Homeowners insurance has six standard coverages, but one of them — Dwelling (Coverage A) — drives almost everything. Get it right and the rest mostly falls into place. Our coverage calculator sizes it all for you; here's the logic.
Dwelling (Coverage A): rebuild cost, not market value
This is the number that matters most. Set it to what a contractor would charge to rebuild your home today — not its market price (which includes land) and not what you paid. In hot markets rebuild cost is often below market value; after a construction-cost spike it can be above. Under-insuring here is the costliest mistake, and many policies pro-rate even partial claims if you insure for less than 80% of rebuild cost. Ask your insurer to run a free replacement-cost estimate.
Other structures & personal property (B & C)
Other Structures (detached garage, fence, shed) defaults to 10% of dwelling — fine for most. Personal Property defaults to 50% of dwelling; do a quick room total to confirm, and choose replacement cost so you're paid to buy new.
Liability (Coverage E): at least your net worth
$100,000 is the floor, but $300,000–$500,000 costs only a little more. Carry at least as much as your net worth, and add a $1–2M umbrella if you have real assets — it's the cheapest liability per dollar you can buy.
The add-ons worth considering
Water backup (sewer/sump failure — a common basement claim, ~$50–100/yr), extended/guaranteed replacement cost (pays above your limit if rebuild costs surge), and scheduled items for jewelry or art above the standard caps. And remember: flood and earthquake are never included — they're separate policies.
Get the dwelling number right first. The coverage calculator turns your rebuild cost and assets into the right Coverage A / liability / add-ons — then sends you to compare carriers for that coverage.
Frequently asked questions
How much dwelling coverage do I need?
Enough to rebuild your home today (rebuild cost) — not its market value or purchase price. Ask your insurer for a replacement-cost estimate, and insure for at least 80% of it to avoid pro-rated claims.
Should homeowners insurance equal my home's value?
No — it should equal your rebuild cost, which excludes land. In many markets that's less than market value; after construction-cost spikes it can be more.
How much liability coverage do I need on a home policy?
At least $100,000, with $300,000–$500,000 recommended and only slightly more. Add an umbrella policy if you have significant assets.
What's the 80% rule in homeowners insurance?
If you insure your home for less than 80% of its rebuild cost, insurers may pro-rate (reduce) even partial claims — so don't under-insure the dwelling.
Related: Home Coverage Calculator →