Homeowners Insurance Coverage in 2025

What is home insurance and what does it cover? A basic home insurance policy covers your home’s structure and belongings after your deductible applies, starting at $79 per month.

You can choose between replacement cost coverage, which pays its current value, or actual cash value coverage, which accounts for depreciation. Is home insurance required? Most mortage lenders require home insurance, but it’s not required by law.

See how much homeowners insurance you need, and find out what home insurance covers. Then, enter your ZIP code to get free home insurance quotes from providers near you.

What Homeowners Insurance Covers

Homeowners insurance protects the structure of your home as well as your personal belongings.

It also protects guests who are injured on your property by covering medical costs and legal fees.

Home Insurance Coverage Options

However, policies list specific damages that aren’t covered without an optional rider or endorsement.

The most basic homeowners insurance policies come in two parts. Homeowners insurance dwelling coverage means the structure of your home, such as walls, the roof, and any built-in appliances. Meanwhile, liability coverage pays for any legal or medical bills if someone gets injured on your property.

You can pick and choose more homeowners insurance coverage options based on the type of policy you buy.

The most common types of homeowners insurance are HO-3 and HO-5 policies. Both protect your home and belongings from common risks, but HO-5 offers broader coverage with fewer exclusions.

Types of Home Insurance Policies

You can pick a policy that covers either the replacement cost or actual cash value (ACV) of your property. Replacement cost coverage is ideal because it covers the full cost to repair or rebuild your home at its current value, without factoring in depreciation.

ACV policies are often cheaper, but you won’t get back what you paid for your house or personal items.

All home insurance policies provide some version of these coverages unless you choose a renters policy.

Learn how to read your homeowners insurance policy:

• Premiums: The monthly or annual rate you agree to pay for home insurance coverage.
• Deductibles: The amount you pay for repairs out of pocket before the insurer pays.
• Covered Losses: In return, the insurer protects your property from the named perils in the policy.

What does homeowners insurance cover and not cover? The 10 common perils covered by most insurance policies include fire, wind or hail, theft, vandalism, and lightning.

Other policies will cover damage caused by freezing and the weight of snow and ice, volcanic eruptions, and accidental damage to air conditioners and heating units.

Learn More: 8 Types of Homeowners Insurance Policies

What Home Insurance Doesn’t Cover

The most common home insurance exclusions are:

• Earthquakes
• Flooding
• Identity theft
• Termites
• Wear and tear

Some states require flood or earthquake riders on all home insurance policies. Since most providers don’t offer this kind of coverage, you can find a policy through the National Flood Insurance Program.

Comparing Homeowners Insurance Rates

Insurance companies use certain variables to set homeowner rates. Always compare home insurance quotes from multiple providers to find the most competitive price based on:

• Location: Living in an area prone to natural disasters like hurricanes or wildfires will raise rates.
• Crime Rates: Premiums are higher in densely-populated neighborhoods with high crime and property damage rates.
• Credit Score: Homeowners with poor credit scores pay more for insurance.
• Deductibles: Agreeing to pay more out of pocket with a higher deductible gets you cheaper premiums but costs more when you file a claim.

The value of your home has the biggest impact on premiums, and your home insurance rates will be higher if you choose replacement coverage over actual cost value.

Home Insurance Monthly Rates by Provider & Dwelling Coverage

The average price of a home in America is $400,000, and many homeowners pay around $200 per month for $400,000 to $500,000 in coverage.

Premiums vary by state based on differences in laws, population density, weather risks, and local claim trends. For instance, homeowners in Florida often face higher premiums due to the greater threat of hurricanes and severe storms.

Compare home insurance rates by state to see how specific regional risks impact your premiums.

Learn More: Best Home Insurance for High-Value Properties

How to File a Home Insurance Claim

Most insurance companies have an online claim portal, or policyholders can start the process on the mobile app. Still, the quickest way to file an insurance claim is directly with an agent over the phone.

When you file a home insurance claim, you need your policy number and home inventory of your items ready. Document the damage and give the agent a detailed description. Include receipts, appraisals, photos of the damage, and repair estimates from local shops to support your claim.

Having this information ready makes the claims process smoother and helps you get your reimbursement faster.

Then, get repair estimates from local repair shops soon after you file so you’re prepared to negotiate with the insurance adjuster when they come to appraise the damage. If you live in a fire-prone area, learn how to file a home insurance claim after a wildfire.

Homeowners Insurance Policy Explained

Home insurance covers dwellings and personal items inside the home. Homeowners are responsible for deductibles and monthly premium payments, but policies protect against common perils like fire and theft.

Basic home insurance covers property damage and theft, personal liability, loss of use, and medical payments for guests injured on your property. Compare the different types of homeowners insurance to learn more.

However, multiple exclusions apply. For example, earthquake and flood damage is never covered by home insurance unless you buy an endorsement.

Insurance endorsements will raise your monthly rates. Living in high-risk areas prone to crime or natural disasters also raises rates. Enter your ZIP code to compare quotes from the best home insurance companies near you.