Homeowners Insurance: What Should You Have in Place?
Homeowners insurance can protect much more than the physical house. A useful policy review includes the structure, personal belongings, liability, temporary living costs, deductibles, exclusions and the records you would need if you ever had to make a claim.
This page provides general educational information. Coverage, exclusions, limits, deductibles and claim rules vary by insurer and policy. Review your declarations page and full policy documents for the terms that apply to your home.
Know these seven things.
They matter before there is a claim.
- Your dwelling coverage limit
- Your personal property coverage
- Your liability limit
- Your deductible or deductibles
- Your additional living expense coverage
- Major exclusions or separate coverage needs
- Where your home inventory and policy records are stored
Know what the policy is protecting before you focus on the premium.
A homeowners policy commonly brings several kinds of protection together. The house itself is only one part. Your belongings, personal liability and the cost of living elsewhere after a covered loss may also be part of the policy.
That makes the declarations page, coverage limits and exclusions worth reviewing before something happens—not after.
The amount needed to reconstruct a damaged home can be influenced by construction costs, materials, labor, local requirements and the specific features of the property.
Homeowners coverage is usually more than one protection.
The exact policy varies, but these are some of the major coverage areas worth locating and understanding.
Dwelling
Coverage for the home structure, subject to the covered causes of loss, limits, exclusions and policy conditions.
Personal Property
Coverage for eligible belongings such as furniture, clothing, electronics and other household possessions.
Liability
Protection that may apply when you are legally responsible for certain injuries or property damage to others.
Additional Living Expenses
Coverage that may help with certain extra living costs when a covered loss makes the home temporarily uninhabitable.
Replacement cost and actual cash value are not the same thing.
How a policy values damaged or stolen property can affect how much is available after a covered loss. Check the policy instead of assuming every item will be replaced at today's new-item price.
Replacement Cost
Replacement-cost coverage generally focuses on the cost of replacing covered property with similar property, subject to policy terms, limits and claim requirements.
Actual Cash Value
Actual cash value generally reflects depreciation or the reduced value of property because of age, wear or other factors, depending on the policy and applicable rules.
A lower premium does not tell you what a claim could cost you.
Your deductible is part of the financial responsibility you may carry when making a covered claim. Some policies may use different deductibles for certain causes of loss.
Check the dollar amount.
Know the deductible you would be responsible for on a typical covered property claim.
Make sure that amount is realistic for your emergency savings.
Check for separate deductibles.
Some policies may use percentage-based or separate deductibles for specific risks, depending on the property and location.
Review the actual declarations page and endorsements rather than assuming every claim uses one deductible.
Homeowners insurance does not mean every kind of damage is covered.
Some risks may be excluded, limited or handled through separate policies or endorsements. The details depend on the policy and where the property is located.
Standard homeowners coverage may not include flood damage. Separate flood coverage may be appropriate depending on the property and risk.
Certain forms of earth movement may be excluded or require separate coverage depending on the insurer and location.
Jewelry, collectibles, art or other high-value items may have special limits and may require additional scheduled coverage.
Business equipment, inventory or liability may not be fully protected under ordinary homeowners coverage.
Insurance generally is not a replacement for ordinary maintenance, deterioration or routine repairs.
Coverage for water damage can depend heavily on the cause of loss, policy wording and optional endorsements.
A policy is easier to use when you can show what you owned.
A basic home inventory can help you remember and document belongings after a covered loss. It does not need to become a complicated database.
Useful Inventory Records
Keep a copy away from the property.
An inventory stored only inside the home could be lost in the same event that damages the property. Keep a secure backup somewhere you can reach after an emergency.
Map Where Records Are Kept →Your coverage may need another look when the property changes.
Renovations
Major remodeling, additions or upgraded finishes can change rebuilding costs and property values.
Large Purchases
Furniture, electronics, jewelry or collectibles may change the amount or type of personal property coverage you need.
New Structures
A shed, detached garage, pool or other addition may affect property and liability considerations.
Home Business
Business equipment, customers, inventory or professional activity can create insurance needs beyond ordinary household coverage.
Know what records you would reach for after a loss.
Good preparation does not guarantee a claim will be covered, but it can make it easier to communicate what happened and provide requested documentation.
Keep the policy information accessible.
Know the insurer, policy number, claims contact information and where the current declarations page is stored.
Do not rely on one copy stored only inside the home.
Document damage carefully.
When it is safe to do so, photos, videos, receipts and other records may help show the condition of property after a loss.
Follow insurer instructions before discarding damaged items or making major permanent repairs.
What the lender requires and what the household needs are not always identical.
Mortgage lenders commonly require homeowners insurance while a loan is in place. Meeting a lender's requirement does not automatically mean every personal property, liability or disaster-related need has been addressed.
Lender Focus
The lender has a financial interest in the property securing the loan and may require specified insurance coverage as part of the mortgage agreement.
Household Focus
You still need to consider your belongings, liability exposure, temporary housing costs, deductibles, exclusions and any additional risks that matter to your household.
Home changes often create insurance changes.
Buying a Home
Review property coverage, deductibles, liability and lender requirements before closing.
Getting Married
Combining households can increase personal property, liability and recordkeeping needs.
Moving
A change of residence can affect coverage, property details and where important documents are stored.
Starting a Home Business
Business equipment, activity and liability may require additional insurance review.
Connect the policy with the records and plans around the home.
Home & Housing
Review property records, maintenance, utilities, warranties, safety information and household responsibilities.
Review Home & Housing →Where Things Are Worksheet
Record where insurance policies, property records, warranties and other important documents can be found.
Map Important Records →Emergency Preparedness
Connect insurance records with evacuation plans, household contacts, supplies and emergency documents.
Review Emergency Readiness →Use your actual policy and trusted consumer resources for the details.
Coverage and insurance regulation can vary by state and insurer. These resources provide useful consumer information about homeowners coverage, disaster planning and insurance regulation.
Consumer information about homeowners insurance and access to state insurance regulators.
Visit NAIC →Federal information about disaster preparedness, flood risk and flood insurance resources.
Visit FEMA →Federal household emergency-preparedness guidance and planning resources.
Visit Ready.gov →A few details are worth understanding before you need to make a claim.
What does homeowners insurance usually cover?
A homeowners policy may include coverage for the dwelling, eligible personal property, personal liability and additional living expenses, subject to the policy's limits, covered causes of loss, exclusions, deductibles and other terms.
Is homeowners insurance required by law?
Homeowners insurance requirements can depend on the mortgage or other contractual obligations. Mortgage lenders commonly require coverage while a qualifying loan is in place.
Does homeowners insurance cover flooding?
Flood damage may not be covered by a standard homeowners policy. Homeowners in areas with flood exposure should review whether separate flood insurance is appropriate.
What is the difference between replacement cost and actual cash value?
Replacement-cost coverage generally focuses on the cost to replace covered property with similar property, while actual cash value typically reflects depreciation or reduced value. Exact claim rules depend on the policy.
Why should I keep a home inventory?
A home inventory can help document belongings and make it easier to identify property after a covered loss. Photos, videos, receipts and other records can be useful depending on the claim.
Pull out your declarations page and check the coverage before you need it.
Start with the dwelling limit, personal property coverage, liability limit and deductible. Then make sure you know the major exclusions and where your home inventory and policy records are stored.