Home Insurance Remains Confusing for Most Homeowners

Policy Aspects Where All Homeowners Struggle Equally

Exclusions (33% general vs. 30% first-time)

When we asked people what they find confusing about their insurance policy, the thing that rose to the top for general homeowners and was confusing for a similar percentage of first-time homeowners was exclusions.

Policy exclusions are the situations, events or types of damage your policy doesn’t cover. And they’re an important aspect of your coverage to understand before an event happens and you realize the coverage you thought was there actually isn’t.

Why it’s confusing:
Policies often emphasize what is covered, while exclusions are buried in dense legal language. Many homeowners assume they’re protected against common risks, like flooding or sewer backups, only to find out too late that those require separate coverage.

Additional Coverages (31% for both groups)

This is one of the few areas where confusion is identical across both groups with close to a third of homeowners experiencing confusion around additional coverages. Additional coverages (or endorsements) are optional add-ons—like identity theft protection, equipment breakdown coverage or extended replacement cost that can be added to your policy. 

Why it’s confusing:
Much like with exclusions, homeowners often don’t know what’s included by default versus what costs extra. The value of these add-ons can also be unclear, making it hard to decide what’s worth paying for. Even seasoned homeowners don’t feel confident evaluating optional coverage, which points to a broader issue with how insurers explain these benefits.

Premium Calculation (30% general vs. 33% first-time)

This is where first-time homeowners start to show more uncertainty; however, the difference is still only a couple of percentage points. Approximately a third of both groups have questions about how their home insurance premiums are calculated. Premiums are calculated based on factors like location, home value, claims history and risk exposure.

Why it’s confusing:
The pricing process is largely opaque. First-time homeowners, in particular, may not understand why their premium is high—or what actions (like raising a deductible or improving home safety) could lower it.

Policy Aspects Where First-Time Homeowners Struggle More

Coverage Limits (27% general vs. 37% first-time)

This is one of the biggest gaps between the two groups. A 10-point gap suggests first-time homeowners are significantly less comfortable assessing whether their coverage is adequate.

Coverage limits define the maximum amount your insurer will pay for a claim. Typical policy limits include 100% of the replacement cost for the dwelling, 50%–70% of that amount for personal property, and $100,000–$500,000 for liability.

Why it’s confusing:
First-time homeowners may assume their policy covers the full cost of rebuilding or replacing belongings, without realizing limits can fall short—especially if construction costs rise. Another point of confusion is many new homeowners might assume they’re covered for the replacement cost of their property instead of actual cash value. Replacement cost covers buying new items, while actual cash value only pays the depreciated value.

Claims Process (19% general vs. 33% first-time)

Another major divide. Less than one in five of repeat homeowners don’t feel like they have a good grasp of the claims process. This makes sense, as chances are they’ve had to file a claim at some point in their journey as a homeowner. First-time homeowners are far more uncertain here, likely because they haven’t gone through the process before.

Why it’s confusing:
Many homeowners don’t fully understand the steps involved until they need to file a claim. Unlike the auto insurance claims process, where fault is determined, damage is assessed, and then the claim is paid,  the home insurance claims process can be more complex and have more steps. First-timers, in particular, may not know what documentation is required, how long it takes or what’s covered during the process.

Deductibles (18% general vs. 36% first-time)

When it comes to understanding home insurance deductibles we find the largest gap between first-time homeowners and repeat homeowners. A deductible is the amount you pay out of pocket before insurance kicks in. With double the confusion rate, this is a critical education gap. Many new homeowners may not fully grasp how deductibles impact real-world costs.

Why it’s confusing:
First-time homeowners often struggle to balance deductible amounts with premium costs. A higher deductible lowers your premium—but increases your financial responsibility during a claim. 

Additionally, some homeowners don’t realize that their policy has different deductibles. For example, many policies have a flat dollar amount deductible  for many perils but a separate deductible for wind and hail events. Instead of being a flat dollar amount, this deductible is a percentage of your home’s value.