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The Mover’s Guide to Home Insurance

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As every mover will encounter, buying home insurance is part and parcel with the purchase of a new home. Movers need proof of a policy in order to secure a loan. But it’s a confusing process filled with jargon, differing quotes, and pressure from all sides.

Before your lender or your agent can pressure you to go with a particular insurance company, read up on plans and shop around. You can take control of the process to secure a policy that protects your home and your wallet.

MYMOVE has the basics to help you start.

What is Home Insurance?

Home insurance (aka “hazard insurance”) protects you — and your lender — from certain problems related to your house that could land you in physical and financial trouble. These problems are called perils.

Some perils have their roots in nature, while others are man-made. Some involve damage to your home; others involve injuries to people who visit your home.

A home insurance policy generally covers more than you think — and less than you think, all at once. That’s why even veteran policyholders consider it confusing.

Why Should I Purchase Home Insurance?

There’s an unlimited array of possible disasters that could lead a homeowner to purchase home insurance, but they fall under two main categories:

  • You want coverage, just in case. Whether it’s physical damage to your property (your home and possessions in it), or your liability for people on your property, home insurance helps lift the financial burden should disaster strike.
  • You have to satisfy your mortgage lender. Mortgage lenders require proof of insurance to secure a loan. Watch out: If your loan payments lapse, lenders will often purchase insurance for you (with premiums much higher than what you can find yourself).

What Does Home Insurance Cover?

According to the Insurance Information Institute, standard home insurance policies cover four main areas:

1. Your dwelling (and other structures on your property)

Your policy should pay to repair or rebuild your home if it’s impacted by perils or disasters, such as a fire or a hurricane (don’t worry, we will get into the specific perils later on). It also covers other structures on your property, like carports and sheds.

2. Your personal belongings

If your personal belongings are stolen or damaged during one of the listed perils, they are covered. Most policies offer coverage valued at 20% to 50% of your home structure insurance limit. For example, a policy may have $100,000 to cover your home structure, and anywhere from $20,000 to $50,000 to cover your personal belongings.

Most policies won’t automatically insure big-ticket items, like valuable art or jewelry. Make sure to let your agent know and get that precious engagement ring insured.

Note: This part of the policy should include off-premises coverage. This means belongings are covered anywhere in the world, unless you opt out of it. 

3. Liability protection

Also known as “third party insurance,” this part of the policy protects you and your family members against lawsuits resulting from injuries or damage to personal property. The protection covers both the cost of defending the person and court payouts (up to the policy’s financial limit), should you/your family member be found responsible.

Standard policies generally start coverage with a $100,000 limit, which might not be high enough. The good news: More coverage can be purchased fairly inexpensively.

Note: Liability protection also extends beyond the home property to anywhere in the world. It can also pay for damage caused by your pet. Ask your agent about this.

4. Additional living expenses

This pays for living expenses if you’re displaced from your home due to one of the covered perils until the home is rebuilt.

What Are The Different Types of Home Insurance Policies?

Some policies cover “named perils,” meaning you’re protected from certain disasters explicitly listed in the policy. Other, more robust policies cover your home on an “open-peril” basis. That means you’re protected from all incidents and disasters except those explicitly excluded from your policy.

Here are the different types of standard insurance forms and the perils they cover, according to the Insurance Information Institute.

Policy Type Covered Perils
HO-1 A limited coverage policy that only protects from the following 10 named perils:

  1. Fire or lightning
  2. Windstorm or hail
  3. Explosion
  4. Riot or civil commotion
  5. Damage caused by aircraft
  6. Damage caused by vehicles
  7. Smoke
  8. Vandalism
  9. Theft
  10. Volcanic eruption

Note: According to the International Risk Management Institute, HO-1 has been discontinued in almost all states because of its limited coverage. This type of policy does not include protection of personal property. 

HO-2  A basic insurance policy that pays for repairs for damage caused by the following 16 named perils:

  1. Fire or lightning
  2. Windstorm or hail
  3. Explosion
  4. Riot or civil commotion
  5. Damage caused by aircrafts
  6. Damage caused by vehicles
  7. Smoke
  8. Vandalism
  9. Theft
  10. Volcanic eruption
  11. Falling object
  12. Weight of ice, snow, or sleet
  13. Water damage caused by steam, heating, AC, sprinklers, or an appliance
  14. Sudden and accidental tearing apart, cracking, burning, or bulging (of a hot water heating system, AC, or sprinkler system)
  15. Freezing of plumbing, AC, sprinkler system, or appliance
  16. Damage caused by short-circuiting

Note: HO-2 policies usually include personal property and personal liability coverage.

HO-3  The most popular policy due to its broad coverage options. It covers the policyholder on an open-peril basis, protecting the structure from all disasters except those specifically excluded from the policy.
However, HO-3 policies cover personal belongings on a named-peril basis.
Note: HO-3 policies also include personal property and personal liability coverage.
HO-4 Known as “renters insurance,” this policy covers personal property in a rented apartment or home. HO-4 insures all of the tenant’s personal belongings, as well as anything the tenant installs in the property (i.e. appliances or cabinets).
HO-4 protects renters from the 16 named perils listed in HO-2.
Note: Ask your insurance agent if your HO-4 policy includes liability insurance, as many do not. Renters can (and should) add liability coverage to the policy at an extra cost. 
HO-5 Known as a comprehensive coverage policy, HO-5 covers both your home and your personal property on an open-peril basis. This means the structure of your home and your belongings are protected from all perils unless they are explicitly excluded from your policy.
Note: HO-5 policies also include personal liability coverage.
HO-6 This policy insures condo owners. HO-6 is often known as “walls-in” insurance, as it covers the inside of the unit and the policyholder’s personal belongings from the 16 named perils listed in HO-2. The condo association’s policy typically covers common areas and the exterior of the structure.
Note: Standard HO-6 policies also include personal liability coverage. 
HO-7 An HO-7 policy insures mobile or manufactured homes (i.e. trailers, single- and double-wide mobile homes, RVs). It covers the structure of the home on an open-peril basis, but protects the personal belongings inside the home from the 16 perils named in HO-2.
Note: HO-7 policies also include personal liability coverage.
HO-8 This policy is designed to protect older homes from the 10 named perils listed in HO-1. It’s a modified form of the bare-bones policy, best used for homes that are 40+ years old, are architecturally significant, or are registered landmarks — a good example: Victorian homes.
HO-8 is reserved for homes where the cost of repairing damages exceeds the value of the home. Because of this, policyholders are paid actual cash value should damage occur (meaning the payout is much less than the cost of repair).
The lower payout brings down the cost of the HO-8 premium, making it attractive to policyholders who cannot afford more robust coverage. Although the lower cost may entice homeowners, you should think twice before choosing an actual cash value policy.
Note: HO-8 policies also include personal liability coverage.

Note: Texas policies are similar, but not identical to the standard insurance forms listed above. 

What’s Not Covered by Standard Homeowners Insurance?

Of course, there’s a flip side to what’s covered. For all that standard home insurance covers, there are a few major incidents that most policies do not offer financial protections from.


Damage from rising waters” — or from floods caused by torrential rains, overflowing levees, a hurricane storm surge, and more — are excluded from standard insurance policies.

You can purchase flood insurance for these instances from the National Flood Insurance Program and other private insurers. If your home is located in places at high risk of flooding, your lender may be federally mandated to require extra flood insurance.

Tip: You can check out your state’s flood history with FEMA’s interactive tool. It will also show the risk of future floods and possible flood-related costs. 


Although they have the potential to severely damage homes and belongings, earthquakes are not included under standard policies. But you can purchase supplemental coverage from private insurers (or, if you live in California, from the California Earthquake Authority).

Earthquake coverage is especially important if you live near a fault line. It’s best to discuss with your insurance agent to make sure your policy incorporates this coverage if needed.


Again, this is excluded from coverage, though you can pay extra for it. Sinkholes can happen anywhere but are most prevalent in the following states:

  • Alabama
  • Florida
  • Kentucky
  • Missouri
  • Pennsylvania
  • Tennessee
  • Texas

Maintenance Damage

Insurers take the stance: your home, your responsibility. Because home insurance companies rule it’s the homeowner’s job to take precautionary steps to protect the home from damage, policies will not cover incidents due to lack of maintenance (i.e. mold and termites).

Sewer Backups

Insurance companies do not cover water damage from sewer, drain, or sump pump backups. But when a sewer backup happens, it can cause thousands of dollars of (very smelly) damage throughout your entire house.

You can ask your agent about policy add-ons that cover sewer backups.

Am I Required to Buy Home Insurance?

Great question. The answer: No, and yes.

Here’s why the answer is no: Even though we don’t recommend it, you can legally own your home without homeowners insurance. There aren’t any federal or state laws requiring home insurance.

Here’s why the answer is yes: While the government won’t require you to buy home insurance, your lender almost certainly will. That’s because it wants to protect its investment when it gives you a mortgage for your new home. Should any covered peril occur that damages your house, your lender wants to make sure it’s repaired so it can still be collateral for the loan.

Here’s where you have some flexibility: If you pay cash for your home or have paid off your mortgage, you don’t have to buy home insurance. You just have to be ready to repair or rebuild it on your own if something happened to your home. In other words, it’s a pretty big gamble.

How Much Does Home Insurance Cost?

The cost of home insurance can depend on a number of factors, including but not limited to the following:


How much you pay for home insurance greatly depends on your risk of (1) filing a claim, and (2) filing a large claim. Much of your risk of filing a claim is tied to where you live.

Live along the East Coast with the annual threat of hurricanes? You’ll pay more for coverage. Live in Tornado Alley in the Midwest? You’ll also pay more.

Live in Utah or Oregon, where the threat of natural disasters is likely low? Not so much.

Value, not cost

Remember, you should insure your home for the amount it would take to rebuild from the ground up. So a house that costs more to rebuild will cost more to insure. One common method of determining this value is multiplying the square footage of the home by local building costs per square foot.

This number can be very different from the real estate value of the house because you’re not buying the land, the view, proximity to schools and shopping, and so on —  you already have those.

Ryan Scruggs, a Farmers Insurance agent in Phoenix, Arizona, says everything starts with an appraisal of your home. He says to double check that the amount of coverage you buy is right, including what’s inside the house.

“Make sure it’s insured properly for personal property, clothing, jewelry, electronics, etc.,” Scruggs says. “Always overestimate on your personal property.”

Construction and age

Characteristics of your home — like how old it is, the type of material it’s made of, and the condition of the roof — impact the cost of your premium.

Say your home has an older roof and is made out of wood (or any type of more flammable material), your premium would be higher than a new construction brick home. The construction and age of your home impact how costly it would be to repair your home should a disaster strike.

Your insurance history

When evaluating your risk of filing claims, home insurance providers also take a historical view — both of you and the home. Their thesis: People who have filed claims are more likely to file more claims. Fair? Not necessarily, but true nonetheless.

The cleaner your claims history, the more willing the insurance company is to offer you a lower premium.

Your credit score

Insurance companies often use information from your credit report to calculate an “insurance score.” This score considers factors like your credit history, your outstanding debts, and whether you pay your bills on time to help them predict your likelihood of filing a claim while under their coverage.

This is a controversial tactic. A few states (Georgia, Hawaii, Maryland, Oregon, and Utah) have established guidelines prohibiting or limiting the practice.

What’s the average cost of home insurance in my state? 

The average annual premium for home insurance in the United States was $1,192 in 2016, the last year the Insurance Information Institute gathered data.

The five states with the cheapest average annual premiums:

  • Oregon: $659
  • Utah: $664
  • Idaho: $703
  • Nevada: $742
  • Wisconsin: $762

The five states with the most expensive average annual premiums:

  • Louisiana: $1,967
  • Texas: $1,937
  • Florida: $1,918
  • Oklahoma: $1,875
  • Kansas: $1,548

Find your state.

Note: The data for each state (with the exception of Texas) is based on the standard HO-3 insurance policy.

What Are My Next Steps to Shop for Home Insurance?

After reading (or skimming) this guide, you should have a basic knowledge of what you’re shopping for and why. Here are some action items you can add to your home insurance to-do list:

1. Think through your property

You’ll know what kind of home you’ve just bought or rented. Did you just buy a single-family home? Are you renting an apartment? Did you just buy a condo? Look at the standard insurance forms above (HO-1 through HO-8) and figure out which one best applies to you.

Also, consider where you live and the risks your home could face. Ask your agent which policy add-ons are popular in your area, and prepare for common perils.

2. Make a list of your belongings

Don’t skimp on this task. Walk through your home with a pen and paper, your list-making app, or a video camera and inventory your home.

Keep the record in a place you can access easily. You will want it in the event that disaster hits.

3. Get your house appraised

Hire someone to come out and take an honest look at the rebuild value of your home. Important note: This is not the same thing as a purchase appraisal (the one you got done when you bought your home).

The insurance appraisal will take a look at your home and its contents, and help to make sure that you don’t get over- or under-insured.

Like with the inventory, keep the record in a safe place.

4. Determine how you want to shop for insurance

Do you want to compare prices yourself, or is it worth hiring an insurance broker to do the job for you?

5. Shop around

Don’t go with the first deal you see, no matter how tempting. Leverage what you learn as you (or your broker) researches premiums to get the best deal.

There are also definite perks with going local by hiring an insurance agent in your community.

Note: The Insurance Information Institute has a great list of questions you should ask when shopping around. 

The Bottom Line: 

Face it. Home insurance is something you buy and never ever want to use. Any amount you pay for such a product is going to seem like a burden you don’t want — until you want it.

Learn as much as you can, and get the best deal. That way you can live out the tried and true mantra: Hope for the best, prepare for the worst.

Arthur Murray contributed to this post. This post was originally published on May 9, 2018. Updated on July 8, 2019.


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