Homeowners insurance.
In plain English
Homeowners insurance protects the structure of your home, your belongings, and your liability if someone is hurt on your property. In exchange for a yearly premium, the insurer pays covered losses above your deductible, such as fire, wind, hail, or theft. Standard policies exclude floods and earthquakes, which need separate coverage. Lenders require it while you have a mortgage, and it is usually paid monthly through escrow. Coverage should reflect the cost to rebuild, not the home's market price, and choosing replacement cost over actual cash value changes what you collect after a claim.
01Why it matters
It is a required, ongoing cost and the thing standing between a disaster and a financial catastrophe, so both its price and what it actually covers matter.
02The math, step by step
A policy might cost about 1,800 dollars a year, or 150 dollars a month in escrow, with a 1,000 dollar deductible. After a covered 12,000 dollar kitchen fire, you pay the 1,000 dollar deductible and the insurer covers the remaining 11,000 dollars.
03What this is NOT
Homeowners insurance is NOT based on what you could sell the home for. It should cover the cost to rebuild it, which can be higher or lower than the market price.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.