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Your house is one of your biggest investments. But without proper protection, that investment can be lost if there is an accident or natural disaster. Purchasing homeowners insurance is one of the best ways to protect your home and your bank account.

Here’s how to shop for a policy and make sure you get the coverage you need.

1. Decide how much coverage you need

Generally, most insurance policies protect:

  • The dwelling or house and other structures on the property
  • Personal property, which includes everything in the house and all of your valuables
  • Liability expenses if someone is injured in your home or sues you
  • Additional living expenses if you need to live somewhere else while your home is being repaired

When determining how much coverage you need, consider the following:

Dwelling coverage

Most insurers require you to have at least 80% of your dwelling replacement cost covered, but you’ll have the most coverage if you get 100%. You’ll want to get enough coverage so that if your home is damaged or destroyed, you’ll receive enough money to replace it and any other structures on the property.

Replacement cost

Your policy’s replacement cost replaces or repairs your home at current prices. You can use our replacement cost calculator to determine the replacement cost value of your home.

Extended replacement cost

If you have an extended replacement cost endorsement on your homeowners insurance policy, your insurer will cover your home’s replacement cost up to a certain percentage even if it exceeds your dwelling coverage limit.

Guaranteed replacement cost

Guaranteed replacement cost doesn’t set a percentage limit on your home’s replacement costs and provides even more coverage than the extended replacement cost endorsement. With this type of endorsement, you are guaranteed to have the rebuild or repair of your home covered, no matter the cost.

Personal property coverage

Typically, homeowners insurance will pay to replace 50% to 70% of your personal property. With most major insurance companies, you’ll have the option to purchase additional coverage, if needed. You’ll also have the option to buy coverage for valuable items, which are items, like jewelry or collector’s items that may require higher coverage limits.


Standard home insurance policies include $100,000 of liability coverage. This type of coverage protects you if someone or their property is injured, damaged or destroyed by you or a family member. Liability coverage will help you out, up to your coverage limits, for things like legal costs and court damages, too.

Since it is well known that even a minor accident can turn into a major expense — especially if lawsuits are involved — most experts recommend at least $300,000 in liability coverage.

If you need more liability coverage than the standard home insurance policy offers, you can purchase umbrella insurance.

Additional living expenses (ALE)

Additional living expenses coverage pays for your accommodations, meals and other costs while you wait for your home to be rebuilt or repaired after extensive damage, such as a fire. However, there are limits — most home insurance policies include 20% of your dwelling coverage in additional living expenses coverage.

Guest medical payments

Guest medical payments cover medical costs for guests if there is a minor incident and they are injured.

2. Ask about homeowners insurance discounts

Most homeowners insurance companies offer a variety of home insurance discounts to help lower costs.

Home insurers hope that you won’t be making too many, if any, homeowners insurance claims in the future, and so the safer or newer your home, the more discounts they’ll give you. That explains why if you buy a new home, the average discount you’ll get is 40%.

If the house you move into is five years old, it’s generally around a 26% discount. Again, these are averages.

There are many different discounts available, and you should ask your insurer what they offer. For example, many insurance companies offer a discount if you bundle your home and auto insurance. You can also get discounts for upgrading your home or having a new home.

3. Gather documentation

To get the right homeowners insurance policy, you should know the following:

  • Age, type and square footage of home
  • Security alarm or other safety equipment
  • Age of roof
  • Age of mechanicals like HVAC, water heater, etc.
  • Recent upgrades
  • Home fair market value
  • Who lives in the home
  • What other structures are on the property
  • Personal property inventory
  • Social security number
  • Pets in the home and their breed

4. Compare quotes from multiple insurers

Different insurers offer different rates, so comparing quotes from multiple insurers will help you get the lowest rate for your profile.

Make sure you compare apples to apples and request the same coverages and coverage limits on all quotes.

5. Purchase your homeowners insurance policy

Once you’ve decided which insurer you want to go with, just let the insurance agent know. They’ll send you a policy to sign, and then you’ll be insured.

Hopefully, you’ll never need to use your homeowners insurance policy. But by getting a policy with the amount of coverage, your financial health will be protected if you do.

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Geoff Williams
Contributing Researcher


Geoff Williams is a freelance journalist and author in Loveland, Ohio. He has been writing about insurance and personal finance since the mid-2000s. His work has appeared in numerous publications, including Life magazine, Ladies’ Home Journal, The Washington Post, CNNMoney, Entrepreneur, and U.S. News & World Report.