What homeowners insurance is

• ✺Homeowners insurance protects what is likely your largest financial asset from unexpected disasters.
• ✺Without it, a fire, storm, or lawsuit could be financially devastating.
• ✺Lenders require it, so understanding your policy helps you avoid coverage gaps and unexpected costs.

Dwelling coverage

The part of a homeowners policy that covers the physical structure of the home.

Liability coverage

Coverage that protects you financially if you're found responsible for someone else's injury or property damage.

Deductible

The amount you pay for covered care each year before your insurance starts sharing the cost.

Flood insurance

Separate insurance covering flood damage, not typically included in standard homeowners policies.

• ✗Assuming floods or earthquakes are covered by a standard homeowners policy.
• ✗Not updating coverage limits after major renovations or increases in the home's rebuild cost.
• ✗Choosing the cheapest policy without comparing coverage limits and exclusions.
• ✗Forgetting to document belongings (photos, receipts) in case you ever need to file a claim.

• !Standard homeowners policies typically exclude flood and earthquake damage, which require separate policies.
• !Lenders usually require proof of homeowners insurance before closing and throughout the life of the mortgage.
• !Home insurance premiums can rise due to local risk factors (like wildfire or hurricane exposure), claims history, and the home's condition.
• !Keeping a home inventory with photos and receipts can make filing a claim faster and smoother.

• Homeowners insurance covers the home's structure, belongings, and liability for injuries on your property.
• Standard policies usually exclude floods and earthquakes, requiring separate coverage.
• Lenders require homeowners insurance as a condition of the mortgage.
• Reviewing and updating coverage limits periodically helps avoid being underinsured.

Totally optional. Nobody's grading you.

1. 1.Review your homeowners policy's coverage limits and exclusions.
2. 2.Ask your insurer whether flood or earthquake coverage makes sense for your area.

Related lessons:

• What a mortgage is
• What property taxes are
• Unexpected homeownership expenses

• Homeowners insurance
  Consumer Financial Protection Bureau (CFPB)(opens in a new tab)
• Flood insurance basics
  Federal Emergency Management Agency (FEMA)(opens in a new tab)
• Homeowners insurance basics
  National Association of Insurance Commissioners (NAIC)(opens in a new tab)