What is the primary purpose of homeowner's insurance?

The primary purpose of homeowner's insurance is to protect the homeowner against financial loss from disasters. This coverage includes protection for the structure of the home itself, personal property within the home, and liability for injuries or damages that occur on the property. In the event of a covered peril, such as fire, theft, or storm damage, homeowner's insurance steps in to alleviate the financial burden of repair or replacement for both the home and its contents.

While liability coverage is an important component of homeowner's insurance, it does not capture the full scope of protection that the policy offers. Coverage for home renovations is generally not included as part of a basic homeowner's policy—it requires additional coverage or endorsements. Similarly, homeowner's insurance does not guarantee that a property will always be replaced with new structures, as policies often provide for actual cash value or replacement cost, but with certain limitations and factors influencing claims. This comprehensive approach to financial protection against various risks is what defines the primary function of homeowner's insurance.