Homeowners Insurance
Insurance protecting a home and its contents against damage, theft, and liability.
What is Homeowners Insurance?
Homeowners insurance is a package policy that protects a home's structure and personal contents against covered perils — fire, windstorm, hail, theft, and vandalism — and provides liability coverage for accidents occurring on the property. Standard policies (HO-3) cover the dwelling at replacement cost, personal property at actual cash value or replacement cost, and liability up to policy limits. Flood and earthquake damage are typically excluded and require separate policies. Mortgage lenders require homeowners insurance. Premiums are based on home value, location, construction type, claims history, and deductible chosen.
Example
A homeowner's roof is destroyed in a hailstorm. Their HO-3 policy with a $1,000 deductible covers the $18,000 replacement cost, paying $17,000 to the contractor. Had the damage been from flooding, they would need separate flood insurance.
Source: NAIC — Homeowners Insurance