If you own a home, your mortgage lender requires homeowners insurance. If you rent, your landlord likely requires renters insurance. But even if no one forced you, both are worth having.
Homeowners Insurance
A standard homeowners policy (HO-3 in the US) covers six main things:
| Coverage | What It Protects |
|---|---|
| Dwelling | The house structure itself |
| Other structures | Garage, shed, fence, detached workshop |
| Personal property | Furniture, electronics, clothing, appliances |
| Loss of use | Hotel & meals if your home is uninhabitable |
| Liability | If someone is injured on your property |
| Medical payments | Minor injuries to guests (no lawsuit needed) |
What’s NOT covered by standard policies:
- Flood damage (need separate FEMA flood insurance in US)
- Earthquake damage (separate policy or rider)
- Routine maintenance (leaky pipes, mold from neglect)
- Sewer backup (can add as an endorsement)
- High-value items beyond limits (jewelry, art — need a rider)
Renters Insurance
Renters insurance is often overlooked, but it’s inexpensive and critically important.
| What it covers | What it doesn’t cover |
|---|---|
| Your personal belongings | The building structure (landlord’s insurance covers this) |
| Liability (someone hurt in your unit) | Roommate’s belongings |
| Additional living expenses | Flood or earthquake damage |
| Theft (even outside your home) | Intentional damage |
Average cost: $15–30/month for $30,000–$60,000 of personal property coverage.
How Much Dwelling Coverage Do You Need?
Your dwelling coverage should be based on replacement cost — how much it would cost to rebuild your home — not the market value.
| Home value | Market value includes | Replacement cost is |
|---|---|---|
| $400,000 | Land ($100k) + house ($300k) | ~$300,000 to rebuild |
| $200,000 (deprecated area) | Land ($100k) + house ($100k) | ~$300,000 to rebuild |
How Personal Property Coverage Works
Take a home inventory. Most people underestimate what they own.
Quick estimate (2-bedroom apartment):
- Furniture: $10,000–$20,000
- Electronics: $3,000–$8,000
- Clothing: $5,000–$15,000
- Kitchen: $2,000–$5,000
- Miscellaneous: $3,000–$8,000
Total: $23,000–$56,000
Renters insurance typically includes $30,000–$60,000 of personal property coverage. Increase it if you have more valuable belongings.
Real-World Examples by Country
United States
| Insurer | Homeowners (annual) | Renters (annual) |
|---|---|---|
| State Farm | $1,200 | $180 |
| Allstate | $1,350 | $200 |
| Liberty Mutual | $1,100 | $160 |
| USAA (military) | $950 | $140 |
Tip: Flood insurance through FEMA’s NFIP averages $700/year but varies by flood zone.
United Kingdom
Buildings insurance (structure) and contents insurance (belongings) are typically sold separately.
| Insurer | Buildings (annual) | Contents (annual) |
|---|---|---|
| Aviva | £200–£400 | £80–£150 |
| Direct Line | £180–£350 | £70–£130 |
| LV= | £190–£380 | £75–£140 |
Canada
| Province | Typical Homeowners (annual) | Typical Renters (annual) |
|---|---|---|
| Ontario | $1,200–$1,800 | $200–$350 |
| British Columbia | $1,000–$1,500 | $180–$300 |
| Alberta | $1,100–$1,700 | $190–$320 |
Top insurers: Intact Insurance, TD Insurance, Desjardins, Aviva Canada, Co-operators
Bundling Discounts
Most insurers offer significant discounts if you bundle home and auto insurance:
| Insurer | Bundle Discount |
|---|---|
| State Farm | 15–25% |
| Geico | 10–20% |
| Aviva | 15–25% |
| TD Insurance | 10–15% |
| Intact | 15–20% |
How to Save Money
| Strategy | Savings |
|---|---|
| Bundle home + auto | 10–25% |
| Increase deductible ($500 → $2,500) | 15–30% |
| Install security system | 5–15% |
| Pay annually | 5–10% |
| Maintain good credit (US) | 10–20% |
| Stay with same insurer (loyalty discount) | 5–10% |
| Shop around at renewal | 15–40% |
How to File a Home Insurance Claim
- Document the damage — take photos and videos before cleaning up
- Mitigate further damage — cover broken windows, tarp a leaking roof (insurer requires this)
- Contact your insurer — most have 24/7 claims lines
- Meet the adjuster — they’ll inspect the damage and estimate repair costs
- Receive payment — actual cash value (depreciated) or replacement cost (new), depending on your policy
Summary
| Key Point | Takeaway |
|---|---|
| Homeowners covers structure + contents + liability | Mortgage lenders require it |
| Renters covers contents + liability only | $15–30/month — worth it for everyone |
| Flood and earthquake are separate | Standard policies exclude them |
| Insure for replacement cost, not market value | Rebuilding costs are different from buying |
| Bundle to save | Home + auto bundle saves 10–25% |
| Review coverage annually | Your home’s value and your belongings change |