• Best companies
  • Understanding home insurance
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What home insurance covers

Home insurance covers more than your house. It also covers detached structures on your property, all of your belongings and your finances if you’re responsible for injuries or damages to someone else. It will also cover the extra costs of living somewhere else if you can't live at home due to a covered loss.

Learn more about what a standard home insurance policy covers.

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Home Insurance

5 important things to know as you compare home insurance

1

You should buy enough home insurance to cover the cost of rebuilding.

You should buy enough home insurance to cover the cost of rebuilding.

One of the most common mistakes people make when shopping for home insurance is thinking the coverage should equal the home's market value. But home insurance is designed to pay for rebuilding your home and doesn't cover the value of the land. That amount might be lower or higher than what you paid for the house. In recent years many homeowners who lost homes in disasters were found themselves caught short because they were underinsured.

A good home insurance agent can help you estimate, and it wouldn't hurt to ask a local contractor about building costs in your area.

2

Your landlord's insurance won't cover your stuff.

Your landlord's insurance won't cover your stuff.

Don't expect the landlord to help you replace anything if disaster strikes. Their insurance covers the building - not your things. Buy renters insurance to protect your belongings if they're stolen or damaged. Like home insurance, renters insurance also provides liability coverage if you're held responsible for injuries or damage.

3

A good inventory is worth your time.

A good inventory is worth your time.

Conduct an inventory to find out how much coverage you need. Check whether your insurance company offers an inventory app, or use the Insurance Information Institute's free online software at KnowYourStuff.org to help catalog everything. Standard home and renters insurance policies place dollar limits on valuables and special collections coverage, so you might need to buy additional coverage for those items. Besides helping you determine how much coverage you need, an inventory helps the claims process go smoothly.

4

Replacement cost coverage is worth the extra expense.

Replacement cost coverage is worth the extra expense.

Replacement cost coverage is pricier than actual cash value coverage, and here's why. With replacement cost coverage, the policy reimburses you for buying a new, comparable item to replace the one that was damaged. Actual cash value coverage pays you the current market value of the item that was damaged or destroyed. Say, for instance, a pipe burst and ruined a 5-year-old couch. Replacement cost coverage would pay for a new sofa. Actual cash value coverage would reimburse you for the cost of a new sofa minus five years of depreciation.

5

A home or renters insurance policy doesn't cover everything.

A home or renters insurance policy doesn't cover everything.

Standard home and renters insurance policies do not cover damage from earthquakes or floods. You need to buy separate insurance policies for coverage in case either of those disasters strikes. Home and renters insurance also excludes coverage for business activities, even when the business is conducted from your home office, and limits coverage for business property.

Home insurance FAQ

What is the cheapest home insurance?

What you pay for coverage depends on many factors, including the age, location, and materials of your home. However, the cheapest home insurance companies nationwide based on Insurance.com's rate analysis are Amica and Allstate.

Rates were compared for a policy with $300,000 of dwelling and liability coverage and a $1,000 deductible.

Is homeowners insurance required?

Homeowners insurance isn’t required by law, but your mortgage company will require it to protect their investment in the home. If you don’t have a mortgage, you don’t have to carry home insurance, but it’s highly recommended that you do.

How are homeowners insurance claims paid?

A home insurance claim goes through the same process as any claim. After the report, an adjuster will investigate and decide what’s covered. Homeowners insurance claims are usually paid by check or sometimes direct deposit. How much you get will depend on the limits of your policy, and your deductible will be subtracted from the total.

How do you shop for homeowners insurance?

Shopping for homeowners insurance is similar to looking for auto insurance. You can shop online either directly with insurance companies or using a quoting tool to compare multiple companies at once. You can also work with an insurance agent to help find the right homeowners insurance for your needs.

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