Homeowners insurance is designed to alleviate the financial burden of repairing or rebuilding your home and replacing your belongings after common disasters such as fires, lightning strikes, tornadoes, or burglaries. Additionally, it can cover costs related to lawsuits stemming from injuries, such as if your dog bites a guest or if your tree damages a neighbor’s car.
What does homeowners insurance cover?
A standard homeowners insurance policy protects your home and belongings from damage caused by various covered perils. Typical policies include coverage for damage resulting from:
An aircraft, car or other vehicle
Falling objects
Fire and smoke
Lightning strikes
Theft
Vandalism and malicious mischief
Some types of water damage
The weight of ice, snow and sleet
Windstorms and hail
Explosions
What are the types of homeowners insurance?
In most states, standard homeowners insurance policies provide four main types of coverage.
-
Assists you in covering the costs of repairs or rebuilding your home if it is damaged or destroyed.
-
Assists you in covering the costs of repairing or replacing your belongings if they are damaged.
-
Helps safeguard your financial assets in the event that you are responsible for an injury or property damage.
-
Assists you in covering rent, food, and other increased expenses if you need to live elsewhere while your home is being repaired.
What coverage is mandatory or recommended in my state?
Home insurance isn’t legally required, but if you have a mortgage, your lender may mandate that you maintain insurance until the loan is fully paid off. (Learn more about home insurance coverage by state.)
There are also many good reasons to insure your home. If your property is damaged or destroyed in a disaster—such as a tornado, kitchen fire, or hailstorm—insurance can assist you in covering the costs to repair or replace your home and belongings. Additionally, the liability coverage included in a homeowners policy helps protect your personal assets from expensive lawsuits if you are sued and found liable for injury or damage to others.
How much homeowners insurance do I need?
One way to estimate the amount of home insurance you may need is to multiply the total square footage of your home by the per-square-foot building costs in your area. A local real estate agent, contractor, or builders’ association can provide you with a rough estimate of these local building costs.
In addition to calculating the cost of rebuilding your home, consider the following factors:
- The cost to replace your belongings
- Expenses for additional living costs if you are unable to stay in your home
- Protection for your financial assets in the event of a lawsuit
What is the cost of homeowners insurance?
The average annual premium for an HO-3 policy, the most common type of homeowners insurance, is approximately $1,115 for a package that includes dwelling, property, and liability coverage, with insurance amounts ranging from $200,000 to $299,000, according to a January 2021 report by the National Association of Insurance Commissioners.
However, various factors influence the actual cost of a home insurance policy, such as your location, the type of home you own, and the level of coverage you select. To learn more about your coverage options and available discounts, schedule a consultation today.