Compare Homeowners Insurance Rates
in just 2 minutes


By Mike Heuer

What is homeowners insurance?

Homeowners insurance is a contract between an insurance company and a policyholder to provide insurance protection to cover some or all of the cost of damage or destruction to a home.

What is a peril?

A peril is a potential source of damage or destruction. Some perils are covered by various insurance contracts while others are not, and not all homeowners insurance plans provide the same coverage for the same perils.

What is liability coverage?

Liability coverage pays up to policy limits for potential legal liability and medical payments if someone is injured on the premises or suffers property damage. Court costs also can be covered as well as attorneys’ fees up to policy limits.

What are exclusions?

Exclusions are those perils or causes of damage or destruction that are not covered by the insurance contract. Common exclusions include acts or war or government decisions. Some exclusions require and endorsement and additional payment to be protected against. Others, like external flooding, can be covered with an additional insurance policy.

How do I know what is covered?

The declarations section of a homeowners insurance policy typically lists perils covered or those that are excluded from coverage.

What is replacement cost coverage?

Replacement cost coverage is a homeowners insurance plan what will rebuild or replace a home or covered item regardless of the cost to do so. Such plans cost more than those that do not provide replacement cost coverage.

What is actual cash value coverage?

Actual cash value coverage is the replacement cost or market value of a home or covered property minus depreciation. Such policies are more affordable than replacement cost policies but can leave a homeowner suffering a financial loss.

What is agreed value coverage?

Agreed value coverage is a policy in which the policyholder and insurer agree to a specific value for the home or other items when the contract is drawn up and will pay that amount in the event of a total loss.

Is flood insurance included?

External flood insurance generally is not included in a standard homeowners insurance plan but can be purchased from some property and casualty insurers or the National Flood Insurance Program, which is administered by the federal government. Internal flooding, such as might occur with a ruptured water heater, is covered up to policy limits in some homeowners insurance plans and not in others.

What are endorsements?

Endorsements are additional coverages provided for an additional cost that enhance the protection offered by a homeowners insurance plan. An example of an endorsement is coverage for earthquake damage.

Are my belongings covered by homeowners insurance?

Most homeowners insurance plans provide a nominal level of coverage for personal belongings and other valuables that even protects them while away from the home, such as a laptop computer that is stolen from a vehicle while traveling. Additional coverage is available for high-dollar items, like artwork, jewelry, antiques and other items on a replacement cost, agreed value or actual cash value basis.

What is an all-risk insurance policy?

An all-risk policy is one that only names excluded perils and covers all other perils not listed as being excluded from insurance protection.

What is Dwelling insurance?

Dwelling insurance is a homeowners insurance policy that covers second homes and other properties that are not occupied on a regular basis. Such policies generally cost more than homeowners insurance but not as much as policies for vacant homes.

What is Vacant Home insurance?

Vacant home insurance provides coverage for homes that have no one residing in them nor any furnishings. Because such structures have no one keeping an eye on them regularly, they are particularly vulnerable to damages or destruction from theft, vandalism, break-ins and other forms of damage. Many insurers will not provide coverage for vacant homes. Those that do charge a much higher rate than for homes that are occupied or dwellings that have furnishings and occasional occupancy throughout the year.

What is condominium insurance?

Condominium insurance protects the interiors of condominiums and the personal belongings and furnishings of the policyholder and other residents. A homeowners association policy typically covers the exterior and commons areas as well as liability.

What is renters insurance?

Renters insurance provides protection for personal belongings and furnishings as well as liability coverage for renters.