Do you need homeowners insurance?

While home insurance isn’t mandated by law, your mortgage lender will typically require you to have home insurance if you're financing your home. Even after you pay off your mortgage, a home insurance policy can be vital to protect what is likely your most valuable asset if disaster strikes.

What does homeowners insurance cover?

These are the standard coverages included in a home insurance policy and how they work:

Coverage type What it covers
Coverage type: Dwelling What it covers: Covers your home's structure and anything permanently attached to your house, including attached garages, chimneys, roofs, countertops, cabinets, flooring, vanities, and in-ground pools.
Coverage type: Other structures What it covers: Covers structures not permanently attached to your home, including unattached garages, gazebos, decks, patios, sheds, pergolas, fences, and driveways.
Coverage type: Personal property What it covers: Pays to repair or replace your belongings, including clothes, furniture and electronics, if they're damaged or stolen from your home, car, storage locker, or even while you’re on vacation.
Coverage type: Liability What it covers: Pays for injuries or damages you or your family members cause to others, including certain related attorney and court costs.
Coverage type: Loss of use What it covers: Pays for daily expenses exceeding your normal living costs because you're unable to live in your home while it's being repaired or rebuilt due to a covered loss.

What perils are covered?

Perils are simply incidents that result in property damage or loss. These are the perils most commonly covered by home insurance policies:

  • Windstorms
  • Fire and smoke
  • Lightning
  • Hail
  • Tornadoes
  • Explosions (e.g., aerosol can or gas grill)
  • Theft and vandalism
  • Car/aircraft crashing into your home
  • Falling trees or other objects
  • Weight of snow, sleet, or ice
  • Water damage (from leaking roofs, broken pipes, water heaters, washing machines, dishwashers, or other appliances, but not floods)

What does home insurance NOT cover?

Your home insurance policy will have a list of coverage exclusions. Here are a few common examples of what's not covered:

  • Earthquakes
  • Flooding
  • Damage from termites
  • Wear and tear
  • Mold

How much coverage do you need?

Your coverage limits will depend on your home's value and how much you have in personal property and assets:

Coverage type Recommended coverage amount
Coverage type: Dwelling Recommended coverage amount: Your dwelling limit should cover the cost to rebuild your home from scratch if it's destroyed in a covered incident. Make sure the price of building materials and any unique features are accounted for. Keep in mind, the cost to rebuild your home could be higher than its market value.
Coverage type: Personal property Recommended coverage amount: Personal property limits are often calculated by using 50% of your dwelling coverage. For example, if your dwelling coverage is $200,000, you'll have $100,000 in personal property coverage. If your belongings total more than $100,000, you can purchase additional coverage.
Coverage type: Liability Recommended coverage amount: Choose a limit that best protects your assets by adding up your bank, brokerage, and retirement accounts, as well as the equity in your home or other property. Most home insurers offer personal liability coverage limits of $100,000, $300,000, and $500,000. If you need more than $500,000, an umbrella policy may be necessary.
Coverage type: Loss of use Recommended coverage amount: Your loss of use coverage limit is often 20% of your dwelling coverage amount. For example, if you have a $200,000 dwelling limit, then you could get up to $40,000 on a loss of use claim.

Read more on how much home insurance coverage you need.

How much does home insurance cost?

In 2019, the average price for a 12-month home insurance policy from ASI, one of the insurers in Progressive's network and part of our family of companies, ranged from $676 ($56 per month) to $2,044 ($170 per month). The cost of your home insurance depends on many factors, including your home's type, location, and roof condition, as well as any previous home insurance claims.

See more on the average price of home insurance in your state.

There are many ways to lower your home insurance premium, including increasing your home insurance deductible and bundling your home policy with auto insurance.

FAQs about home insurance

Is home insurance tax deductible?

Generally, no. But there are some exceptions that warrant a possible deduction, including if you have a home-based business. Consult a tax professional for more details.

Does home insurance cover theft from a car?

Home insurance covers theft under personal property coverage, including items stolen out of your car. Note that home insurance won't cover theft of the actual vehicle.

How long are home insurance policies in effect?

Most policies are for 12 months and renew annually, but you can change home insurance companies at any time.

How do I pay for home insurance?

When purchasing a policy, you may have the option to pay in full or "escrow,” meaning your mortgage servicer will pay your home insurance company on your behalf from a designated account. This account holds funds for your insurance and property taxes that are included in your monthly mortgage payment. If you prefer not to escrow, your insurer may offer a monthly payment option.

First time home buyer? Learn more about what to look for in a home insurance policy.

Do I need homeowners insurance for a rental property?

If you have rental properties and tenants, you need landlord insurance to safeguard your property and provide liability coverage like any other home insurance policy.

Read more commonly asked questions regarding home insurance.

How to buy homeowners insurance


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