What insurance do you need on your house?

Homeowners insurance protects your house and belongings against destruction or damage caused by natural disasters, perils or accidents. It can also cover medical expenses for someone hurt on your property, as well as legal costs if you’re sued over injuries. Many insurers offer different types of homeowners policies, and you can customize your coverage by choosing specific protections.

Most insurers use an actuarial process to determine your premium and coverage limits based on their assessment of your risk. This includes your home’s location, construction materials and history of claims in the area. It’s also important to consider your home’s age, as older houses may have more limitations on their coverage. For example, many insurers don’t cover damage caused by a sewer or drain backup unless you purchase an endorsement for the coverage.

Generally, your home insurance guide policy covers the structure of your house and attached structures, such as garages or tool sheds. It also typically covers personal property at actual cash value, which takes into account depreciation. To ensure you have enough personal property coverage, it’s best to create a home inventory that catalogs your belongings. This can help during the claim-filing process and ensure that you receive fair compensation if something is stolen or destroyed.

The biggest part of your home insurance is dwelling coverage, which reimburses you for repairs to your house and other structures after a covered event. It generally doesn’t cover floods or earthquake damage, and you might need separate riders for those risks. It’s possible to get a specialized homeowners policy for these events, but they tend to be more expensive.

Your policy’s deductible, which you’ll pay before your insurer starts paying on a claim, is another cost-saving element to be aware of. Most insurers have a $1,000 deductible for most losses, but some have different deductibles for different kinds of claims. For instance, a homeowner’s policy might have a higher deductible for damage from hurricanes and hail.

If you can’t find a private insurer to provide coverage, most states sponsor “FAIR” plans, which can offer you low-cost or no-cost homeowners insurance. You’ll need to check with your state’s insurance department to learn more about FAIR plans in your area.

Many insurers offer discounts, such as multi-policy discounts or safe-driver discounts. In addition, you can often save money by purchasing other kinds of insurance from the same company that provides your homeowners policy. For example, you might be able to get a discount for buying auto insurance from the same company that offers your homeowners policy. Lastly, it’s often cheaper to buy your homeowners insurance from the same company you have auto and/or life insurance through. This way, your information is already in the system when it comes time to file a claim. This can make the process much quicker and less stressful for you. It can also help you avoid duplicate coverage, which can be costly if the insurer discovers it later on.