Congratulations on your home! Buying a home is a major milestone and a large investment. As a homeowner, you're taking full responsibility for your property, and that includes protecting it with insurance.
There are several types of homeowners insurance and levels of coverage. As you look at coverage options, use our guide with what you need to know about home insurance including key terms and frequently asked questions.
Claim: When damage occurs to your home or belongings, you can file a claim with the insurer to receive a payout to help cover repairs or the loss.
Deductible: What you have to pay out-of-pocket for repairs before the insurer will start making payments.
Limit: The maximum your insurer will pay on claims for your policy. You can set the limits for your policy as you decide how much of each type of coverage to buy.
Premium: The monthly fee you pay for coverage.
There are eight types of home insurance. These policies are designed for specific types of homes or offer different levels of coverage.
Four types of homeowners insurance are for single family homes:
The other types of homeowners insurance are for specific types of homes or living situations.
Home insurance includes several different types of coverage. Understanding each type of coverage will help you determine what you need as you shop for a homeowners insurance policy.
Keep in mind that you won't find flood or earthquake coverage in a typical homeowners insurance policy. If there are situations that you'd like insurance coverage for that are not included in your policy, like earthquakes, you can buy flood insurance or earthquake insurance separately.
You can have different levels of coverage within your home insurance policy. These coverage levels include the policy's coverage limit, which is the most the insurer will pay on claims.
The type of coverage also makes a difference to your policy. Your homeowners policy can include the following levels of coverage:
You can find discounts with most insurers to save on your homeowners insurance rate. Bundling discounts are common, so buying home and car insurance from the same insurance provider can help you save.
It's common for the home insurance industry to offer discounts for having a new roof or a discount for having a good quality roof. You can find discounts for home security since these systems reduce the risk of theft. Some insurers also offer discounts for being claims-free for a certain number of years.
Some insurers offer more uncommon discounts with its homeowners insurance coverage. For example, Farmers offers career-based discounts for doctors, teachers, firefighters, engineers, and more. AAA offers discounts to its members for having AAA membership and maintaining it.
There are many ways to lower your home insurance rate through discounts. Keep these savings opportunities in mind as you consider companies.
State Farm has earned the top spot on our list through receiving positive customer ratings and reviews. Learn more about State Farm home insurance.
Homeowners insurance covers your liability, belongings, and your dwelling. You pay a monthly premium for this coverage. If your home experiences covered damage, you can file a claim with your home insurance provider.
If your claim is approved, you'll receive a payout up to your policy's limit. You will also have to pay your deductible before your homeowners insurance company starts covering costs.
Home insurance coverage includes liability, belongings, and dwelling. Some policies only offer coverage for your belongings and dwelling under specified circumstances. An example of a covered peril is fire.
Other policies cover all circumstances except those listed in the policy like earthquakes. If you want additional coverage, you'll need to consider other types of insurance.
Homeowners insurance usually does not cover damage from earthquakes, flooding, etc.
If you want coverage for these circumstances, you'll need to buy a separate insurance product like earthquake insurance.
As you evaluate policies, pay attention to the coverage limits, deductible, and monthly insurance premium rates. Understanding these factors will help you understand the cost and coverage offered by a policy.
You'll also want to consider the situations covered and whether your policy covers replacement costs or the actual cash value. If you can, you'll want to opt for replacement cost coverage because that will offer more protection for your future finances.
The amount of coverage you'll need depends on your home and the kind of protection you want.
Most recommend getting replacement cost coverage for your home because rebuilding includes buying new materials and paying for labor.
Work with an insurance agent to assess your needs and determine how much you need.
Since homeowners insurance rates depend on multiple factors, it's difficult to give an estimate. Work with your insurance carrier or an insurance agent to learn more.
Discounts on homeowners insurance vary company to company. However, there are not very many available. If your auto insurance is from the same insurer, you can usually get a discount on your home insurance.
Some insurers may offer other discounts, but these vary by insurance provider.
Adjusting the coverage limit and deductible also affect your premium rate. However, keep in mind that when you make a claim, you'll have higher out-of-pocket costs.
Sign up below to receive a monthly newsletter containing relevant news, resources and expert tips on Home Insurance and other products and services.