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Taiyou Nomachi/Getty Images August 02, 2022 Cate Deventer is a writer, editor and insurance professional with over a decade of experience in the insurance industry as a licensed insurance agent. Angelica Leicht is an insurance editor on the Bankrate team. She is truly passionate about helping readers make well-informed decisions for their wallets, whether the goal is to find the right comprehensive auto policy or the best life insurance policy for their needs. Bankrate logo

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At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation of how we make money. Our content is backed by LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure. Bankrate logo

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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible. All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first. Bankrate logo

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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate logo

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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Homeowners insurance protects your finances from home damage, which is why it’s an essential tool for so many homeowners. But when you purchase a home insurance policy, you enter into an agreement with the insurance company to pay your premium in exchange for the insurance company paying for certain . Compare rates and save on home insurance today! Get quotes Close X This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions.

Compare home insurance rates

Answer a few questions to see personalized rates from top carriers. Continue Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Quick Facts $382/year average savings through Bankrate 2 out of 3 homes are underinsured 1 out of every 20 insured homes makes a claim each year 100% of homes need insurance before getting a mortgage Bankrate See more providers in Choose from insurers in Show More Mortgage

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Return to form This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions.

Compare home insurance rates

Answer a few questions to see personalized rates from top carriers. Continue Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Quick Facts $382/year average savings through Bankrate 2 out of 3 homes are underinsured 1 out of every 20 insured homes makes a claim each year 100% of homes need insurance before getting a mortgage Bankrate See more providers in Choose from insurers in Show More Mortgage

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Return to form Understanding your home insurance policy can help you better prepare for unexpected damage. It may also help you feel more confident and comfortable with your coverage if you need to file a claim. Here’s what you need to know about homeowners insurance and how it works to help you get prepared if the unexpected happens down the road.

What is homeowners insurance

Homeowners insurance is financial protection that you purchase from an insurance provider. It helps pay for damages if a covered disaster or other damaging event affects your home.
A standard insurance policy : Home’s structure and belongings: Home insurance offers financial protection for the structure of a home as well as any belongings in the home in the case of a covered event. Additional living expenses: Homeowners insurance generally covers additional living expenses you incur while repairs are being done — meaning should you need to stay in a hotel and dine out, your policy might cover those additional expenses. Liability protection: A standard homeowners insurance policy comes with liability protection. This means should someone get hurt while on your property or if you are found at fault for damage to someone else’s property, your liability coverage might step in to help pay for their expenses. There are many . If you have a mortgage or other type of home loan, you will more likely have to carry an HO-3 policy, which is the most common type of home insurance. include, on average: Dwelling coverage Other structures coverage Personal property coverage Liability Medical payments Additional living expenses Each policy type comes with different covered perils. Understanding what perils — such as fire, water damage and burglary — your policy is designed to cover is an important step in your financial planning. Policies that cover more perils will generally cost more, but they will also provide you financial protection from a greater number of circumstances.

How does homeowners insurance work

Your homeowners insurance journey can be broken down into several steps, each with its own specific set of considerations. Understanding each step could help you understand how your policy works.

Obtaining quotes

Homeowners insurance is not difficult to obtain, but there are some things you should know as you evaluate companies. First, you may want to research several to find which carriers best fit your needs. As you evaluate each provider, you may want to think about how the company’s discounts and coverages fit with your situation. To review customer service, you can look to numerous studies, and can help you evaluate an insurance provider’s financial strength. Once you have chosen several companies that could fit your needs, you can contact each one to . You can often do this online, by phone or by visiting a local agency. During the quote process, ask about each company’s discounts. Taking advantage of home insurance discounts, which often include savings for home alarm systems, bundling policies and being claims-free, is one of the easiest ways to lower your premium. Learn more:

Purchasing a policy

Once you have chosen the company you feel is best for you, your family and your home, you can . You may need to sign an application and make a payment before it is set in place. Most providers offer different payment options, such as paying annually or quarterly. If you have a mortgage on your home, you may not need to make a payment. Your premium may be included in your monthly mortgage payment, held in your escrow account and disbursed to your insurance company at each renewal. If you have a current policy and are switching to a new company, you should let your mortgage servicer know about the change. Your new insurance company will likely send documentation to the mortgage company, but advising your loan servicer about the change ahead of time allows them to note your file and prepare for receiving documents and an invoice from a new insurance company.

Maintaining a policy

Once you have a policy in place, maintaining it is relatively simple. You will need to make premium payments or, if your coverage is paid from your escrow account, make sure that the premium gets paid by your mortgage company. If you make any changes to your home or lifestyle, like updating your roof, renovating a room or , you should notify your insurance carrier to make sure that your policy still properly covers you.

Filing a claim

If the unexpected happens and your home sustains damage, you may need to file a claim. You can typically file claims online, through a mobile app or with an agent in person or over the phone. You can expect questions regarding some general information like where the damage is, what kind of damage you have and when it occurred. Before sending any payout, a request to submit pictures of your home’s damaged portions or to allow a claims adjuster to inspect the damage is generally standard. Once you initiate the claims process, your insurance provider will determine the next steps.

Is homeowners insurance required

No states legally require homeowners insurance. However, if you have a mortgage, your lender will most likely require you to have it. Homeowners insurance protects your lender from the possibility that you may not be able to pay off your loan if your home is destroyed. However, even if you do not have a mortgage, homeowners insurance may be a good idea. Most financial advisors recommend that every homeowner purchase a policy. If your home is suddenly damaged or destroyed by a covered peril, your home insurance can help pay for the cost to repair or rebuild so that you do not have to shoulder those costs out of pocket.

How much does a home insurance policy cost

The in the United States is $1,383 per year for $250,000 in dwelling coverage. However, there are multiple of homeowners insurance, which means that your premium could differ from the national average. Some of these factors include: Your state and ZIP code: One of the biggest factors when it comes to how much you pay for home insurance is where you live. Each state and even each ZIP code has a unique profile regarding the likelihood of certain claims, which can impact your premium. Construction of home: How your house is constructed can affect your premium in a few ways. Some construction types are more resistant to certain types of damage, like wind or fire, which can lower your premium. However, some types of building materials are more expensive to repair, which could increase your premium. Age of home: Newer homes are generally less likely to experience damage from a variety of causes, such as weather or plumbing issues. Additionally, the building materials used in older homes may not conform to modern building standards, meaning additional work may be needed to repair or replace them. Expenses to update materials could drive costs up. Distance to nearest fire station: The closer you are to a , the faster authorities are likely to get you in an emergency. This means that the emergency responders are likely to be able to put a fire out faster than if you live farther away, which could minimize damage. Deductible: Your deductible is the amount you agree to pay out of pocket if you file a claim. Choosing a higher deductible means that the insurance company will pay less if you file a claim (because you agree to pay more), so your premium is generally lowered accordingly. Coverage options levels: In general, the higher your coverage levels, the more you will pay for insurance. Similarly, the more optional coverages you choose to add to your policy, the more you will likely pay. Credit score: In most states, your credit score affects your home insurance premium, as are statistically more likely to file a claim than homeowners with higher credit scores. However, not all states allow credit to be used as a rating factor. Claim history: If you have filed a homeowners claim within the last three to five years, your premiums may be higher. Even if you change insurance companies, your new carrier can and may charge you accordingly. Another factor that influences the cost of homeowners insurance is which company you choose. Insurance companies weigh each pricing variable differently. One company may weigh your claim history more heavily than another, for example. Shopping around and getting quotes from several carriers might help you find the coverage you need at a competitive price.

Frequently asked questions

How much homeowners insurance do I need

The homeowners insurance you need will likely depend on your personal situation. Your dwelling coverage is based on what the value is to replace your home, which means that if your home is more expensive, you will need more coverage. Other types of coverage, like structures, personal property and loss of use coverage, will typically be percentages of your dwelling coverage. And, your personal liability coverage will also be based on your personal circumstances. Many agents will recommend that you have higher levels of this type of coverage if you have a trampoline, a pool, or regularly host guests. That said, it may be beneficial to work with a licensed agent to find the appropriate coverage levels for you.

How fast do insurance companies process claims

Most home insurance providers are able to process and settle claims quickly. In most cases, that typically happens within 30 days. However, if the claim involves injuries or catastrophic losses, like numerous homes being damaged, it may take longer to receive a payout on your claim.

Should you work with a national or local provider

Whether you work with a national or local provider is a personal question. However, there are pros and cons to both options. To help make a choice, it may be beneficial to review each company’s coverage options, the available discounts, the related policy features and any third party reviews. This may help give you an idea of the providers that could work best for you. From there, you can request quotes from the options that seem like they may be a good fit for your specific situation.

What will homeowners insurance not cover

Each type of home insurance policy covers different perils, but there are some things that standard policies do not cover. Damage caused by flooding is typically excluded and can be obtained by purchasing a , although a few companies offer flood coverage as an endorsement. Similarly, earthquake damage is also typically excluded, but it can commonly be added as an endorsement unless you live in a high-risk area. In that case, you may need a separate policy. SHARE: Cate Deventer is a writer, editor and insurance professional with over a decade of experience in the insurance industry as a licensed insurance agent. Angelica Leicht is an insurance editor on the Bankrate team. She is truly passionate about helping readers make well-informed decisions for their wallets, whether the goal is to find the right comprehensive auto policy or the best life insurance policy for their needs.