation, so an older roof or sofa pays out far less. Replacement cost costs a bit more in premium but protects you far better after a major loss.

How much coverage do you need?

Insure your dwelling for what it would cost to rebuild — not its market price, which includes land. Choose personal property and liability limits that reflect what you own and what you could be sued for; many homeowners pair higher liability with an umbrella policy for extra protection.

Deductibles and what is excluded

Your deductible is what you pay before insurance kicks in; a higher deductible lowers your premium. Standard policies exclude some major risks — most notably flood and earthquake — which require separate policies. Routine maintenance and wear and tear are never covered, so keeping the home in good repair matters.

What affects your price, and how to save

• Location, age, construction, and condition of the home
• Your coverage limits, deductible, and claims history
• Bundling home and auto for a multi-policy discount
• Security and safety devices: alarms, smoke detectors, water shutoffs
• Raising your deductible and shopping multiple insurers at renewal