Home insurance: coverage, claims, and costs

What a homeowners policy covers (typical HO-3)

Common exclusions

• Flood (buy separately)
• Earthquake (separate policy or endorsement)
• Sewer and drain backup (often an add-on)
• Wear and tear, maintenance problems, mold from long-term leaks
• Pests
• Business activities at home

Comparing policies

Look beyond the premium:

• Dwelling limit high enough to rebuild at today’s costs (not market value)
• Replacement cost vs. actual cash value for the roof and belongings
• Deductibles, including separate percentage deductibles for wind, hurricane, or hail
• Extended or guaranteed replacement cost endorsements
• Ordinance or law coverage to meet building codes
• Insurer’s financial strength and complaint record (check your state insurance department)

Renters insurance

Renters insurance (HO-4) is usually inexpensive and covers belongings, liability, and loss of use. Many landlords require it. It does not cover the building. See renters insurance.

Manufactured homes and condos

• Manufactured homes need specialized policies (HO-7 or manufactured home policies).
• Condo owners (HO-6) insure interior finishes and belongings; the association’s master policy covers the building—check the bylaws to see which parts you’re responsible for.

Build a home inventory

Walk through your home with video, open closets and drawers, and save receipts and serial numbers. Store copies in the cloud.

Filing a claim

1. Report promptly and get a claim number.
2. Prevent further damage and save receipts.
3. Document everything with photos and video.
4. Keep a claim diary of every conversation.
5. Get your full policy (including declarations and endorsements).
6. Get independent repair estimates.
7. Don’t throw away damaged items until the adjuster sees them or approves disposal.

If a claim is denied or underpaid

• Ask for the decision in writing with the policy language relied on.
• Provide additional evidence.
• Use the appraisal clause for disputes over the amount of loss.
• File a complaint with your state insurance department.
• Consider a licensed public adjuster (who takes a percentage) or an attorney.
• Mortgage servicers often co-sign insurance checks and control disbursement for major repairs; ask for their loss draft process.

Why premiums are rising and what you can do

In many states, homeowners premiums have risen sharply due to severe weather losses, higher construction costs, and reinsurance costs. Some insurers have stopped writing new policies in high-risk areas.

Steps that can help:

• Shop with multiple insurers and an independent agent.
• Raise your deductible to an amount you can afford.
• Ask about mitigation discounts for roof upgrades, shutters, wildfire defensible space, or water shutoff devices.
• Bundle with auto insurance.
• Improve credit where insurers use insurance scores (rules vary by state).
• Check your state FAIR plan or residual market if private coverage isn’t available.

See property tax and insurance help.

Flood insurance basics

• NFIP building coverage for homes goes up to $250,000 and contents up to $100,000; private policies may offer more.
• A 30-day waiting period usually applies to new NFIP policies (with some exceptions, like at loan closing).
• Flood insurance is required for mortgages backed by federal agencies in high-risk flood zones—but floods also happen outside those zones.
• Increased Cost of Compliance coverage can help pay to meet building codes after substantial damage.

Home insurance and mortgages

Lenders require homeowners insurance. If your policy lapses, the servicer may buy force-placed insurance, which is often much more expensive and may not cover your belongings. Respond to servicer notices quickly and send proof of coverage.

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