- Actual cash value
- This type of policy, which covers the replacement cost of your home minus the cost of depreciation, is not usually recommended because it can leave you having to pay thousands of dollars out of pocket in the event you need to rebuild your home.
- Adjuster
- Once a claim has been made, this person estimates the damage, then makes recommendations about the settlement amount to the insurance company.
- Bundling
- The practice of offering insurance coverage by the same company for multiple things, such as both your home and your car. Doing so could earn you a discount on both policies—amounts may vary.
- Discounts
- Insurance companies may provide an array of discounts off your premium. Those could include having a security system installed, wind-resistant shutters, or even being a veteran, teacher, or over the age of 55. Ask your agent what discounts might be available for your policy.
- Exclusions
- Any event, loss, or situation, explicitly stated, such as flood or hurricane, where your home is not covered by your policy.
- Guaranteed or extended replacement
- These policies are more expensive but promise better coverage for the full cost of replacing or repairing a damaged or destroyed home. Extended replacement cost will cover 20 percent above the standard coverage, while guaranteed replacement will have no cap on the cost of rebuilding, though the coverage is pricier and less common. For more details, see What Extra Coverage Should I Consider?
- Named peril
- Explicit types of disasters that are named in your insurance policy as being included in your coverage. These can include things like tornadoes, wind, or hail, for example.
- Replacement cost value
- This policy will pay for the full cost of rebuilding your home, up to a stated limit (and no need to deduct for depreciation).
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Extended replacement cost
A standard policy will cover replacing your home at current costs, but up to a limit. Having extended replacement cost coverage will pay 20 percent (sometimes more) above that limit if building costs increase for any reason, such as after a major disaster. Good to know: If your home has custom features, such as stained-glass windows or antique wood floors, you’ll need to purchase additional riders or buy another layer of coverage, called a restoration-cost policy, to assure those features could be replaced.
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Inflation protection
Also called inflation guard, this provision automatically raises the coverage limit on your dwelling to reflect increases in homebuilding costs.
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Earthquake, hail, and windstorm coverage
In our 2025 homeowners insurance survey, of those who filed a claim, the leading causes of damage in filed claims were wind and hail damage. Depending on your state, you may have to pay a separate deductible for hail damage or buy stand-alone coverage. The same is true for earthquakes and high-speed windstorms.
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Replacement cost coverage
A standard policy may reimburse you only for the depreciated, or actual cash, value of stolen or damaged home contents. To avoid having to pay the difference when replacing possessions, pay the extra for replacement cost coverage. Document the contents of your home by making a video inventory of your possessions and store it somewhere safe, such as in the cloud or on a thumb drive kept in a safe-deposit box.
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Personal valuables
Homeowners policies typically put dollar limits on what an insurer will pay to replace valuables such as art, antiques, musical instruments, jewelry, furs, or home-based business property. For instance, if valuable jewelry were stolen, without separate coverage you could expect no more than a few thousand dollars to replace it. So if your valuables are worth more than what a standard payout would be—check with your agent about specific items—buy a rider to supplement coverage of those costly items. In CR’s survey, 4 out of 10 policyholders said they had a separate policy for such valuable, personal items.
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Sewer backup
This coverage would protect you if sewage backed up into your home. The cost can run from around $50 up to several hundred per year. Policy limits range between $5,000 and the full cost of replacing your home. (Unless caused by an event such as fire or a storm, your homeowners insurance policy doesn’t cover a septic system on your property.) Damage to your home from a sump-pump malfunction would be covered, too, but the pump itself isn’t covered, so you’re responsible for the cost to fix it.
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Worried Your Home Insurance Company Might Cancel Your Policy? Dealing With Skyrocketing Premiums? Here’s What to Do Next.
Even before the January 2025 California wildfires, more and more homeowners were having difficulty finding insurance and facing extremely high costs if they did. Here’s how to protect yourself.
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Homeowners Are Facing an Insurance Crisis. CR Thinks These 9 Basic Rights Could Help.
Consumer advocates propose a bill of rights. Plus, expert tips on how to protect yourself and your home in the meantime.
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Why Home Insurance Costs So Much—and How to Pay Less
Blame natural disasters, inflation, or your location. These tips will help you whittle down rising premiums.
