Home insurance

[2] If insufficient coverage is purchased to rebuild the home, the claim's payout may be subject to a co-insurance penalty.

Insurers use vendors to estimate the costs, including CoreLogic subsidiary Marshall Swift-Boeckh, Verisk PropertyProfile, and E2Value, but leave the responsibility ultimately up to the consumer.

[2] As a safeguard against a wrong estimate, some insurers offer "extended replacement cost" add-ons ("endorsements") which provide extra coverage if the limit is reached.

"special form" policy, these two groupings of named perils allow the insurer to offer a choice among three types of policy, with three levels of coverage, which can be priced in a fair and accurate manner and appeal to a variety of resident homeowners as well as owners of apartment buildings and condominium associations.

This type of policy is most common in countries with developing insurance markets and as protection for vacant or unoccupied buildings.

Special-form excluded perils: In the United States, most home buyers borrow money in the form of a mortgage loan, and the mortgage lender often requires that the buyer purchase homeowner's insurance as a condition of the loan, in order to protect the bank if the home is destroyed.

In some cases the mortgagee will waive the need for the mortgagor to carry homeowner's insurance if the value of the land exceeds the amount of the mortgage balance.

In such a case even the total destruction of any buildings would not affect the ability of the lender to be able to foreclose and recover the full amount of the loan.

In the late 1940s, US insurance law was reformed and during this process multiple line statutes were written, allowing homeowner's policies to become legal.

A homeowner would have had to purchase separate policies covering fire losses, theft, personal property, and the like.

[11] The need for standardization grew so great that a private company based in Jersey City, New Jersey, Insurance Services Office, also known as the ISO, was formed in 1971 to provide risk information and it issued simplified homeowner's policy forms for reselling to insurance companies.

[citation needed] Modern developments have changed the insurance coverage terms, availability, and pricing.

[2] Homeowner's insurance has been relatively unprofitable, due in part to catastrophes such as hurricanes as well as regulators' reluctance to authorize price increases.

[2] According to a 2018 National Association of Insurance Commissioners (NAIC) report on data from 2016,[12] 73.8% of homes were covered by owner-occupied homeowners' policies.

[13] This policy can also cover liability arising from injury to guests as well as negligence of the renter within the coverage territory.

Common coverage areas are events such as lightning, riot, aircraft, explosion, vandalism, smoke, theft, windstorm or hail, falling objects, volcanic eruption, snow, sleet, and weight of ice.

Designed to span the gap between the coverage provided by the blanket policy written for the entire neighborhood or building and the personal property inside the home.

[15] According to the 2008 Insurance Information Institute factbook, for every $100 of premium, in 2005 on average $16 went to fire and lightning, $30 to wind and hail, $11 to water damage and freezing, $4 for other causes, and $2 for theft.

[19] According to data from the National Oceanic and Atmospheric Administration (NOAA), damages from weather-related disasters in the United States amounted to approximately $92.9 billion in 2023.

[20] Over recent years, these events' increasing frequency and severity have impacted the insurance industry.

[22] For this reason, there has been a shift in how home insurance is bought in the UK—as customers become a lot more price-sensitive, there has been a large increase in the amount of policies sold through price comparison sites.

In addition to standard home insurance, some 8 million households in the UK are categorized as being a "non-standard" risk.

However, different insurers may not cover things like boundary walls, fences, gates, paths, drives or swimming pools, so it is important to check the specific policy language.