Homeowners Insurance Coverage: The Ultimate Guide to Home Insurance

When purchasing a home for the first time, understanding the various types of insurance and their specific purposes is crucial. Many homeowners simply follow referrals and purchase insurance without truly knowing what they are getting. This guide outlines the top five things to know about homeowners insurance.

Cost of Home Insurance

According to the National Association of Insurance Commissioners, the average cost of home insurance is approximately $1,192 per year. However, prices vary significantly by state. States like Kansas, Florida, Texas, and Louisiana often experience higher premiums—ranging from $1,500 to nearly $2,000 annually.

In Michigan, for example, the average is about $1,200 per year, though some insured individuals pay as low as $400–$900 annually. Location is a significant factor. Contrary to popular belief, rural areas often come with higher premiums due to delayed emergency response times, especially in the event of fire damage.

Factors That Impact Cost

Several factors affect home insurance premiums:

Location: High-risk zip codes may result in increased premiums due to theft or claim history.
Proximity to emergency services: Country homes are often more expensive to insure due to slower fire response times.
Age of the home: Older homes may not have updated systems, resulting in higher costs.
Deductible: Most common is $1,000. A higher deductible can lower the premium but increases out-of-pocket expense during a claim.

When adjusting deductibles, it's essential to balance the premium with potential risk. For instance, increasing a wind and hail deductible to $5,000 or $10,000 is an option, but not always advisable.

Credit history also influences premium costs. Good credit typically leads to lower premiums, as individuals with poor credit are considered higher risk.

Understanding Insurance Coverage

A typical homeowner’s policy consists of several coverage types:

Coverage A (Dwelling): The physical structure of the home. It includes demolition, debris removal, and full reconstruction.
Coverage B (Other Structures): Detached structures like sheds, fences, and pools.
Coverage C (Personal Property): Covers personal belongings such as furniture, electronics, and clothing. It's crucial to opt for replacement cost coverage to receive full replacement value rather than depreciated value.
Coverage D (Loss of Use): Pays for living expenses if the home is uninhabitable due to a covered loss.
Coverage E (Personal Liability): Provides protection in case someone is injured on or off the property due to the homeowner's negligence.
Coverage F (Medical Payments): Covers medical expenses for guests injured on the property, up to the chosen limit, usually $5,000–$10,000.

Calculating the Right Coverage

To estimate how much coverage is needed, multiply the square footage of the home by $150 (average rebuild cost per square foot). For example, a 2,000 sq. ft. home would require about $300,000 in dwelling coverage. Homes with brick or high-end finishes may need calculations based on $160–$180 per sq. ft.

Include specialized features like built-ins, Jacuzzi tubs, or built-in sound systems when discussing coverage with your insurance provider. These features often aren't included in base calculations and need to be declared to ensure full protection.

Additional Considerations

Coverage B typically defaults to 10% of Coverage A, but can be adjusted if significant structures like pole barns are present.
Coverage C is usually very high by default and doesn't typically affect premium when adjusted.
Coverage D provides sufficient coverage for 3–6 months of living expenses in most cases.
Medical Payments can be increased if desired but often max out around $10,000.
Liability Coverage should be at least $500,000. For those with significant assets, consider increasing this and adding Umbrella Insurance for extended liability protection across home, auto, and other areas.

5 Critical Things to Know Before Buying Home Insurance

Buying a home is a huge milestone—and with it comes the essential task of protecting your investment. That’s where home insurance comes into play. But before you sign on the dotted line, there are some important things you should understand to make sure you're getting the best coverage for your needs without overpaying.

4. Do Your Own Research

Let’s get into one of the most crucial yet often skipped steps—doing your own research.

Now, this doesn’t mean you need to spend 30 or 50 hours digging into home insurance. Start simple. Pull up a Zillow or Redfin listing for your house, look at the square footage, and run a basic calculation. For example: square footage × $150 (as a rough base rate), then add 10% for separate structures and adjust percentages for other factors like personal property, liability, and loss of use.

Even just jotting this down on a piece of paper gives you a rough baseline of what kind of coverage amount you should be considering.

You can also compare quotes from different carriers. In my agency, we work with up to 17 different insurance companies—from AAA to Progressive, Citizens, Westfield, and many others. This allows us to show clients a range of pricing and policy options.

For example, some carriers might not insure homes with a pit bull or a pool, while others will, but with a surcharge. Knowing which companies fit your lifestyle helps you avoid unexpected cancellations or policy issues later.

Pro Tip: I’ll be creating a cheat sheet to help you calculate your coverage needs. You’ll find the download link on my website (linked below).

5. Let’s Talk Bundles (Don’t Skip This!)

I know the word "bundle" makes some people instantly skeptical—“Nope, I like my auto guy and my home insurance lady, and I don’t want to change anything.”

I hear you. But here’s what I suggest: if you truly trust your auto insurance agent, call them about bundling your home insurance. Even if it costs a little more, the value of having a single trusted advisor who can support you during a claim—especially in a major event like a house fire—can be worth far more than $100 saved annually.

Still not convinced? Let me sweeten the deal…

Bonus Round: Bundles Can Save You Big

Bundling your home and auto insurance can save you anywhere from 20% to 30% off your premiums. That’s real money—often hundreds of dollars per year.

So whether you stick with someone you trust or shop around, just make sure you're considering the bundle savings. It’s a win-win.

The Discounts You Need to Know

Here’s the part most people have been waiting for—discounts. These can make a major difference in what you pay for your home insurance.

Common Discounts:

First-Time Home Buyer: Some companies offer hundreds off for new buyers.
Updated Roof: A newer roof can significantly reduce your rate.
Updated Electrical, Plumbing, or Heating: These improvements help too.
Paperless Billing / Pay in Full: Easy discounts just for billing preferences.
Affinity Group Memberships: AAA, RV clubs, Harley-Davidson clubs, credit unions, etc.
Good Credit: Your credit score directly affects your premium.
Early Shopper: Getting a quote early may help you qualify.
Non-Smoker Household: Applies if no one in the house smokes.
Security System: Especially systems that notify police.
Fire Alarm & Safety Features: Smoke alarms, fire extinguishers, or systems that notify the fire department.
Smart Devices: Thermostats, Ring cameras, smart alarms—all can help.
Hail-Resistant Roof or Storm Shutters: Especially important in states like Pennsylvania or coastal regions.

When reviewing quotes, always ask your agent:
“Are there any additional discounts I qualify for?”
You’d be surprised what’s available when you just ask.

Final Thoughts

If you already have an agent you love and trust, great! Give them a thumbs up and move forward confidently. But if you're unsure—or feel like you're not getting the attention or expertise you deserve—click the link below. It’ll go directly to me or someone on my team, and we’ll take a look at your situation.

Whether you’re buying your first home or just shopping for better rates, this information could save you hundreds of dollars per year. More importantly, it ensures you’re properly protected when life throws the unexpected your way.

Hit the like button, share this with any friends or family buying a home.

See you in the next one!