The cost of homeowners insurance scales upward depending on what it would cost to replenish the home, and which extra "riders", meaning extra items to be insured, are bound to the policy. The insurance policy itself is a long contract, and list what will and what will not be paid in the case of various cases.

Virtually all insurers charge less if it appears less likely the home will be damaged or even destroyed: as an example, if the home is situated next to a fire station, or even if the home is equipped with fire sprinklers and fire alarms.

Often, claims aren`t paid because of earthquakes, floods, "Acts of God", or even war (whose definition occasionally includes a nuclear explosion from any source). Some kind of special insurance can be purchased for these possibilities.

In the United States, virtually all home buyers borrow money in the form of a mortgage, and the mortgage lender always requires that the buyer acquire homeowners insurance as a condition of the loan, consecutively to protect the bank if the home were to be destroyed. Anyone with an insurable interest in the property should be listed on the policy.