Home and renters insurance, made understandable.

Whether you own a house, a condo or rent an apartment, a residential policy protects two very different things: your stuff and space, and your legal liability to other people. Getting the limits right on both matters more than shaving a few dollars off the premium.

What a standard homeowners policy includes

• Dwelling coverage for the structure itself. The limit should reflect what it would cost to rebuild, which is often different from the home’s market value or purchase price.
• Other structures such as a detached garage or fence, usually set as a percentage of the dwelling limit.
• Personal property for belongings, settled at either replacement cost or actual cash value (replacement cost minus depreciation). High-value items like jewelry often have low sub-limits unless scheduled.
• Loss of use (additional living expenses) if a covered loss makes the home unlivable.
• Personal liability and medical payments if someone is hurt on your property or you accidentally damage someone else’s.

Renters and condo owners

A renters policy skips the building (that is the landlord’s responsibility) and focuses on belongings, liability and loss of use, which is why it is usually inexpensive. Condo owners typically need a policy that covers interior walls, fixtures and improvements, coordinated with what the association’s master policy covers.

The gaps people miss

Standard homeowners and renters policies generally exclude flood and earthquake, which require separate coverage; National Flood Insurance Program policies normally have a 30-day waiting period before they take effect. Wind or hail may carry a separate percentage deductible in some regions. Sewer backup, home-business equipment and short-term rentals are other common exclusions that may need an endorsement.

Before you shop

Estimate your rebuild cost, make a quick home inventory, decide on a deductible you could pay tomorrow, and ask each insurer for quotes using the same limits. The guides below cover each of these steps.