ReSET Blog
Blog · May 11, 2022 · AUTHOR: Media Team

A Quick Guide to Homeowner's Insurance

Homeowner's insurance is a type of insurance that protects individuals who own a home. It can include people who rent or lease their home and pay rent to someone who owns a house as part of a contract. Homeowner's insurance covers the value of a home and any personal belongings that are inside the home. It also pays to repair or replace your home in the case of a covered loss. If you own a home, you should have homeowner's insurance. This coverage protects you in the event of a covered loss. A covered loss is a damage to your home from natural disasters, accidents, or vandalism. It also covers damage from fire, lightning, hail, and snow. Read on for more information about what homeowner's insurance is, how much you should have, and whether you need it.

What is homeowner's insurance?

Homeowner's insurance is a type of insurance policy that covers the structure of a house and its contents against perils such as fire and weather damage. It also provides coverage against liability claims resulting from injury or property damage caused by events occurring on the insured property.

Type of homeowner's insurance

The type of homeowner's insurance you need depends on what kind of home you own and whether it's rented or owned. So let's take a look at each one:

Basic homeowners insurance: HO-1 policy

It is the most basic type of homeowner's insurance policy available, and it covers any damage or loss caused by fire, lightning, windstorm or hail, explosions, riots, or civil commotion. It also covers damage caused by falling objects such as trees or rockslides.

Broad form homeowners insurance: HO-2 policy

This policy provides expanded coverage for more specific types of damage (for example, in addition to the above-listed causes of loss). For example, additional coverage may include:

  • Earthquakes.

  • Vehicles accidentally damaged parked in your driveway.

  • Water backup from sewers or drains.

Special home insurance: HO-3 policy

It is a basic homeowners policy covering damage from wind and hail, fire and explosions, theft and vandalism, falling objects, and other perils like earthquakes or floods. It also covers personal liability arising from accidents at home (if you are injured on the premises due to someone else's negligence).

Renters insurance: HO-4 policy:

An insurance policy covers personal belongings if they are stolen or damaged by perils such as fire, lightning, and vandalism while they are away from your home or apartment building. It also covers liability arising from accidents at the premises, such as if someone slips on your stairs while visiting you in your apartment building.

Comprehensive homeowners insurance: HO-5 policy:

This type of policy provides coverage for all risks associated with owning a home, including wind damage, fire, theft, and vandalism; however, it does not cover flood damage or earthquake damage.

Condo insurance: HO-6 policy:

This policy covers your unit in a multi-unit building such as an apartment complex or condo building. It typically pays for the cost of repairing or replacing your team after a covered disaster and provides liability protection if someone is injured on common property owned by your association.

Mobile home policy: HO-7 policy:

A mobile or factory-manufactured home usually isn't as sturdy as a traditional home, so it's essential to have insurance that protects it from damage. HO-7 is a type of homeowners insurance explicitly designed for mobile homes. It covers the structure of your personal property from things like burglaries, fires, and weather damage.

Old home policy: HO-8 policy:

Owner-occupied homes with an actual cash value (ACV) less than the cost of replacing the damaged structure are often covered under HO8 policies. Insurers commonly use HO8 forms to insure. Older houses, particularly those more aged than 40 years.

What does homeowner's insurance cover?

Homeowner's insurance covers the cost of repairing or replacing your home and its contents in case of a disaster. It can include:

  • Home structure, including foundation, roof, and walls

  • Electrical wiring and plumbing inside the home

  • Your furniture, kitchen appliances, and other items inside your home

  • The cost to clean up debris after a disaster strikes (if you have comprehensive coverage)

About homeowner's insurance

  • Homeowner's insurance is a type of insurance that protects your home against damage and theft. The average cost of homeowner's insurance is $1,000 per year. However, it's essential to know that if you don't have homeowner's insurance, it doesn't mean you're unprotected — it just means that your state may require you to purchase liability coverage instead.

  • If you borrow money or take out a mortgage for the home you live in, lenders typically require that you carry at least some form of homeowner's insurance. However, in some cases, where a borrower is not required to have homeowner's insurance, lenders may require that the borrower purchase liability coverage instead.

  • Lenders will typically only lend up to 80% or 85% of the property's value being purchased by the borrower. So, if the home were destroyed under circumstances where the borrower would be legally responsible for damages (such as a fire caused by negligence), it would be difficult or impossible for them to pay off their mortgage without additional funds from somewhere else (such as an inheritance).

Do you need homeowner's insurance?

Property insurance is a financial tool that protects your home, business, and personal belongings from damage or loss. Property insurance is also known as property coverage or just "homeowners insurance."

If you own a home, condo, or apartment, you need property coverage to protect it against damage caused by natural disasters like floods and earthquakes. Without it, you could find yourself paying for repairs out-of-pocket — or worse yet, losing everything.

How much homeowner's insurance do you need?

The amount of coverage that you need depends on several factors. These include:

  • The value of your home: If you own a multi-million dollar mansion, you may want to consider increasing your limits above those outlined in your standard policy.

  • What type of structure it is (single-family house, condo, etc.): If you live in an apartment building or condo complex with shared walls, there might be more value in purchasing additional liability coverage than owning a single-family home.

  • The age and condition of your home: If your house was built before 1978 and has not been updated to meet current building codes, there may be more value in purchasing additional liability coverage than if you live in an older single-family home that has been adequately maintained over time.

  • Your location (some regions are more prone to natural disasters than others): If you live in an area prone to tornadoes or hurricanes, you may need a higher level of protection than someone who lives in a low-risk area like Colorado or Maine.

How do you find the right coverage for you?

Each person's needs are unique, so finding an insurance plan that fits your specific lifestyle and budget is essential. Here are a few tips on how to find the right coverage:

  • Start by assessing your needs. What type of insurance do you need? What are your priorities?

  • Compare different plans and prices. Take into account factors such as how much the policy will cost, the deductible, and the coverage limits.

  • Read the terms and conditions of each policy carefully before purchasing. Make sure you understand what is covered and what is not.

  • Talk to an insurance agent if you have any questions or need help choosing a policy.

Is homeowner's insurance required?

Homeowner's insurance isn't required by law, but most lenders require it before they will approve a loan for a home purchase. If you don't have homeowner's insurance, the lender will require that you carry mortgage insurance, which is much more expensive than homeowner's insurance.

Other things to consider when buying homeowner's insurance

Homeowner's insurance is a policy that protects the building and its contents against disasters such as fire, wind, and water damage. Other things to consider when buying homeowner's insurance:

  • What will happen if a fire or other disaster damages your home? Will you be able to afford the repairs or rebuilding costs? How much will it cost to replace your belongings?

  • What about liability? If you cause injury or damage to someone else's property, an insurance policy can help pay legal costs and damages in a lawsuit.

  • Do you want to insure against theft? Theft coverage can help pay for stolen items not covered by other policies (such as electronics).

  • Do you want additional living expenses coverage? It covers temporary housing costs while your home is being repaired or rebuilt after a fire or other disaster.

What are the factors that affect homeowners' insurance premiums?

Some common factors that affect homeowner's insurance premiums include:

  • The property's value – The more valuable your home, the more expensive it will be to insure.

  • The deductible – The amount you pay out-of-pocket before the insurance company covers the rest of the claim. A higher deductible means lower premiums.

  • The make and model of your home – Homes with higher replacement costs are typically more expensive to insure than those with lower replacement costs.

  • Your credit score – Many insurers offer discounts for homeowners who have good credit scores.

How should I get homeowner's insurance?

Some companies let you buy homeowner's insurance over the phone or online, but many will require in-person meetings with an agent. Find an agent in your area who can help guide you through getting homeowner's coverage that meets your needs at a price that fits your budget.


Homeowner's insurance is a type of insurance that protects homeowners from risks such as fires, burglaries, and natural disasters. Lenders typically require it when someone takes out a mortgage on a home. However, even if you do not have a mortgage, it is still a good idea to have homeowner's insurance. Like other types of insurance, it can help protect you from financial losses in an unexpected event.


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