FAQs about homeowners insurance

Homeowners insurance covers (just about) any disaster that might happen to the exterior and interior of your home, any structures or land attached to it, and personal belongings — anything from weather damage to theft. You’re also covered for liability if anyone is harmed on your property.
If you’ve shopped for a health insurance or car insurance policy, you know about deductibles—the money you pay out of pocket before your coverage kicks in. This could be represented as a dollar amount or a percentage. If you file a claim on your home insurance, you’ll pay the deductible amount before your insurer covers the rest of the cost. Deductibles don’t apply to liability claims, only to property and personal belongings. You’ll choose your deductible amount when buying a policy. Typically these amounts range from $500 to $2,500, or they may be a percentage (around 1%-2%) of your home’s value. If you’re tacking on extra coverage for perils like earthquakes and hurricanes, these policies may have separate, larger deductibles. The higher the deductible, the lower the premium—the amount you pay every month—and vice versa. Should you spring for a higher deductible or go with a lower one? That depends somewhat on how likely you think you are to file a claim. A high deductible saves you money month to month, and if you’re lucky enough never to make a claim on your policy, you’ll save a ton in the long term. But you’ll pay a lot more if you do need to repair or replace anything. An emergency home repairs fund can help make up the difference. Lower deductibles cost more on a regular basis since you’re paying high premiums. The upside is that your insurance will make a bigger contribution if you do file a claim. This could be a good choice if you think you’ll face an excessively expensive peril covered by your insurance, like fire, water damage, or freezing pipes. But if your risk is relatively low, a high-deductible policy may lead to more savings.
Named perils homeowners’ policies include a list of specific events that could damage your property or belongings. If any of the listed events happen and you file a claim, insurance will pick up the tab. But they won’t pay for damage caused by any peril not on the list. Most policies will name 16 standard perils (like fire, floods, etc.) Named perils policies tend to be more affordable than open peril or all-risks policies, which cover a much wider variety of damage causes. But a named perils policy can be more of a headache if you have to file a claim, since you’re responsible for proving the damage happened because of a covered disaster and not for another reason. For many homeowners a named perils policy is sufficient. Look into open peril coverage if you want to protect against specific threats that aren’t named in a typical policy, or if you own any items valuable enough to require higher coverage limits so you don’t have to replace them out of pocket.