30 Must-Ask Homeowners Insurance Questions Before Buying (With Our Expert Answers)

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As you shop for homeowners insurance, there are numerous questions you need to ask yourself about the policies you analyze. Homeowners insurance is crucial for protecting some of your most valuable assets, so it’s important to make sure you know how to find a policy that can address your unique needs at an affordable price.

Keep reading for an overview of some of the homeowners insurance questions you may want to consider as you compare home insurance quotes from various insurance companies.

Key Takeaways

  • The average yearly rate for homeowners insurance is around $1,820 but the amount you have to pay can vary substantially depending on your personal information, policy details, location and more.
  • Home insurance policies can insure your property against various perils and cover liability claims but you should remember that every policy will come with a set of exclusions that aren’t covered.
  • It’s often recommended that you buy enough homeowners insurance to completely replace your home and belongings if necessary while also adequately protecting your assets in case of a major liability claim.
  • Although homeowners insurance isn’t required by law, you will likely have to purchase coverage if you need to take out a mortgage on your home.
  • To find the right homeowners insurance coverage, you should shop around using an online marketplace platform like SmartFinancial and ask an agent various questions to make sure you’re getting a policy that matches your coverage needs and budget.

1. What Parts Make Up a Homeowners Insurance Policy?

The first page of an insurance policy is generally a declarations page that includes your name and address and summarizes basic information about the policy such as the dollar limit that applies to each of your coverage types and the length of your coverage period.[1]

Afterward, there should be a list of definitions for important terms and phrases that appear throughout the policy. Then, there will be a breakdown of what is covered and what is excluded from coverage by the policy. Finally, the policy may finish by going over the conditions that apply to the insured and the insurance company and explaining any optional coverages you have added to your policy through endorsements.[1]

2. What Types of Home Insurance Are There?

There are eight types of homeowners insurance, also called forms, which differ in terms of the amount of coverage they provide and the types of homes they are designed to insure.[2][3]



HO-1 (Basic Form)

Protects against only 10 named perils

HO-2 (Broad Form)

Protects against 16 perils on a named peril basis

HO-3 (Special Form)

Offers dwelling coverage on an open peril basis and personal property coverage on a named peril basis

HO-4 (Contents Broad Form)

Also known as renters insurance, protects against 16 perils but doesn’t include dwelling or other structures coverage

HO-5 (Comprehensive Form)

Offers dwelling and personal property coverage on an open peril basis

HO-6 (Condo Insurance Form)

Protects the condo owner’s personal belongings and the structure of their unit but not the overall building structure or common areas

HO-7 (Mobile Home Form)

Offers dwelling coverage for manufactured and mobile homes on an open peril basis and personal property coverage on a named peril basis

HO-8 (Modified Coverage Form)

Intended for old/historic homes, provides limited coverage against 10 perils

HO-3 insurance is generally considered standard coverage and is the most popular type of home insurance, accounting for 78.16% of homeowners insurance policies written in 2021.[4]

3. How Much Does Homeowners Insurance Cost?

Homeowners insurance costs around $1,820 per year on average as of January 2024.[5] However, rates can vary significantly based on a number of factors including the type of policy you purchase. For example, the average annual cost of an HO-3 policy for a home worth less than $75,000 was around $765 in 2021, while the average price of an HO-5 policy for a home worth more than $500,000 was about $2,777.[4]

4. Do I Pay Home Insurance in Advance?

When you are closing on a new home, your lender will usually require you to pay for your first year of homeowners insurance coverage in advance.[6] Otherwise, you are generally free to choose whether you will pay for coverage in monthly installments or make an upfront payment for the entire year.

5. What Does Homeowners Insurance Cover?

The following six coverage types are included in a standard homeowners insurance policy.



Dwelling (Coverage A)

Covers the physical structure of your home and attached structures like garages and carports

Other Structures (Coverage B)

Covers standalone structures on your property like sheds and fences

Personal Property (Coverage C)

Covers your belongings including furniture, electronics, clothing and more

Loss of Use (Coverage D)

Covers additional living expenses and lost rent payments if you or your tenants must leave home due to a covered peril

Personal Liability (Coverage E)

Covers medical bills, lost wages, repair costs and legal expenses related to bodily injury and property damage claims you are held liable for

Medical Payments (Coverage F)

Covers medical expenses related to minor injuries that occur on your property regardless of whether you are held liable

Six coverages included in a standard homeowners policy

In addition, many insurance carriers offer a wide array of optional coverage types you can add to your homeowners policy in order to enhance your coverage. For example, you could buy scheduled property coverage to secure extra coverage for your valuables or home-based business coverage to insure your commercial property if you work from home.

6. Is My Vehicle Covered by Homeowners Insurance?

Your homeowners insurance won’t cover any damage to your vehicle since this should be covered by your auto insurance instead. However, your home insurance does cover your belongings while they are stored inside of your vehicle.

7. What Isn’t Covered by Homeowners Insurance?

Every home insurance policy comes with a set of exclusions, which are sources of damage and liability concerns that aren’t covered under the policy. Examples of common exclusions include the following:

  • Flooding caused by heavy rains, sump pump overflows and other external water sources
  • Earthquakes and other kinds of ground movement
  • Poor maintenance and wear and tear
  • Pests and infestations
  • Mold
  • War or nuclear hazard
  • Government confiscation or condemnation of property
  • Intentional losses
  • Failure to adhere to local building codes
  • Dog bites from breeds that are known for being aggressive

Your home insurance company also won’t pay out anything above your policy’s coverage limits regardless of how much money it will actually take for you to recover from a covered loss.

In addition, your insurer can deny your claim if you failed to disclose information related to the claim. For example, if you buy a trampoline and don’t tell your insurance company about it, your insurer may reject a personal liability claim you file after a guest gets injured on the trampoline.

8. What Is a Home Insurance Premium?

Your home insurance premium is the regular payment you must make to your insurance company to keep your coverage active regardless of whether you need to file a claim. Factors that can impact your homeowners insurance premium include the following:

  • Age of your home
  • Condition of your roof
  • Zip code
  • Whether you are eligible for any discounts
  • Policy details like coverage types, coverage limits and deductibles
  • Claims history
  • Updated features and attractive nuisances
  • Whether you have dangerous or exotic pets
  • Credit score (although a few states don’t allow insurance providers to take your credit score into account when setting your rates)[7]

9. How Much Home Insurance Do I Need?

It’s generally recommended that you buy a home insurance policy with enough dwelling coverage to completely rebuild your home in the event of a total loss.[8] You could estimate your home’s replacement cost by multiplying the square footage of your home by local building costs per square foot or hire an appraiser for a more precise estimate.

Coverage limits for your other property insurance policies are usually set at a percentage of your dwelling coverage limit. For example, your personal property coverage limit will often be between 50% and 70% of your dwelling coverage limit, while the number is usually 20% for loss of use coverage and 10% for other structures coverage.[8][9]

However, you may have the option to adjust these coverage limits as necessary. In particular, you may want to maintain a home inventory that documents your most valuable items and how much they are worth so you can know whether you need to purchase more personal property insurance.

10. What Perils Does Home Insurance Cover?

A standard HO-3 insurance policy will insure your belongings against the following 16 named perils.[10]

Fire or lightning

Vandalism or malicious mischief

Windstorm or hail



Volcanic eruption

Riot or civil commotion

Falling objects

Damage by vehicle

Weight of ice, sleet or snow

Damage by aircraft

Freezing of home systems


Sudden/accidental power surges

Sudden/accidental tearing, cracking, burning or bulging of home systems

Water/steam discharge from home systems and appliances

Meanwhile, HO-3 policies insure your home on an open peril basis. This means your dwelling insurance will cover any source of damage to your home and attached structures unless it is specifically listed as an exclusion in the policy.

11. Am I Eligible for Any Homeowners Insurance Discounts?

Insurance companies typically offer multiple discounts that can help you save money on homeowners insurance. Examples of actions you may be able to take to lower your home insurance premiums include the following:

  • Going an extended period of time without filing any claims
  • Earning a Leadership in Energy and Environmental Design (LEED) certification to qualify for an eco-friendly home discount
  • Becoming a member of a homeowners association (HOA)
  • Buying or building a new home
  • Paying your premium for the entire coverage period in full at the beginning of the year
  • Installing safety features like security cameras, fire alarms and sprinkler systems
  • Remaining with the same insurance carrier for several years
  • Using an electronic funds transfer (EFT) to pay your premiums
  • Joining a certain organization or company that qualifies for an affinity discount
  • Receiving all documents related to your policy digitally to earn a paperless discount

12. Does Home Insurance Automatically Renew?

For the most part, your homeowners insurance policy will be renewed automatically as long as you continue to pay your premiums and don’t request for your policy to be canceled. That said, it’s recommended that you shop around for other home insurance policies every year when your policy is up for renewal so you can make sure you are still getting the best coverage at the best rate.

13. Do I Need an Umbrella Policy?

Personal umbrella insurance may be worth considering if you have high liability exposure and highly valuable assets you need to protect because umbrella insurance can provide extra coverage in case a costly claim exhausts your personal liability coverage limit. For example, you may want to buy an umbrella insurance policy if you frequently host pool parties where guests risk drowning or sustaining slip-and-fall injuries.

A major perk of personal umbrella insurance is that it can provide excess liability coverage for multiple kinds of liability policies at once.

As a result, an umbrella policy may extend coverage to both your personal liability insurance and your liability auto insurance. Keep in mind that you may need to have at least $300,000 worth of personal liability insurance to qualify for umbrella coverage.[8]

14. Is Homeowners Insurance Required by Law?

Homeowners insurance isn’t required by law in any state. However, it is often required by mortgage lenders and HOAs.[11] In addition, home insurance is recommended even if you aren’t required to have it since it can insure your home and belongings against several potential sources of damage.

15. Is Mortgage Insurance the Same as Home Insurance?

No, homeowners insurance provides you with liability and property coverage, while mortgage insurance protects your lender from financial losses in the event that you default on your loan, meaning you fail to uphold the terms of the mortgage contract.

16. Is Homeowners Insurance Tax Deductible?

For the most part, homeowners insurance is tax deductible only if you use your home for commercial purposes such as working from home as a self-employed business owner or renting out a property to tenants. However, you can only deduct a prorated amount of your home insurance premiums and other home maintenance expenses based on the percentage of the home’s use that is devoted to business activities.

For example, if you have a home office that is your primary workspace, you must compare the square footage of your home office to the square footage of your entire home to determine what percentage of your insurance payments you can deduct from your taxes.[12] Similarly, if you rent out a vacation home that you also use for personal purposes, you must add up the number of days you rent out the home at a fair market price to figure out what percentage of your expenses are tax deductible.[13]

17. Can My Home Insurance Policy Be Canceled?

Yes, your insurer can cancel your home insurance policy if you fail to pay your premiums, file claims excessively or are caught committing insurance fraud as well as if the insurer simply stops doing business in your state, among other reasons. In addition, you are generally free to cancel your own policy at any time, although some insurance companies will charge you a fee if you terminate your policy before the end of your coverage period.[14]

18. Do I Need a Home Inspection To Get Home Insurance?

A home inspection is not always required to get homeowners insurance but some carriers may require one depending on your circumstances. For example, Kin Insurance generally requires an interior and exterior inspection if your home is more than 40 years old or if you need more than $1 million worth of dwelling coverage.[15]

19. How Much Personal Liability Coverage Do I Need?

Homeowners are generally advised to purchase at least $300,000 to $500,000 worth of personal liability coverage, although your exact needs may vary depending on your circumstances.[8] Keep in mind that your policy may include up to $5,000 worth of medical payments coverage to supplement your liability insurance.[16]

20. What Can Cause an Increase in My Home Insurance Rates?

Various factors can cause your home insurance rates to go up at policy renewal including actions you take and external forces. Examples of these factors include the following:

  • Filing a claim
  • Missing a premium payment and allowing your policy to lapse
  • Moving to a higher-risk area
  • Raising your coverage limits or lowering your deductibles
  • Ceasing to be eligible for a certain discount
  • Inflation including rising material and labor prices
  • Hurricanes, wildfires and other extreme weather events impacting your area

21. What Do I Need To Provide When Applying for Home Insurance?

When you’re applying for home insurance quotes, you should be prepared to share your personal information, information about your current home insurance policy, what level of coverage you are looking for in your new policy, how many people and pets live with you, details about your house, your mortgage lender’s information and your claims history.

22. How Do I File a Home Insurance Claim?

You can file a homeowners insurance claim by taking the following steps:

  1. Report your loss to the police if you are the victim of a crime such as vandalism or theft.
  2. Contact your insurance carrier to begin the claims process and select a time for an insurance adjuster to come to your house.
  3. Take pictures and film videos of the damaged portions of your home or your damaged belongings.
  4. Make emergency repairs as needed to keep your home from experiencing more damage than it already has.
  5. Tell your mortgage lender that you are in the process of filing a claim.
  6. Present evidence to support your claim during the insurance adjuster’s visit including pictures and videos, police reports, home inventories and repair estimates from independent contractors.
  7. Keep track of receipts for repairs and additional living expenses along with any other documents that are relevant to your claim.
  8. Pay attention to the status of your claim so you can sign papers and take care of any issues that arise as soon as possible.
  9. Use your insurance settlement to finish making repairs or, if you think the payout is too low, dispute the settlement.

23. How Are Homeowners Insurance Claims Paid?

After you experience a covered loss and your claim is approved, your home insurance company will generally pay you the actual cash value (ACV) of the items you lost, which is how much they are worth when considering depreciation factors like age or wear and tear. Some policies come with replacement cost value (RCV) coverage, meaning your insurer will give you a second payment after you repair or replace the lost items to account for their recoverable depreciation.

Description of deductibles, actual cash value and recoverable depreciation in home insurance

Your insurer may be required to resolve your claim within a certain time frame, although these requirements vary from state to state.[17] You should also note that the check from your insurance company will likely have both your name and your lender’s name on it if you are still paying off your mortgage.

24. Can I Bundle Car and Home Insurance With the Same Company?

Yes, many major insurance companies offer bundling discounts, which means you will pay less for coverage if you buy your homeowners insurance and your car insurance or some other insurance product from the same carrier.

25. What Home Insurance Questions Will I Be Asked When Applying for Coverage?

Anytime you apply for home insurance, you may have to answer questions about how the homeowners insurance company can contact you, how much coverage you need, what the condition of your home is, whether you are married, whether you have had homeowners insurance before, what improvements you’ve made to your home and what security or safety features you’ve installed.

26. What Does a Home Insurance Quote Represent?

A home insurance quote is an initial estimate of how much you will have to pay for homeowners insurance based on the information you share up front with the insurance company. As a result, it is possible for your home insurance premium to differ from the quote you received before your insurer finished the underwriting process.

27. How Do Deductibles Work?

A homeowners insurance deductible is a set amount of money you have to contribute out of pocket toward approved claims before your insurance provider starts paying. Deductibles discourage frivolous claims since there’s no reason to file a claim for minor damage if the cost of repairs is lower than your deductible. In addition, they have an inverse relationship with premiums, meaning higher deductibles correspond to lower premiums and vice versa.

Line graph showing the relationship between deductibles and premiums

While deductibles are usually flat amounts such as $500 or $1,000, you may have to pay a percentage-based deductible for wind and hail claims if you live in a region that is prone to severe windstorms. Wind and hail deductibles are usually set around 1% to 5% of your dwelling coverage limit.[18]

28. Why Is It Important To Ask Your Agent Homeowners Insurance Questions?

It’s important to ask your insurance agent about the ins and outs of your homeowners insurance policy so you will know what losses will be covered, what your out-of-pocket costs will be and whether the policy is adequately meeting your coverage needs in its current state.

29. What Should I Consider When Buying Home Insurance?

As you compare home insurance quotes, you should consider the amount of coverage various policies provide including their coverage types and coverage limits along with whether the policy works within your budget. It can also be helpful to look up insurers’ customer satisfaction reviews and financial strength ratings before settling on an insurance company.

30. Should I Shop for Home Insurance During Escrow?

Mortgage lenders generally require new homebuyers to shop for homeowners insurance during escrow. Specifically, your lender may require you to show proof of coverage anywhere from three to 15 days before you close on your new home.[6]

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  1. Nevada Division of Insurance. “FP-7955: Homeowners’ Policy,” Page 1. Accessed Jan. 18, 2024.
  2. Allstate. “Types of Home Insurance Policy Forms.” Accessed Jan. 25, 2024.
  3. Lemonade. “Types of Homeowners Insurance.” Accessed Jan. 25, 2024.
  4. National Association of Insurance Commissioners. “Dwelling Fire, Homeowners Owner-Occupied and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2021,” Pages 5 and 28-29. Accessed Jan. 18, 2024.
  5. NerdWallet. “How Much Is Homeowners Insurance? Average January 2024 Rates.” Accessed Jan. 18, 2024.
  6. Farmers Insurance. “When Should I Get Homeowners Insurance?” Accessed Jan. 18, 2024.
  7. Experian. “Which States Prohibit or Restrict the Use of Credit-Based Insurance Scores?” Accessed Jan. 19, 2024.
  8. Insurance Information Institute. “How Much Homeowners Insurance Do I Need?” Accessed Jan. 19, 2024.
  9. Insurance Information Institute. “What Is Covered by Standard Homeowners Insurance?” Accessed Jan. 19, 2024.
  10. Insurance Information Institute. “Homeowners Insurance Basics.” Accessed Jan. 25, 2024.
  11. Hippo Insurance. “HOA Insurance + Your Home Insurance Policy.” Accessed Jan. 25, 2024.
  12. Internal Revenue Service. “How Small Business Owners Can Deduct Their Home Office From Their Taxes.” Accessed Jan. 19, 2024.
  13. Internal Revenue Service. “Residential Rental Property (Including Rental of Vacation Homes),” Page 17. Accessed Jan. 19, 2024.
  14. Mercury Insurance. “What Happens to Home Insurance When Moving Houses?” Accessed Jan. 25, 2024.
  15. Kin Insurance. “Do You Need an Inspection for Homeowners Insurance?” Accessed Jan. 19, 2024.
  16. Kin Insurance. “Medical Payments Coverage – Coverage F.” Accessed Jan. 19, 2024.
  17. Texas Department of Insurance. “How Do I File a Homeowners Insurance Claim?” Page 1. Accessed Jan. 25, 2024.
  18. Insurance Information Institute. “Background on: Hurricane and Windstorm Deductibles.” Accessed Jan. 19, 2024.

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