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Homeowners insurance is rated off Coverage A, the dwelling limit, not off the purchase price or the tax assessment. Coverage A is meant to equal replacement cost: what a builder would charge today to rebuild the same structure with like kind and quality materials. Land is excluded because fire and wind cannot destroy it, so in high land value markets replacement cost can sit well below market value, while in remote areas with costly labor it can exceed market value. Carriers quote an annual rate per 1,000 dollars of Coverage A, commonly between about 3 and 12 dollars depending on state, construction class, roof age, and distance to a responding fire department. The other limits in a standard HO-3 special form policy are usually expressed as percentages of Coverage A: 10 percent for other structures, 50 percent for personal property, and 20 to 30 percent for loss of use, with liability written as a flat limit of 100,000 to 500,000 dollars. Most policies also contain a coinsurance or replacement cost provision requiring the dwelling limit to be at least 80 percent of full replacement cost; fall below that and even a partial claim is settled on a reduced, penalized basis. Two important limits on any estimate: flood and earth movement are excluded from every standard form and need separate policies, and in hurricane and hail regions the flat dollar deductible is replaced on wind claims by a percentage deductible of 1 to 5 percent of Coverage A, which on a 350,000 dollar home can mean 3,500 to 17,500 dollars out of pocket.

Property insurance in its recognizable form dates to the aftermath of the Great Fire of London in 1666, which destroyed roughly 13,000 houses. Nicholas Barbon opened an office to insure buildings against fire in the following years, formalized as the Fire Office in 1681, and the early London fire offices issued metal fire marks that identified insured buildings to their brigades. In the American colonies, Benjamin Franklin helped found the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire in 1752, the oldest surviving US property insurer. For the next two centuries a homeowner bought separate contracts for fire, theft, and liability. The packaged homeowners policy, bundling structure, contents, additional living expense, and personal liability into one contract, was introduced in the United States around 1950 and quickly displaced the monoline approach. Standardized form numbers, including the HO-3 special form that insures the dwelling against open perils and contents against named perils, were developed by rating bureaus that consolidated in 1971 into the Insurance Services Office. Flood was carved out of these forms because private carriers considered the peril uninsurable through normal pooling; Congress responded to that gap by creating the National Flood Insurance Program under the National Flood Insurance Act of 1968, and flood has remained a separate purchase ever since.