Insurance protects you from financial ruin after a fire, theft or liability claim. The coverage you need depends on whether you own or rent.
What homeowners insurance includes
Dwelling coverage for the structure, other structures such as a garage, personal property, loss of use and personal liability. Standard policies exclude floods and earthquakes, which require separate policies.
What renters insurance includes
Personal property, liability and additional living expenses. Premiums are low, often $12–$25 monthly, and often required by landlords. Your landlord's policy does not cover your belongings.
Choosing limits
Insure the home at replacement cost, not market value. Choose replacement-cost coverage for belongings. Increase liability limits to protect your assets and consider an umbrella policy.
Try the numbers
Use our Home Insurance Coverage Calculator to see this in practice. With its default example (Square feet: 2,200; Rebuild cost per sq ft: $190; Coverage level: 100%), it shows recommended dwelling coverage: $418,000. Adjust the inputs to match your situation.
Key takeaways
- Insure to rebuild cost, not market value.
- Floods and earthquakes require separate coverage.
- Renters insurance is inexpensive and valuable.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.