For Consumers

Who needs homeowner insurance and why should I buy it?

If you have a home and a mortgage, your lender will require you to have homeowner insurance. If you don’t have a mortgage, it’s a good idea to protect your investment and buy homeowner insurance.

How much homeowner insurance do you need?

When deciding how much homeowner insurance you need to protect your home, contact your insurance agent. He or she can professionally assess your coverage needs. The replacement cost of your home is generally the amount you insure your home for - it's a calculated value and is based on the specifics of your home.

Be prepared to provide information about your home:

  • Square footage
  • Roof type
  • Recent improvements, such as a new deck or a room addition

Coverage for outbuildings and unattached structures

Your homeowner policy generally covers outbuildings and unattached structures on your property. It doesn't cover another residence on your property, such as a rental or mother-in-law apartment.

Check your policy for coverage amounts and limits. When in doubt, ask your agent.

Is your home financed?

Your bank requires you to have enough insurance coverage to protect their investment in your home. They also may require you to name them on the policy as the lien holder.

If you don't have coverage when you first finance it, the bank may obtain force-placed insurance to protect them against any loss.

If you have coverage and lose it, it's important that you find coverage as soon as possible. Otherwise, the mortgage company will buy it for you and it's expensive.

Know the difference between replacement cost and actual cash value coverage

Replacement cost coverage is the most common type of coverage. It pays to replace or repair your property. The company will pay you the actual cash value until you repair or replace your property. Then they will reimburse you the difference. 

Actual cash value coverage pays you the amount to replace or repair your property, minus how much it's depreciated. For example, if you bought a TV for $1,000 five years ago and it was damaged in a fire, your policy would pay you the amount your TV is worth today, not the amount you paid for it.

Whether you choose replacement cost or actual cash value, keep track of your property's value using a written home inventory checklist. Keep it in a safe place, like a fire-proof safe or on a back-up hard drive, in case you need to file a claim.