Step 36 of 48 Phase 5: Prepare for Closing
5.2 Homeowners' Insurance 101
Homeowners insurance protects your investment from damage, theft, and liability. Understanding coverage types helps you choose the right policy for your needs.
What This Step Covers
- Types of coverage in a standard policy
- What is and is not covered
- Deductibles and how they work
- Liability protection
- Additional coverage options
Standard Coverage Types
| Coverage | What It Protects | Typical Limit |
|---|---|---|
| Dwelling | Structure of your home | Rebuild cost |
| Personal Property | Your belongings | 50-70% of dwelling |
| Liability | Lawsuits and injuries | $100K-$300K |
| Medical Payments | Guest injuries | $1K-$5K |
| Additional Living Expenses | Hotel if displaced | 20% of dwelling |
| Other Structures | Detached garage, shed | 10% of dwelling |
Pro Tips
- Insure for replacement cost, not market value
- Standard policies do not cover floods or earthquakes
- Create a home inventory with photos for claims
- Bundle with auto insurance for discounts
- Review and update coverage annually