Everything You Need to Know About Home Insurance

Home insurance (also called homeowners insurance) provides financial protection against disasters, theft, and liability for accidents that occur on your property. A standard policy covers the structure of your home, your personal belongings, liability protection, and additional living expenses if your home becomes uninhabitable.

What Home Insurance Covers

Dwelling Coverage: Repairs or rebuilding of your home if damaged by covered events like fire, windstorm, or vandalism. Make sure your dwelling coverage matches the cost of rebuilding your home, not its market value.

Other Structures: Covers detached structures like garages, sheds, and fences. Typically set at 10% of your dwelling coverage.

Personal Property: Covers your furniture, electronics, clothing, and other belongings if stolen or damaged by a covered event. Consider making a home inventory with photos and receipts.

Liability Coverage: Protects you if someone is injured on your property or if you accidentally damage someone else's property. This includes legal defense costs if you're sued.

Additional Living Expenses (ALE): Covers temporary housing and living costs if your home is uninhabitable due to a covered loss.

What Home Insurance Typically Does NOT Cover

Standard policies exclude flood damage, earthquake damage, and wear and tear. If you live in a flood zone or earthquake-prone area, you need separate flood or earthquake insurance. Maintenance-related damage is also excluded — it's the homeowner's responsibility to maintain the property.

How Much Home Insurance Do You Need?

The right amount of dwelling coverage should equal the cost to rebuild your home, not its purchase price or market value. Factors that affect rebuilding costs include local construction costs, square footage, number of rooms, and special features like custom finishes or high-end appliances.

For personal property coverage, a good rule of thumb is to insure your belongings at 50% to 70% of the dwelling coverage amount. Go room by room and itemize your possessions to ensure you have adequate coverage.

How to Save on Home Insurance

• Increase your deductible (higher deductible = lower premium)
• Bundle home and auto insurance
• Install security systems and storm-resistant features
• Maintain good credit (insurance companies check credit-based insurance scores)
• Shop around annually for better rates