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How much homeowners insurance do I need?

You’ll need enough home insurance to rebuild your home, replace your belongings, cover additional living expenses, and protect your assets from liability to others.

Pat Howard 1600Kara McGinley


Pat Howard

Pat Howard

Senior Editor & Licensed Home Insurance Expert

Pat Howard is a senior editor and licensed home insurance agent at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

&Kara McGinley

Kara McGinley

Editor & Licensed Home Insurance Expert

Kara McGinley is an editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN,, and elsewhere.

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This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice.

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Deante' Peake

Deante' Peake

Licensed Property & Casualty Expert

Deante' Peake is a licensed property and casualty insurance expert and a former operations manager at Policygenius.

Updated|6 min read

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Homeowners insurance protects your home and personal belongings in case they’re damaged in an unexpected event, like a storm or fire. It also covers your personal assets if someone is injured at your home and you’re held legally responsible.

To determine how much homeowners insurance you need, you’ll want to add up the costs to fully rebuild your home, replace your belongings, cover expenses if you can’t live in your home while it’s being rebuilt, and protect all of your assets if you’re sued.

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How much home insurance coverage do I need?

Most home insurance companies will help you calculate how much insurance coverage you need based on information you provide in your application. 

Here’s a quick look at the typical homeowners insurance coverage amounts based on the different sections of your policy. You can jump down to each section for more details by clicking on the links in the table below. 

Coverage typeTypical coverage limitsHow to calculate needs
Dwelling coverage$100,000 to $1 millionMultiply the square footage of your home by the average cost per square foot to build in your area
Other structures coverage10% of your dwelling limitMultiply the square footage of the other structures on your property by the average cost per square foot to build in your area
Personal property coverage50% to 70% of your dwelling limitMake a home inventory of all of your personal belongings
Personal liability coverageUp to $500,000Add up all of your assets — including your home, belongings, cars, investments, retirement funds and savings
Medical payments to others coverageTypically $5,000 — though possible to increase up to $25,000Increase limits if you own a pool, dog, or trampoline that put your guests at greater risk of injury
Additional living expenses coverage20% of your dwelling limitAdd up how much you spend on living expenses like food, rent, and gas in a typical month

How much dwelling coverage do I need?

Dwelling coverage is the part of your homeowners insurance policy that reimburses you when the structure of your home is damaged. You should have enough dwelling coverage to fully rebuild your home from the ground up if it’s completely destroyed in a disaster.

Your dwelling coverage limits should not be based on your home’s market value, which is how much buyers are willing to pay for it on the real estate market. Instead, how much dwelling coverage you need should be determined by the rebuild cost of your home — also known as the replacement cost

Let’s take a look at an example. 

Say you just went through a bidding war to purchase your first home. While the rebuild cost of the home is only $400,000, you paid over $500,000 for it due to the competitive real estate market. 

You’d only need $400,000 in dwelling coverage — even though you paid over $100,000 more when you purchased the home.

→ Learn more about dwelling coverage

How to calculate your home’s rebuild cost

To get a rough idea of how much your home’s rebuild value is, there’s a simple way to do it: Multiply the square footage of the home by the average cost per square foot to build in your area. [1]  

You can also use this same method to calculate the rebuild cost of other structures on your property, which we’ll get into more next. 

9 factors that affect the rebuild cost of your home

There are many factors that affect a home’s rebuild cost, including:

  • Local construction costs 

  • Age of your home

  • Your home's square footage

  • Number of bathrooms and other rooms

  • Style of your home — colonial, ranch, farmhouse, craftsman, etc…

  • Type, materials, and age of your roof

  • Special features of your home — fireplaces, crown molding, arched windows, etc…

  • Whether your home was custom built

  • Recent renovations

➞ Learn more about how to estimate the replacement cost of your home

Rising construction costs could leave you underinsured 

Home insurance doesn’t account for inflation — the increased prices of labor and construction materials. It also doesn’t take into consideration the cost of bringing an older home up to code during a rebuild. 

This means many homeowners are actually underinsured and don't know it. It's estimated that two out of every three homeowners don't have enough home insurance coverage to fully protect their home, belongings, and other assets after a covered loss, according to the Insurance Information Institute.

Check with your insurance company to learn if they offer any coverage add-ons to protect you against this — like inflation guard or ordinance or law coverage. This ensures you have enough coverage to fully rebuild your home, even if construction costs rise.

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How much other structures coverage do I need?

Other structures coverage pays to repair other structures on your property not attached to your home— like detached garages, sheds, fences, and guest houses. 

The amount of other structures coverage you need is typically set at 10% of your home’s dwelling coverage limit. 

So if your home is insured for $400,000, your other structures coverage would max out at $40,000. However, most insurers let you increase this limit for an additional fee. 

To nail down if you need more coverage than your policy allows, calculate the rebuild cost of all of your structures using the method above.

→ Learn more about other structures coverage

How much personal property coverage do I need?

Personal property coverage pays for your belongings — like your furniture, electronics, and wardrobe — if they’re damaged by a covered event like a fire or windstorm. 

The amount of personal property coverage you need is typically set at around 50% to 70% of your dwelling coverage amount. 

So if your home is insured for $400,000, your personal property coverage limit would be anywhere from $200,000 to $280,000. 

However, you can usually increase your personal property coverage limits for an additional fee.

3 steps to figure out how much personal property coverage you need

Follow these steps to determine how much personal property coverage you need on your home insurance policy: 

  1. Take a home inventory.  A home inventory is a detailed list of all of your personal possessions — as well as their cost. It gives you a better idea of how much personal property coverage you need. And bonus: You’ll have records of your belongings if you need to file a claim.

  2. Decide if actual cash value coverage is enough.  Standard home insurance policies protect your personal property at its actual cash value (ACV) — meaning depreciation is subtracted from your total reimbursement amount.  But you have the option of upgrading your coverage toreplacement cost coverage, which doesn’t factor in depreciation when paying out your claim. If you decide to upgrade to this, you’ll typically pay 10% more than you would have with ACV coverage. 

  3. Add extra coverage for high-value belongings.  Home insurance companies set restrictions on how much they’ll reimburse you for high-value items like jewelry or computers. For example, jewelry coverage often maxes out at $2,000.  If you have expensive belongings, check with your insurance company to see if they offer a scheduled personal property endorsement to increase your coverage limits for specific items.

How much personal liability coverage do I need?

If someone is injured or their property is damaged while at your house and you’re held liable, personal liability coverage pays for legal fees, repair or medical bills, funeral expenses, and any settlement amount you have to pay out.

The amount of personal liability coverage offered by standard home insurance companies typically maxes out at $500,000 — but this might not be enough. 

To figure out how much personal liability coverage you actually need, you’ll want to add up all of your assets — including your home and belongings, cars and boats, and savings and investments. 

So if you have $400,000 in assets, you should have at least $400,000 in personal liability coverage — if not more to ensure you’re fully protected.

→ Learn more about personal liability coverage

Have more than $500,000 in assets? Consider an umbrella policy

If your assets total more than the maximum personal liability coverage limit in your policy — typically $500,000 — the Insurance Information Institute recommends adding a personal umbrella policy. With umbrella insurance, you can usually increase your liability insurance between $1 million and $5 million.

How much medical payments to others coverage do I need?

Medical payments to others coverage pays for medical bills for your guests if they’re injured while at your home — regardless of who’s at fault. 

The amount of medical payments to others coverage you need is typically set at around $5,000 — though you might be able to increase it to $10,000 or even $25,000 depending on the company.

You might want to increase your medical payments to others coverage limits if you have a pool, trampoline, or a dog that puts your guests at greater risk of getting hurt in an accident.

→ Learn more about medical payments to others coverage

How much additional living expenses coverage do I need?

Additional living expenses (ALE) — also called loss of use coverage — is the part of home insurance that pays for you to live somewhere else if your home is being repaired after a covered disaster. It can help pay for things like hotel stays, restaurant meals, transportation, pet boarding, and other living expenses.

The amount of additional living expenses coverage you need is typically set at 20% of your dwelling coverage.

But some insurers will let you choose higher coverage limits for an additional cost. If your home is located in an area that’s prone to natural disasters, it may be worth it.

You can calculate how much ALE coverage you need by adding up how much you spend on living expenses like food, rent, and gas in a typical month.

→ Learn more about additional living expenses coverage

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Policygenius can calculate how much home insurance you need — for free

Simply click the Start calculator button and answer a few questions to be connected with a licensed Policygenius expert. They’ll crunch the numbers to figure out exactly how much home insurance coverage you need and help you compare quotes from some of the best companies on the market

They can even help you bundle your home and car insurance together so you have fewer companies to deal with — and help you score a discount to boot!

3 additional coverages to consider

Homeowners insurance doesn’t cover everything — you may need to add additional coverages to your policy or purchase separate standalone policies to ensure you’re fully protected. These might include:

Flood insurance

While homeowners insurance covers certain types of water damage — like a burst pipe — it doesn’t cover flood damage. Even if you don't live in an area that’s at high risk for flooding, you should still consider purchasing a standalone flood insurance policy anyway. 

Why? Because 25% of all flood losses occur in low-risk areas, according to the Insurance Information Institute. [2]

Homeowners who live in flood zones may also be required by their mortgage lender to have a flood insurance policy in addition to their regular home insurance.

→ Learn more about flood insurance

Earthquake insurance

Your standard home insurance policy also won’t cover earthquake damage. You may be able to add an earthquake endorsement to your current homeowners insurance policy. 

Otherwise, you might want to consider purchasing a standalone earthquake insurance policy — even if you don't think earthquakes are a problem where you live.

Why? Because as many as half of Americans are exposed to a potentially dangerous quake, and that number is likely higher in earthquake-prone states like California, Nevada, and Oklahoma, according to the U.S. Geological Survey. [3]

→ Learn more about earthquake insurance

Water backup coverage

Damage from water that backs up through your drains or sewers or overflows from a sump pump isn’t typically covered by a regular homeowners insurance policy or flood insurance policy. [4] If you want protection from this type of water damage, you can add water backup coverage as an endorsement to your policy. 

→ Learn more about water backup coverage

Frequently asked questions

How much is home insurance a month?

Homeowners insurance costs around $1,899 a year or $158 a year, according to our analysis of 2022 home insurance rates from across the country. But how much you pay will vary greatly depending on where you live, the size of your home, your credit score, and other factors. The best way to find out what you’ll pay for coverage is to shop for quotes from different insurance companies — which you can do right here at Policygenius.

Do I need more home insurance coverage every year?

Maybe — since inflation causes construction costs to rise each year, it’s not a bad idea to adjust your home insurance coverage levels to account for this. You’ll also want to add more coverage to your home if you made major renovations, added a new structure to your property, or purchased lots of expensive belongings to ensure you’re fully protected.

Is foundation repair covered by home insurance?

Home insurance covers foundation repair if the damage was caused by a peril that’s covered in your policy, like a fallen tree or explosion. But home insurance doesn’t cover flood or earthquake damage to your foundation. It also won’t cover any gradual damage, like if your foundation cracks over time due to normal wear and tear.

How much home insurance is required by mortgage lenders?

Most mortgage lenders require you to have enough coverage to rebuild your home completely from the ground up after a covered loss. This is to protect the lender's financial investment in your home should the unthinkable happen and it’s destroyed. Mortgage lenders typically require your coverage to include protection against hazards like fire, wind, hail, and vandalism. And if you live in a high-risk flood zone, your lender will likely require you to take out flood insurance as well.

Do I need additional insurance coverage if I'm renovating my home?

Yes, you might want to take out builders risk insurance if you're renovating your home. This is because standard home insurance policies don't cover homes under construction. Most insurance carriers allow you to add builders risk insurance as an endorsement to your existing policy, helping you to avoid the hassle of taking out a separate policy with a different insurer.