How much homeowners insurance do you need?

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Pat HowardManaging Editor & Licensed Home Insurance ExpertPat Howard is a managing editor and licensed home insurance expert 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.&Rachael BrennanSenior Editor & Licensed Auto Insurance ExpertRachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and

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Jennifer GimbelJennifer GimbelSenior Managing Editor & Home Insurance ExpertJennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at and a content strategist at

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Deante' PeakeDeante' PeakeLicensed Property & Casualty ExpertDeante' Peake is a licensed property and casualty insurance expert and a former operations manager at Policygenius.


Expert reviewedExpert reviewedThis article has been reviewed by a member of ourFinancial Review Council to ensure all sources, statistics, and claims meet the highest standard for accurate and unbiased advice.Learn more about oureditorial review process.

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Understanding how much home insurance you need

Purchasing a house can be a risky investment given the unpredictability of the market and Mother Nature. Fortunately, with the right amount of homeowners insurance, you have the peace of mind knowing your house and livelihood are covered in case of the unexpected.  

In short, homeowners insurance should cover:

  • The cost to rebuild your home

  • The cost to replace your personal belongings

  • The combined value of your assets

  • Temporary living costs if your home is destroyed

In this guide, we’ll help you choose the right amount of coverage to ensure your house and finances are fully protected.

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How much homeowners insurance should I have?

While you can technically purchase whatever amount of homeowners insurance meets the coverage “minimums" required by your insurer or lender, that likely won’t be enough to adequately protect your house and other areas of your life.

Here’s a breakdown of minimum coverage limits, our recommended coverage limits, and optional policy enhancements for each of the six standard homeowners insurance coverages.

Coverage type

Minimum coverage limits

How much coverage you need

Optional coverage upgrades*


The minimum amount required by the insurer or your mortgage lender

An amount equal to the home's replacement cost, which is the cost to rebuild to the home's original specifications

Extended replacement cost, guaranteed replacement cost, inflation guard, ordinance or law

Other structures

10% of dwelling coverage limit

10% to 20%, or whatever amount covers the replacement cost of additional structures on your property

Optional dwelling coverages also apply to additional structures on your property

Personal property

50% of dwelling coverage limit

50% to 70%, or whatever amount covers the cost of replacing all of your belongings

Replacement cost contents, open perils coverage, scheduled personal property

Loss of use

20% of dwelling coverage limit

20% to 30%, but you should have enough to cover additional living expenses for up to a year

Unlimited loss of use coverage

Personal liability


$300,000 to $500,000, but you'll want at least enough to cover the combined value of your assets

Personal umbrella policy, personal injury protection, home business protection

Medical payments


$3,000 to $5,000, but you may want to consider higher limits if you have liability risks on your property

$10,000 or $25,000 limits

Collapse table

Availability of optional coverages can vary by state and insurance company.

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How much dwelling coverage do I need?

Dwelling coverage is the part of your home insurance policy that covers the cost to rebuild your home in case it’s damaged or destroyed by a fire, severe storm, or another covered peril. To determine how much dwelling coverage you need, you’ll have to get the home’s replacement cost, or the cost to rebuild it using materials of similar type and quality at today’s prices.

Learn more >> 9 home insurance myths — debunked

How do I calculate my home’s replacement cost?

Replacement cost is only based on factors that impact the home’s reconstruction value, such as square footage, construction style, number of rooms, and local building costs in your area. It does not take the home’s market value or the value of the land into consideration. 

Here’s how to get a rough estimate of your home’s replacement cost.

  1. Multiply the square footage of the home by the cost of building materials per square foot in your area, while also considering the cost of built-in appliances and fixtures in the home. [1] Or contact a local construction company for an estimate. 

  2. Use an online home insurance calculator or replacement cost estimator, like the Policygenius home insurance calculator below.

  3. Get home insurance quotes or talk to an independent insurance agent for an estimate. Most major insurance providers now use their own replacement cost estimator software to provide coverage recommendations — and they’re often fairly accurate. If you go with this option, get home insurance quotes from multiple companies to make sure you are getting the best rate.

Keep in mind that, while most insurance calculators are free, you may be asked to pay if you want a more thorough estimate.

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. We’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 home insurance companies on the market. 

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

What factors can impact my home’s replacement cost?

A home’s replacement cost can vary based on when it was built, where it was built, and several other factors listed below.

  • Local construction and labor costs 

  • The age of your home

  • Your home's square footage

  • Number of bathrooms and other rooms

  • The architectural style of your home

  • Special architectural features specific to your home, like a fireplace, crown molding, arched windows, etc

  • Home renovations or upgrades

Remember that, over time, changes to things like construction costs or recent renovations can necessitate higher coverage limits for your home.

Learn more >>How to estimate home replacement cost

Rising construction costs could be leaving you underinsured 

Many homeowners are 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 rising costs, like inflation guard or ordinance or law coverage. Or consider purchasing additional dwelling coverage like extended or guaranteed replacement cost.

How to insure your house against inflation

In an era of expensive climate disasters, above-average inflation, and rising replacement costs, there’s a chance your policy’s dwelling coverage limits may not be high enough to cover the cost to rebuild your home to its original condition.

According to our Policygenius Home Insurance & Inflation Shopping Survey, only 33% of homeowners are "very sure" their home's coverage limit is high enough to cover their home's entire rebuild cost.

Your insurance expert can help you find out if valuable policy add-ons or additional dwelling protection are available in your area, like: 

  • Extended replacement cost: In the event your home is destroyed and rebuild costs are higher than the dwelling coverage limit in your policy, this extended replacement cost coverage extends your limits to cover the increased costs, typically up to 25% or 50%, depending on your policy.

  • Guaranteed replacement cost: This covers the full cost of rebuilding your home after a disaster, regardless of the cost. Guaranteed replacement cost is similar to extended replacement coverage in that it's triggered by spikes in construction costs — the difference being there isn't a cap or limit to how much it will pay out.

  • Inflation guard: This automatically increases your dwelling coverage limit each year to keep pace with inflation.

  • Ordinance or law: This covers the increased cost of rebuilding your home to comply with local building codes and ordinances.

These coverage add-ons are both limited by company and state. If interested, reach out to your insurance agent to see if it’s offered where you live, or shop policy options from multiple home insurance companies.

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How much personal property coverage do I need?

Your personal property coverage limit should be high enough to cover the total value of your belongings, aka your furniture, electronics, and anything else you consider your “stuff.” By default, personal property coverage limits are set at 50% of your dwelling coverage limit, but most insurers offer a 70% option for an additional fee. 

Here are some effective ways to calculate the value of your belongings, increase your reimbursement amount, and increase coverage limits on expensive valuables or precious heirlooms with lower limits of liability.

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. Consider replacement cost contents coverage

Standard home insurance policies protect your personal property at its actual cash value, meaning depreciation is subtracted from your total reimbursement amount on a claim. But many insurers will give you the option of upgrading your coverage to replacement cost, which doesn’t factor depreciation into your payout. While you typically have to pay an additional fee for this coverage, it’s often worth it.

3. Consider additional coverage for jewelry and other expensive valuables

Insurers limit how much they’ll pay out for certain high-value items like expensive jewelry, art, and electronics. For example, a standard policy will only cover jewelry up to $2,500 per theft loss. Check with your insurance company to see if they offer a scheduled personal property endorsement to increase your coverage limits on specific valuables.

How much liability insurance do I need?

Your liability coverage limit should be high enough to cover the financial value of your assets, such as the value of your home, car, possessions, cash on hand, savings, and anything else of yours that holds value. That means if you have $400,000 in assets, you should have at least $400,000 in personal liability coverage to ensure you’re fully protected.

Liability coverage helps pay for legal or medical expenses if you’re legally responsible for an injury or property damage. For example, if you’re held liable for an injury to a house guest, personal liability coverage can help cover their medical bills, legal fees if they decide to sue,  and other liability expenses that you’d otherwise be responsible for covering out of pocket. If the settlement amount exceeds your liability coverage limit, the plaintiff may be entitled to go after your assets until this amount is reached.

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 loss of use coverage do I need?

If you can’t live in your home due to covered disaster, you’ll want enough loss of use coverage to cover the cost of hotel bills, restaurant meals, and other expenses required for you to maintain your normal standard while your home is being rebuilt or repaired.

Your loss of use coverage limit defaults to 20% of your dwelling coverage limit, but your insurance provider may offer higher limits (or even unlimited coverage) for an additional fee. If your home is located in an area prone to natural disasters where total losses aren’t uncommon, it may be worth opting for higher coverage limits.

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

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What is not covered by homeowners insurance? 

Homeowners insurance excludes certain disasters from coverage, including flooding, earthquakes, and water damage from sump pump or sewer line backups. To ensure you’re fully protected, consider additional insurance coverage or policy endorsements.

Flood insurance

While homeowners insurance covers some causes 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 >> How does flood insurance work?

Earthquake insurance

Earthquake damage isn’t covered by a standard home insurance policy, but 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 >> Is earthquake insurance worth the cost?

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 >> How does water backup coverage work?

Frequently asked questions

How much coverage should you buy for your home to be fully insured?

For your house to be fully insured, you’ll want to make sure your policy’s dwelling coverage limit is equal to the home’s replacement value. When you get your homeowners insurance quote, the insurance company will likely provide an estimate of your home's replacement cost and other coverages in your policy, but it may be worth getting a replacement cost appraisal if your house is in a high-risk location.

Does homeowners insurance give you both property and liability protection?

Yes, a typical homeowners insurance policy has two main sections of coverage: property and liability. Together, these coverages provide homeowners with comprehensive financial protection from different types of property and liability-related losses.

The property section includes coverage for your home's structure (dwelling), structures separate from your house like a detached garage (other structures), your belongings (personal property), and temporary living expenses like hotel and restaurant bills if you need to stay somewhere else after a loss (additional living expenses).

The liability section has two coverages: personal liability coverage, which pays your medical or legal expenses if you're found negliglent for another someone's injury or property damage (like if your dog attacks a stranger or chews through a neighbor's furniture); and medical payments coverage, which pays out for medical expenses if a guest sustains minor injuries on your property — regardless of whether you're at fault or not.

Do I need more home insurance coverage every year?

Because construction costs rise each year due to inflation, make sure to adjust your dwelling coverage levels at your annual policy renewal. You’ll also want to increase your coverage limits after major renovations, after adding a pool or gardening shed to your property, or after purchasing expensive valuables.

What is usually not covered by homeowners insurance?

Most homeowners insurance policies do not cover water damage caused by flooding, earthquake damage, subsidence, gradual water damage, pest damage, damage due to neglect or maintenance problems, and theft if your house has been vacant for more than 60 days.

How much home insurance is required by mortgage lenders?

Many mortgage lenders will require enough home insurance to pay for a full rebuild of the home. Though some may only require you to purchase an amount equal to or greater than the principal balance of the mortgage. If you live in a high-risk flood zone, your lender may also require you to purchase flood insurance.

While many people think you don't need home insurance once your mortgage is paid off, experts highly recommend keeping it to ensure your home and assets remain financially protected.

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

Depending on the extend of the renovations, you may need insure the home with a builders risk insurance policy throughout the course of the project. Most home insurance policies don't cover homes under construction due to the increased loss and liability risk. Some insurers may also offer a dwelling under construction coverage endorsement that you can add onto your home insurance policy.

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of oureditorial standards.

  1. Insurance Information Institute

    . "

    Insurance for Your House and Personal Possessions

    ." Accessed May 25, 2022.

  2. Insurance Information Institute

    . "

    Don't Risk Being Underinsured: Five Insurance Mistakes To Avoid

    ." Accessed May 25, 2022.

  3. United States Geological Survey

    . "

    Nearly Half of Americans Exposed to Potentially Damaging Earthquakes

    ." Accessed May 25, 2022.

  4. Insurance Information Institute

    . "

    Which Disasters Are Covered by Homeowners Insurance?

    ." Accessed May 25, 2022.


Pat Howard is a managing editor and licensed home insurance expert 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.

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and


Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at and a content strategist at

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