Home Insurance: What It Covers & How to Compare (2025)
Your home is likely your largest asset — and most homeowners are either over-insured, under-insured, or paying too much. We explain every coverage type, what's excluded, and how to find the right policy at the right price.
Types of Home Insurance Policies
HO-3 — Standard Homeowners
The most common policy. Covers your home structure against all perils except those specifically excluded. Personal property is covered against named perils only.
HO-4 — Renters Insurance
Covers your personal property and liability in a rental unit — not the building. Typically $15–30/month. Every renter should have it.
HO-5 — Comprehensive
The broadest homeowners coverage. Both structure and personal property are covered on an open-perils basis. Best for high-value homes and belongings.
HO-6 — Condo Insurance
Covers your unit's interior and personal property. Your condo association's master policy covers the exterior structure and common areas.
What a Standard Policy Covers
| Coverage | What's Protected | Typical Limit |
|---|---|---|
| Dwelling | Structure of your home | Full replacement cost |
| Other Structures | Garage, fence, shed | 10% of dwelling coverage |
| Personal Property | Furniture, clothing, electronics | 50–70% of dwelling coverage |
| Loss of Use | Hotel/rental while your home is being repaired | 20% of dwelling coverage |
| Liability | Injuries or property damage you cause others | $100K–$500K |
| Medical Payments | Minor injuries to guests on your property | $1K–$5K |
What Home Insurance Does NOT Cover
- ✗Flood damage — requires a separate NFIP or private flood policy
- ✗Earthquake damage — requires a separate rider or policy
- ✗Normal wear and tear or gradual deterioration
- ✗Sewer or drain backup (available as a low-cost add-on)
- ✗Home business equipment over $2,500
- ✗Intentional damage
Key Factors When Choosing
Replacement Cost vs ACV
Always choose replacement cost over actual cash value (ACV). ACV policies subtract depreciation, leaving you thousands short after a claim.
Deductible Sweet Spot
Most homeowners are best served by a $1,000–$2,500 deductible. Higher deductibles lower premiums but mean more out-of-pocket in a claim.
Location Risks
Flood zones, wildfire areas, and hail belts significantly affect premiums and coverage availability. Get flood insurance quotes separately if you're near water.
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