How to Shop for Homeowners Insurance: Complete Guide

by COUNTRY Financial

Homeowners insurance premiums have risen roughly 45% since 2022. Two policies at the same price point can produce very different outcomes depending on how coverage limits, deductibles, and valuation methods are set.

What does homeowners insurance actually cover?

A standard homeowners insurance policy is designed to help address financial losses from sudden, accidental damage to your home and belongings. Most policies are built around five core coverage types:

• Dwelling coverage is intended to help pay to repair or rebuild the main structure of your home, including walls, flooring, built-in cabinets, and attached fixtures, if damaged by a covered event.

• Personal property coverage is designed to help pay for damaged or stolen belongings inside your home, such as furniture, electronics, and clothing. Learn more about how personal property coverage works and what it includes.

• Liability coverage is designed to help address costs if someone is injured on your property or if you or a household member causes damage to another person's property.

• Additional living expenses (ALE) coverage is intended to help cover temporary housing and related costs if a covered event makes your home uninhabitable during repairs.

• Other structures coverage is designed to help pay for damage to structures on your property that are separate from your main home, such as detached garages, fences, and sheds.

There is a meaningful distinction between named-peril and open-peril coverage. Named-peril coverage is designed to help address a defined list of covered events, which typically includes:

• Fire and lightning

• Wind and hail

• Theft and vandalism

• Damage from vehicles or aircraft

• Falling objects

Open-peril coverage is intended to help address a broader range of events not specifically excluded by your policy. A power surge that damages electronics, for example, may not be covered under named-peril personal property coverage, but could be addressed under an open-peril policy.

Standard homeowners policies typically do not cover flooding, earthquakes, sewer backup, damage from wear and tear, or gradual mold growth. Some of these may be addressable through endorsements or separate policies, which is worth discussing with your agent based on your location and risk profile.

How replacement cost and actual cash value affect your claim settlement

One of the more consequential decisions when setting up a policy is how your home and belongings will be valued if you have a claim. There are two primary loss settlement options worth understanding before you buy.

Actual cash value (ACV) subtracts depreciation from the cost to repair or replace your home. For example, if your home's depreciated value at the time of a claim is $200,000, that is the maximum ACV may pay toward repairs, even if rebuilding today costs more.

Replacement cost value (RCV) is intended to help pay the cost to repair or rebuild at today's prices, without subtracting for depreciation. Extended replacement cost may extend that protection to up to 120% of your coverage limit to help account for inflation. COUNTRY Financial also offers guaranteed replacement cost coverage, which is designed to help cover rebuilding costs with no ceiling on reimbursement. This may be worth considering in periods of elevated construction costs.

For personal property, the default on many policies is ACV. Upgrading to RCV on contents may help reduce out-of-pocket gaps at claim time.

A 2025 study found that 74% of Colorado policyholders surveyed had underinsured homes, a figure that reflects how easy it is to underestimate what adequate coverage requires.

How deductibles work and how to choose one

Your deductible is the amount you pay out of pocket before your insurance may step in on a covered claim. There are two types to be aware of:

Percentage-based deductibles are becoming more common, particularly for wind and hail in areas with higher storm exposure. On a home insured for $400,000, a 2% wind deductible means $8,000 out of pocket before coverage may apply.

A deductible that would be difficult to cover if you had a claim may be worth reconsidering, regardless of the premium savings.

What factors affect your premium?

Premiums reflect a combination of home-specific and market-level factors. Some of the most common include:

• Location, including proximity to fire stations, flood zones, and storm-prone areas.

• Home age and construction, as older homes and certain building materials may carry higher premiums.

• Roof age and condition. Roof claims totaled nearly $31 billion in 2024, up 30% from 2022, making roof age a primary underwriting consideration for many carriers.

• Coverage limits and deductible selection, with higher limits and lower deductibles corresponding to higher premiums.

• Credit score in most states.

Some discounts may be available based on your situation. Combining home and auto with the same carrier through a multi-policy discount, installing monitored security or fire alarms, or paying your annual premium in full are common options worth asking about.

Premiums also vary significantly by state, so regional context matters when evaluating whether a quoted rate is competitive.

What to look for when comparing quotes

Getting multiple quotes is a reasonable starting point, but the comparison is only useful when you are looking at the same coverage across each option. When reviewing quotes side by side, it may help to confirm:

• Coverage limits, deductibles, and covered perils are identical across each quote

• Endorsements or add-ons (such as flood, scheduled personal property, or umbrella coverage) are itemized rather than folded into the base price

• The loss settlement selection (ACV vs. RCV) is the same across each option being compared

Liability is another area worth a close look. Standard policies often include $100,000 in liability coverage, but the Insurance Information Institute (III) suggests that $300,000 to $500,000 may be worth considering to help address broader exposure. An umbrella policy may be one way to extend that coverage further based on your situation.

Beyond price, how a carrier handles claims is also worth factoring in. COUNTRY Financial's claims representatives are available around the clock, and our local representatives stay involved throughout the process to help make sure clients understand their options at every step.

Common coverage gaps worth reviewing

A few patterns tend to surface when homeowners discover their coverage may not go as far as expected:

• Setting dwelling coverage to purchase price. Market value and rebuild cost are often different figures, and underinsuring the structure is one of the more common coverage gaps.

• Skipping flood coverage. Flooding is excluded from standard homeowners policies; separate flood insurance, including options through the National Flood Insurance Program (NFIP), may be worth exploring based on your location.

• Not scheduling high-value items. Standard policies often carry sub-limits of $1,500 to $2,500 for categories like jewelry, art, and musical instruments, regardless of actual value.

• Not revisiting the policy. Renovations, major purchases, and changes in local rebuild costs can all affect whether your current limits still align with your situation.

Why working with a local representative may make a difference

Shopping for homeowners insurance is less about finding the lowest price and more about understanding what that price actually includes. A local representative brings context that an online quote tool cannot, including knowledge of regional risks, local rebuild costs, and which coverage gaps are most common in your area.

A COUNTRY Financial representative can help you:

• Review your current coverage limits and identify potential gaps

• Compare loss settlement options such as actual cash value versus replacement cost

• Explore endorsements that may be relevant to your home and location

• Walk through deductible types and how they affect your out-of-pocket exposure

• Answer questions before, during, and after a claim

Start a quote or connect with a local representative to get started.

Published 7-21-26