Home Insurance

Shopping for home insurance isn’t exciting per se, but it is necessary. In addition to satisfying your mortgage lender’s requirements, it covers your largest investment in the event of a disaster. Get the expert guidance you need to make an educated buying decision from our expert research, guides and company comparisons.

What To Know About Home Insurance

Home insurance, also known as homeowners insurance, is a property insurance policy that covers a residence. It provides financial protection in the event of a disaster or accident, covering losses to a home, its contents and loss of use. It also provides liability insurance for accidents and injuries or property damage to others at the residence or those caused by the homeowner or the homeowner’s family, including pets.

Here are some essential aspects of home insurance to learn about before shopping for the right policy.

Prepare for Gathering Quotes

Getting quotes is an important part of the home insurance buying process. Different providers offer varying levels of coverage and use their own underwriting systems, so it’s hard to know if you’re paying a fair price without comparing one company to another.

However, whether shopping online or talking with an agent, you’ll need a few pieces of information about your home and yourself to get accurate numbers.

Here’s a checklist to start shopping:

• Name and date of birth
• Email address
• Social security number, in some cases
• The number of people living in the home
• The home’s size, age and construction details

Typical Plan Structure

There are three levels of home insurance coverage that range in cost and level of protection. No one policy fits all — your coverage choices depend on your budget and risk acceptance level. 

• Actual Cash Value: This standard coverage level pays to replace the home or possessions — minus depreciation.

• Replacement Cost: This upgrade pays the cost of rebuilding or repairing the home or replacing possessions.
• Guaranteed/Extended Replacement Cost: The highest level of protection, this pays for the costs to rebuild the home as it was pre-disaster, even if that amount exceeds the policy limit. It protects against sudden increases in construction costs, but not the cost of upgrading the residence for compliance with current building codes.

Standard home insurance policies include six coverage types:

• Dwelling: Covers the cost of completely repairing the structure of your home.
• Other structures: Covers detached structures on your property, like a detached garage.
• Personal property: Covers the personal belongings in your home.
• Loss of use/additional living expenses: Pays for living expenses when your house needs to be rebuilt or repaired.
• Liability: Pays for medical bills or repairs when you are responsible for an incident that injures someone or damages their belongings. It may also cover legal fees if you are sued.
• Medical payments to others: Covers medical bills when a guest is injured in your home.

Endorsements

In addition to standard coverage, many carriers offer additional insurance policies, known as riders or endorsements, that you can purchase to increase areas of coverage that matter most to you. Endorsements increase the cost of your policy but allow you to customize coverage to get the most peace of mind.

For example, you might include coverage for your sump pump and water backups, identity theft protection, or specific personal property coverage for an expensive collection of valuables. Some companies include endorsements in their basic policies, providing added value that should be considered when comparing quotes.Get a head start on your shopping experience with our article on the best home insurance companies.