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Owning a home is a large financial investment. As with any major asset, protecting your investment against both common and uncommon financial risks is usually accomplished through an insurance policy. Homeowners insurance is a comprehensive policy that protects not only the physical structure and your belongings, but also typically includes additional living expenses, personal liability, and medical payments to others.
If you purchase a home by securing a mortgage on your property, your mortgage company will generally require you to carry homeowners insurance with coverage sufficient to rebuild (replacement cost) and to maintain that coverage for the life of the loan.
Since the mortgage company has also invested in your property, it has a vested interest in making sure damages are repaired when a disaster occurs.
For this reason, mortgage companies require their customers to maintain certain minimum levels of homeowners insurance for the duration of the loan.
How Homeowners Insurance Works
Homeowners insurance pays to repair or replace your home and belongings if something bad happens, like a fire or theft, and it also provides liability coverage if you’re legally responsible for injuries or damage. To secure the assurance of this financial compensation, you’ll pay a yearly premium — usually set up through escrow or paid out yearly or monthly — to your insurance company.
Your policy will also come with a deductible (often a flat amount for most losses) that you must pay out of pocket before the insurer will cut you a check. Choosing a higher deductible means you’ll have lower premiums, but it also puts you on the hook for a bigger out-of-pocket payment in the event of a claim. In catastrophe‑exposed states, many policies also include separate wind/hail or named‑storm/hurricane percentage deductibles (commonly 1%–5% of your dwelling limit) that apply only to those events — see how hurricane deductibles work.
What Does Homeowners Insurance Cover?
Homeowners insurance provides financial protection against losses that can occur from accidents, theft, or some specified disasters. Most standard homeowners policies provide several layers of protection for damages that can occur during a protected claim. The primary layer covers the costs to repair or replace your home if it’s damaged during an event covered by the policy. Other layers provide financial protection for additional structures or personal items on your property, increased expenses that might accrue as a result of a covered loss, or legal expenses resulting from incidents that occurred on your property (see this overview of standard coverages and exclusions).
Within these layers, all homeowners insurance policies cover six important areas:
- Your dwelling, i.e., the main structure of the home
- Other structures, like detached garages, sheds, and guest houses
- Personal belongings stored inside your home or on your property
- Loss of use, meaning alternate lodging while your home is under repair
- Personal liability in case someone is injured on your property and sues
- Medical payments for anyone injured on your property or by your pets
What Homeowners Insurance Doesn’t Pay For
While homeowners coverage protects your home against many kinds of unexpected damage, there are some things that are specifically excluded from your policy. Standard policies do not cover flood or earth movement (like earthquakes/landslides), and normal wear and tear or neglect is not covered — details vary by insurer and endorsements, so review your policy closely (see III’s guide).
Most homeowners insurance doesn’t cover damage caused by pests, including insects, birds, or rodents. While storm damage is generally covered, other natural disasters such as earthquakes and floods are not. Policies have also tightened in some areas: for example, roof claims may be settled at actual cash value (especially for older roofs) or have separate wind/hail deductibles, and short‑term rentals or e‑bikes may require specific endorsements to be covered (see hurricane/wind deductibles, Florida roof settlement statute, and NAIC e‑bike guidance).
Your policy also won’t cover normal wear and tear or damages resulting from improper care of your home. Sudden and accidental damage can be covered, but maintenance‑related issues (like long‑term leaks or neglect) are typically excluded; coverage for water damage often depends on specific endorsements and deductibles outlined in your policy.
Fortunately, for damages that aren’t covered by your homeowners policy, there are other ways to get coverage.
- For earthquakes, most providers offer a separate insurance policy for this or as an add-on to your existing homeowners policy.
- For floods, you can also get separate insurance from FEMA’s National Flood Insurance Program or a private provider, or check with your homeowners carrier to see if it offers an additional rider for flood protection.
- For pests, pest control companies offer contract services. While you won’t get payments for existing or future occurrences of damage from pests, you can at least take preventative care to reduce the risk of pests and damage from taking place.
For wear and tear, home warranties are a great way to pay for the replacement of household appliances that break down over time.
How Much Does Homeowners Insurance Cost?
According to the latest official data from the National Association of Insurance Commissioners, the average U.S. homeowners insurance expenditure was $1,411 per year in 2021. Marketwide filings show average rate increases of about +9.9% in 2022 and +11.3% in 2023, which implies a derived national average around $1,730 for 2023; premiums continued to rise through 2024, so current averages for in‑force policies are likely in the high‑$1,800s to low‑$1,900s nationally (an estimate, not an official NAIC figure).
Geographic location plays a major role in the total policy cost. Highest‑cost states commonly include Florida, Louisiana, Oklahoma, and Texas, while lower‑cost states often include Utah, Idaho, and Oregon — and many high‑risk states have seen outsized increases since 2021 (NAIC/III; S&P Global rate data).
In addition to physical location, the price of a policy can vary based on the deductible, the size of your home and materials used in it (since those contribute to replacement costs), the endorsements you choose (e.g., water backup, roof settlement terms), and the safety and mitigation features available.
As a current shopping benchmark, recent national averages based on quoted rates are about $1,759 per year for $250,000 in dwelling coverage and $2,377 per year for $300,000. Smoke detectors and burglar alarms can help reduce your monthly premiums, as can bundling your policy with auto insurance; many insurers also offer credits for verifiable mitigation (e.g., wind/wildfire hardening) and programs or discounts tied to water‑leak detection devices (industry trends).
Ask the Home Insurance Experts
William Taylor
Senior Career Advisor, VelvetJobs
Insurance is oftentimes intimidating by design, and insurance companies serve a unique role in bridging the gap between their product and consumers. What can we learn from insurance companies’ marketing strategies?
I have observed that most of these insurance companies are now leveraging the power of social media to reach their customers. They are adopting a voice that is less intimidating and sharing content that is engaging and interactive. These companies are coming up with out of the box ideas to break the stigma that insurance is boring.
Many consumers resist change from what’s familiar, even if it’s to the detriment of their finances or overall wellbeing. What kinds of techniques do insurance providers use to overcome this hesitation and entice consumers to switch over?
Some of my clients from the healthcare insurance industry are organizing educational webinars as part of their marketing strategies. These webinars give them the chance to break down the complexities of health insurance quotes for prospective clients.
To entice customers, many insurance companies are adopting a more friendly approach. They are providing valuable knowledge for free on their online platforms and going above and beyond to personalize their services for every client. The insurance agents today are more empathetic and try to win the trust of the customers.
Bottom Line: Insurance companies are now leveraging the power of social media
Willie Greer
Founder, The Product Analyst
Many consumers resist change from what’s familiar, even if it’s to the detriment of their finances or overall well-being. What kinds of techniques do insurance providers use to overcome this hesitation and entice consumers to switch over?
There are three main methods of insurance marketing: extensive, exclusive, and selective. The extensive method is using services of any go-between company, capable to conclude one or more insurance contracts.
Moreover, the exclusive method is used when the insurance company counteracts with only one general insurance agent, which has an exclusive right to conclude an insurance contract in a given region. This contract should be concluded in favor of the above-mentioned insurance company. In addition, a selective method is used, when the insurance company counteracts with two or more general agents in a given region.
The essence of insurance is to protect any asset from all kinds of threats and losses. That way, it can be assured that the value of an asset can be preserved.
What advice would you offer consumers on how to keep advertising in perspective when shopping for an insurance carrier?
Consumers must keep in mind that not because it was advertised well means it is the best in the market. It may be a factor to consider but always remember what your priority is before heading to buy insurance. Weigh your options and know when to fancy an advertisement and when to flop it. Through this, you will be able to get what you really paid for.
Joy Gendusa
Founder & CEO, PostcardMania
How do insurance companies differentiate themselves from their competitors in their marketing?
One very successful way I’ve seen insurance competitors differentiate themselves from the competition is with targeted mail pieces that feature a highly personalized technology called variable data. Variable data inserts each individual’s information into the design of your mail piece so that each piece looks like it was designed specifically for that recipient. And you can customize almost any type of data to be variable, from the first name to the type of policy to even the photo on your mailer. THE biggest and best variable data differentiator an insurance company can include is the expiration date of the recipient’s policy. That way, agents know WHEN to hit homes with their mailers and people know by when they need to call for a quote. Calling someone out by name with something personal is a time-tested way to grab attention.
Many consumers resist change from what’s familiar, even if it’s to the detriment of their finances or overall well-being. What kinds of techniques do insurance providers use to overcome this hesitation and entice consumers to switch over?
By focusing on a non-invasive marketing platform like direct mail, insurance agents and brokers are able to catch people at a good time, when they’re at peace with receiving advertisements — and that’s when they’re checking their mail. People hate to feel like advertising is stealing their free time. That’s why things like commercials and pop-up ads are so despised — they haven’t been granted permission. But when we’re sorting our mail, we’re open to commercial communications and oftentimes we’ll put something aside if it’s the right message at the right time. That’s how you can start to build the trust that’s needed to help people get over the discomfort of shopping around for insurance. Let them pick the time and the place for it.
Chuck Kim
COO & Co-Founder, Executive Digital
Many consumers resist change from what’s familiar, even if it’s to the detriment of their finances or overall well-being. What kinds of techniques do insurance providers use to overcome this hesitation and entice consumers to switch over?
The trust between the consumer and agent and/or price is the key selling point. When consumers hear “you’ll save X%”, that’s the sales trigger. What many forget is that selling at a price point works for a small percentage of consumers. Education,
white papers and, most importantly, digital omnipresence should be the key for all insurance companies.
What advice would you offer consumers on how to keep advertising in perspective when shopping for an insurance carrier?
Do research on the insurance agent online and interview the agent to make sure you can trust them. The agent will be the one who creates the right policy to protect you. The company itself should be researched, because, at the end of the day, in a bad situation, the relationship between the Agent and Agency will be of utmost importance, so spend time researching!
Ty Stewart
CEO & Founder of Simple Life Insure
Insurance is oftentimes intimidating by design, and insurance companies serve a unique role in bridging the gap between their product and consumers. What can we learn from Insurance companies’ marketing strategies?
Insurance has to pay special attention to humanizing its products and services and has done so through a robust, humanizing ecosystem of content marketing. Insurance coverage can be jargon-filled and technical, with tons of contract clauses and liability statements. It’s frankly overwhelming, so the insurance industry as a whole has really stepped up to the plate with diverse, humanizing and educational digital content.
In particular, we see this in really approachable e-newsletters, videos and vlogs, mobile touchpoints, and a ton of user-friendly, value-rich industry blogs delivering content that empowers folks, instead of scaring them.
How do insurance companies differentiate themselves from their competitors in their marketing?
The most successful insurance marketing connects with its audience on a human level, not by selling products or commodities.
These brands differentiate themselves in their language and touchpoints. They don’t use industry jargon. They’re easy to get in touch with. You speak with a real person as soon as possible if you want, but can overwhelmingly service your own needs on a digital-first basis rather than a loop of automated phone calls or in-person appointments. Companies that adapt best to humanizing interactions and approachable digital service offerings are the ones who stand out from the crowd these days.
What advice would you offer consumers on how to keep advertising in perspective when shopping for an insurance carrier?
It’s essential to understand that your insurance and finance needs evolve in life. What you paid for in your twenties and early thirties will not suffice in your 40s, which itself won’t work when you’re retired.
Understand that your insurance reps or financial advisors aren’t continually trying to upsell you new products just because. Most are sincerely looking out for your evolving interests. Know what your own interests are and how they’re likely to change over the years, and you’ll feel better serviced, not continually sold to.
Ethan Taub
CEO of Loanry
How do insurance companies differentiate themselves from their competitors in their marketing?
Insurance is a very mature market, there are likely thousands of insurance companies in the US alone and it is difficult for anyone to stand out. Competitive advantages in insurance are difficult to establish, the durability of such competitive advantage is often determined through creating barriers to imitation. The longer it takes a competitor to imitate your distinctive competencies the greater the opportunity you have to build a strong market position.
How did you personally choose your current home or car insurance carrier, and what role, if any, did that carrier’s advertising techniques play in your decision?
I have to admit, I took the easy road and used a comparison website. Advertising was not a consideration for me beyond certain brands I was familiar with and unfamiliar with. I made my decision based on the price and the coverage of the plan.
Adam Jackson
Digital Marketing Manager, Big Leap
Insurance is oftentimes intimidating by design, and insurance companies serve a unique role in bridging the gap between their product and consumers. What can we learn from Insurance companies’ marketing strategies?
I think great insurance companies embody trust and dependability in their marketing efforts. They want you to know that you won’t get taken to the cleaners or left out in the rain by them. That principle is applicable to just about every marketing strategy if people truly believe you have their best interest at heart they are more likely to work with you.
What advice would you offer consumers on how to keep advertising in perspective when shopping for an insurance carrier?
I give the same advice for most advertisements to my friends and family. Marketing is usually based on highlighting and accentuating the “good” and downplaying the “bad.” So when you see an advertisement, you can take the good things they say and use them as the basis for your research, but whatever they say is so great about them usually has a “price” to be paid and you need to identify those “costs” before you make a decision
Laura Packard
Vice President of Marketing & Client Relations, Aartrijk
Many consumers resist change from what’s familiar, even if it’s to the detriment of their finances or overall well-being. What kinds of techniques do insurance providers use to overcome this hesitation and entice consumers to switch over?
This scenario is where independent agents are most effective. Purchasing the right type and coverage amount of insurance are decisions that should be made with the assistance of someone who can help educate and make informed suggestions. That’s what independent agents do best. They have a variety of carriers at their fingertips and can spend enough time with their clients to best determine their coverage needs. There’s no extra cost to use an independent agent, and it’s an effective way to ensure consumers are really covering their bases and protecting themselves adequately and thoroughly.
What advice would you offer consumers on how to keep advertising in perspective when shopping for an insurance carrier?
Keep in mind that you shouldn’t automatically go with a company whose commercials make you giggle. There’s a lot more to the insurance buying process than humor or price. You are best positioned by not shopping for a carrier, who will likely only have one option for you. By finding an independent agent, you will unlock access to numerous carriers as well as have a professional who will be able to guide you through the process as your advocate. These independent agents might not have snazzy commercials on TV or radio, but they are the ones sponsoring your town’s little league teams, buying ads in high school yearbooks or active in your local Chamber of Commerce. Don’t dismiss working with an agent just because he doesn’t have a multi-million dollar advertising budget like direct carriers do.
