Home Insurance

The 80% rule means that an insurer will only fully cover the cost of damage to a house if the owner has purchased insurance coverage equal to at least 80% of the house's total replacement value. If the coverage purchased covers less than 80% of the replacement value, the amount the insurance company pays will be proportionate to the amount of coverage originally purchased.

A home renovation doesn't always cause home insurance premiums to rise, but it can happen. Projects that increase a home’s value—for instance, adding a room—may lead to higher premiums because of the increased living space. Installing higher-end materials—marble in the bathroom or commercial-grade kitchen appliances—can also increase building costs and premiums.

If you compare the cost to replace just your clothing and electronics, which can run into the thousands, and the annual fee for renter’s insurance—generally under $200—it may put the price tag into perspective. Your actual cost will depend on how much coverage you need, the type of coverage you choose, the amount of your deductible, and where you live.

Your premiums for homeowners insurance are typically not tax-deductible. However, in special cases, you might be able to get a full or partial tax deduction as a business expense if you are a landlord. If your home or property is damaged in a federally recognized disaster, it may be possible to deduct uninsured financial hits your family incurs due to the disaster.

Many homeowner policies cover wildfires just as they cover more typical fires—like kitchen, electrical and lightning-based fires, so check to see if you are already covered. If your home is in a high-risk area for wildfires, it’s important to make sure you are not underinsured.

Airbnb does offer up to $1 million of its own coverage per rental, but that may not cover everything, and making a claim can be complicated. If something happens to your property in the course of an Airbnb rental, you’ll want to make sure you have adequate coverage. Most standard homeowners insurance policies exclude short-term rentals.