What is homeowners insurance?

Homeowners insurance helps protect you from unexpected losses related to your home and belongings. It also helps provide liability coverage for accidents occurring in your home, on your property or as a result of your activities. Learn more about how homeowners insurance protects you, your family and your belongings.

Basic home insurance terms

The following list of basic insurance terms can help you understand the topics addressed in this article. View our comprehensive list of homeowners insurance terms to learn more.

• Actual cash value (ACV): Cost of property if bought new today, minus depreciation for age, condition and obsolescence.
• Claim: Policyholder's documented request filed with their insurer for reimbursement after a covered loss.
• Coverage: Insurance offering financial protection from unexpected losses.
• Deductible: Policyholder's financial responsibilities for each claim filed.
• Endorsements: Additional coverages not included in a standard policy, also known as insurance add-ons.
• Limits: The maximum dollar amount of financial protection purchased for specific coverages.
• Loss: Injuries or damages sustained by a peril, such as the items stolen after a home robbery.
• Named perils: Covered events listed in your policy, such as wind, hail and lightning.
• Open perils: An insurance type covering a broad range of events, except those expressly excluded.
• Peril: Event which caused the damages, such as vandalism, fire or theft.
• Policy: Formal written insurance contract.
• Premiums: Amount of money an insurer charges to provide coverage.
• Replacement cost value (RCV): Cost of property if bought new today without deducting for depreciation.

About home insurance

Standard homeowners policies help provide basic limited protections, typically covering your property, belongings and liability. You may also buy additional coverages and/or increase your standard coverage limits for greater peace of mind.

What does standard home insurance protect?

Standard homeowners insurance helps deliver financial protection for named perils up to your policy's limits. Unless otherwise stated in your policy, it must be an accident, not resulting from wear and tear or negligence, for you to benefit from it.

Standard homeowners insurance typically helps protect the following:

• Dwelling: Your home and attached structures.
• Detached structures: Other buildings on your property, such as detached garages, gazebos, swimming pools and sheds.
• Personal property: Your belongings inside and outside of the home.
• Loss of use: Additional living expenses if your home is deemed uninhabitable after a covered event.
• Personal liability: Liability claims and lawsuits for damages to others or their property caused by you, your children, your pets or accidents on your property.

Perils typically covered by standard home insurance

While insurers vary, a standard homeowners insurance policy may cover the following unexpected events.

• Acts of your children
• Acts of your pets
• Claim and defense expenses
• Fire
• Frozen interior plumbing
• Hail
• Lightning
• Lightning-related power surges to electronics and appliances
• Medical expenses
• Smoke
• Theft
• Tornado
• Vandalism
• Weight of ice and snow
• Wildfire

How do home insurance add-ons work?

Insurance add-ons, or endorsements, are coverages you may buy and add to your home policy. They help cover perils not included in your standard home insurance.

Add-on coverage examples

While not exhaustive, the following list includes additional coverages you may buy and add to your homeowners insurance policy. Select a coverage to learn how it may help protect you.

• Earthquake coverage
• Equipment Breakdown coverage
• Flash flood coverage
• Home renovation insurance
• Matching undamaged siding coverage
• Personal injury insurance
• Scheduled personal property coverage
• Service line coverage
• Water backup and sump pump failure coverage

Is home insurance required?

While homeowners insurance isn't needed to buy or own a home, lenders usually require it to finance a home.

Home insurance premiums

Standard coverages, add-ons and protection limits significantly affect homeowners insurance costs. Other factors, such as location, credit history and home details, also impact policy costs. Typically, premiums are due monthly, semi-annually or annually.

Home insurance claims

For loss reimbursement, take the following steps:

• Contact your insurance agent to ensure the loss is covered.
• Confirm your coverage limits and deductibles.
• Take photos of and document the damages.
• Complete and file your claim.

If you are with American Family Insurance, you may file your claim through your agent, My Account or the MyAmFam app. After filing, insurers typically send an adjuster to inspect losses after a claim. Factors such as your policy's deductible, coverages, limits and loss qualifications help determine your reimbursement.

Buying a home insurance policy

You may apply for home insurance by contacting an American Family Insurance agent. They can help you get the standard and add-on coverages you need with the appropriate limits. They can also help connect you to qualifying bundling discounts and other savings programs.

This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.

*Customers who bundle home and auto insurance policies may save up to 23% on both policies together (as of December 2023). Discounts may vary by state, property, policy form and company underwriting the home and/or auto policy. Discounts may not apply to all coverages on a home or auto policy.