Homeowners' insurance is a combination offering both property and liability coverage. Usually it includes protection for a person's home, any other buildings on the property, and for the buildings' contents and personal belongings except automobiles and pets.

The policy can be written to include the property of guests. If disaster strikes, homeowners' insurance usually pays a family's living expenses until they get settled at home once again. Homeowners' policies include two kinds of liability insurance. General liability coverage protects homeowners from losses from lawsuits. Medical payment coverage pays for medical treatment of people injured on the insured property.

Although homeowners' insurance generally does not cover such perils as flood, earthquake, or volcanic eruption, the added coverage is sometimes available in areas where it is needed and can be added for an additional premium. Thus this type of insurance is also important for people. Homeowner insurance is the contract in which the insurance company promise to pay the full amount to the insured people.