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Home Insurance

Homeowners insurance can protect your biggest asset: your home. Learn more about liability limits, interior vs. exterior damage, injury that arises while on the property, and more. 

The 80% rule means that an insurer will only fully cover the cost of damage to a house if the owner has purchased insurance coverage equal to at least 80% of the house's total replacement value. If the coverage purchased covers less than 80% of the replacement value, the amount the insurance company pays will be proportionate to the amount of coverage originally purchased.

A home renovation doesn't always cause home insurance premiums to rise, but it can happen. Projects that increase a home’s value—for instance, adding a room—may lead to higher premiums because of the increased living space. Installing higher-end materials—marble in the bathroom or commercial-grade kitchen appliances—can also increase building costs and premiums.

If you compare the cost to replace just your clothing and electronics, which can run into the thousands, and the annual fee for renter’s insurance—generally under $200—it may put the price tag into perspective. Your actual cost will depend on how much coverage you need, the type of coverage you choose, the amount of your deductible, and where you live.

Your premiums for homeowners insurance are typically not tax-deductible. However, in special cases, you might be able to get a full or partial tax deduction as a business expense if you are a landlord. If your home or property is damaged in a federally recognized disaster, it may be possible to deduct uninsured financial hits your family incurs due to the disaster.

Many homeowner policies cover wildfires just as they cover more typical fires—like kitchen, electrical and lightning-based fires, so check to see if you are already covered. If your home is in a high-risk area for wildfires, it’s important to make sure you are not underinsured.

Airbnb does offer up to $1 million of its own coverage per rental, but that may not cover everything, and making a claim can be complicated. If something happens to your property in the course of an Airbnb rental, you’ll want to make sure you have adequate coverage. Most standard homeowners insurance policies exclude short-term rentals.

Key Terms

A canine liability exclusion, a component of homeowner’s insurance policies, indemnifies the insurance company against damages caused by the policyholder’s dogs. This type of clause is often included in homeowner insurance contracts.

Personal property refers to the items that people own such as furniture, appliances, or electronics—items that differ from real property because they are movable. Personal property can be intangible (stocks and bonds) or tangible (clothes or artwork).

A first-loss policy is a type of property insurance policy that provides only partial insurance. In the event of damage, the policyholder does not seek compensation for losses below the pre-established first-loss level.

Though they both deal with protecting a home, catastrophe and homeowners insurance are technically two different types of coverage. Homeowners insurance may contain certain types of coverages, but loss or damage resulting from certain types of events are typically excluded.

Vandalism and malicious mischief insurance, a type of coverage that protects against losses sustained as a result of vandals, is included in most basic commercial and homeowner insurance policies.

Additional expense coverage provides funds for expenses in case of a disaster, such as a fire, or change in circumstances, such as renovation by the apartment building's owner.

An umbrella insurance policy is a type of personal liability coverage that goes beyond the amount that regular home or vehicle insurance offers. To qualify, you must own standard homeowners, auto, or watercraft policy first.

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