All homeowners need some form of homeowner’s insurance policy because they protect against the risk that something will happen to their house. This is true whether you live in a modern state-of-the-art McMansion outside of Boston or a dilapidated Victorian you inherited from your grandmother. The point is that if the unthinkable happens, homeowners need to know that their financial situation won’t be disastrously affected by the loss of their home.

Types of home insurance

Homeowners have a number of options when it comes to different types of homeowner’s insurance policies. For example, there are fire and theft policies, flood insurance and earthquake insurance. There are also policy options that include optional coverage such as earthquake retrofitting, storm mitigation and flood restoration.

Homeowner’s insurance is a lot like other kinds of insurance in that the premium rates will vary depending on the type of risk taken out along with the cost to insure it. If you want to take out a policy for earthquake damage, for example, the premium is likely to be higher than that if you opt to take out a fire policy instead.

Types of home insurance policies

There are a few different types of policies you can find. The most basic will cover the insured’s dwelling and personal property, but these are typically limited by what’s excluded from coverage. For instance, it won’t cover flood damage or damage from a mudslide. It might not cover any losses that occur from burst pipes or electrical fires either. Other policies apply only to certain perils or may include specific limits on how much they will pay out in the event a covered loss occurs.


You should know that most homeowners will be better off taking a policy that includes replacement cost coverage. This means the insurance company will pay to rebuild your home at the current market value. Otherwise, you’re going to get reimbursed for the original purchase price, which doesn’t account for any price inflation or improvements you’ve made since you moved in.