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If you’re like many Americans, your home is the single largest purchase you’ll ever make–and one you likely can’t afford to replace if disaster strikes.

That’s why homeowners insurance can be a wise investment. This type of insurance will compensate you if an event covered under your policy damages or destroys your home or personal items.

It will also cover you in certain instances if you injure someone else or cause property damage.

Although having homeowners insurance isn’t required by law, mortgage lenders often require you to insure your home until you’ve paid the loan in full.

Choosing the right coverage for your home–and understanding exactly what is (and what isn’t) covered–can be confusing though.

Some policies cover more than others, and how much coverage you need will depend on your circumstances, as well as your risk tolerance.

Here’s what you need to know about the options available for protecting your home.

Recommended: What’s the Difference Between Homeowners Insurance and Title Insurance?

What Does Homeowners Insurance Typically Cover?

Most standard homeowners insurance policies include six different kinds of important coverage.

•  Dwelling: This covers the physical structure of the home itself, including its foundation, walls, and roof, as well as structures attached to the home such as a front porch.
•  Other structures on your property: This covers things that aren’t attached to the main home structure, like garages and fences.
•  Personal property: This includes personal items including clothing, furniture, and everything else that you put inside your home.
•  Additional living expenses: This provides funds to pay for temporary living expenses, such as hotel costs and restaurant meals, while your home is being repaired or rebuilt.
•  Liability coverage: This protects you against lawsuits and damages you or your family cause to other people or their property.
•  Medical coverage: This is offered to foot the bills incurred by somebody who is injured on your property, whether it’s your fault or theirs.

What Type of Events Does Homeowners Insurance Cover?

The most common type of homeowners insurance policy on the market is called HO-3 insurance.

This insurance includes coverage of 16 specifically named perils, but it may also offer “open peril” coverage, which means that anything that damages your dwelling that is not specifically excluded in the paperwork will be covered by the policy. (This coverage generally does not extend to your personal property, however.)

The 16 named perils typically include:

•  Fire or lightning
•  Windstorms or hail
•  Explosions
•  Riots
•  Damage caused by aircraft
•  Damage caused by vehicles
•  Smoke
•  Vandalism
•  Theft
•  Volcanic eruptions
•  Falling objects
•  Damage due to the weight of ice, snow or sleet
•  Water or steam overflow from plumbing, HVAC systems, internal sprinklers and other appliances
•  Damage due the “sudden and accidental tearing apart,cracking, burning, or bulging” of an HVAC, water-heating, or fire-protective system
•  Freezing of pipes and other household appliances
•  Damage due to a power surge

What Isn’t Covered by Homeowners Insurance?

Homeowners insurance typically covers most scenarios where a loss could occur. However, some events are generally excluded from policies. These often include:

•  Earthquakes, landslides and sinkholes
•  Infestations by birds, vermin, fungus or mold
•  Wear and tear or neglect
•  Nuclear hazard
•  Government action (including war)
•  Power failure

What if you live in a flood or hurricane area? Or an area with a history of earthquakes? You may want to consider a rider (which is supplementary coverage to an existing policy) for these or an extra policy for earthquake insurance or flood insurance.

Home insurance policies also typically set special limits on the amount of reimbursement you can receive in categories such as artwork, jewelry, appliances, tools, electronics, clothing, cash, and firearms.

If you own something particularly valuable, such as fine art painting or piece of expensive jewelry, you might want to purchase a rider that you will be reimbursed in full for it.

What Should I look for in a Homeowners Insurance Policy?

Homeowners insurance companies typically offer three different reimbursement models or levels of coverage.

Which one you choose can be an important decision. That’s because it will impact how you will be reimbursed in the event your home is damaged or burglarized, and also the cost of your premiums.

These are the most common homeowners policy options, listed from least to most costly.

Actual Cash Value

Actual cash value typically covers the cost of the house plus the value of your belongings after deducting depreciation (i.e., how much the items are currently worth, not how much you paid for them). If your five-year-old TV was stolen, for instance, you would not likely get reimbursed for the cost of a brand-new one.

Replacement Cost Value

Replacement value policies generally cover the actual cash value of your home and possessions without the deduction for depreciation, so you would likely be able to repair or rebuild your home and re-buy your possessions up to the original value.

Extended Replacement Cost Value

This coverage will typically pay out more than the original value of your home and belongings, up to a specified limit, if it actually costs more to fix your home and/or replace your possessions.

The limit can be a dollar amount or a percentage, such as 25% above your dwelling coverage amount. This gives you a cushion if rebuilding is more expensive than you expected.

Guaranteed Replacement Cost Value

Guaranteed Replacement Cost is the most comprehensive coverage. This inflation-buffer policy pays for whatever it costs to repair or rebuild your home and replace your possessions—even if it’s more than your policy limit.

This type of coverage can be ideal since you typically don’t need just enough insurance to cover the value of your home, you will likely need enough insurance to rebuild your home, preferably at current prices.

Understanding Homeowners Insurance Deductibles

Homeowners policies typically include an insurance deductible — the amount you’re required to cover before your insurer starts paying.

The deductible can be a flat dollar amount, such as $500 or $1,000. Or, it might be a percentage, such as 1 or 2 percent of the home’s insured value.

When you receive a claim check, an insurer typically subtracts your deductible amount from the total claim.

For instance, if you have a $1,000 deductible and your insurer approves a claim for $8,000 in repairs, the insurer would likely pay $7,000 and you would be responsible for the remaining $1,000.

Choosing a higher deductible will usually reduce your premium. However, you would likely have to shoulder more of the financial burden should you need to file a claim.

A lower deductible, on the other hand, means you might have a higher premium but your insurer would likely pick up a greater portion of the tab after an incident.

The Takeaway

Of the many types of insurance coverage out there on the market, homeowners insurance is one of the most important–it literally protects the roof over your head, which very well might also be your most valuable asset.

Homeowners insurance covers damage to your home and its contents. It also typically reimburses you for losses due to theft and pays out if visitors to your property are injured.

Your policy may also pay for living expenses, such as a hotel stay, if your home becomes uninhabitable.

In some cases, you can get additional policies or riders for events not covered by your regular home insurance, such as flooding, as well as extra coverage for any highly valuable possessions.

Because choosing the right homeowners insurance company and right amount of coverage can be overwhelming, SoFi has partnered with Lemonade to help bring customizable and affordable homeowners insurance to our members.

Prices start as low as $25 per month, and Lemonade gives back leftover money to charities of your choice.

Check out homeowners insurance options offered through SoFi Protect.

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SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How safe is blockchain technology? It has proven to be a powerful technology for protecting the integrity of vital information. But that doesn’t mean it’s entirely safe.

The technology has become increasingly prevalent in recent years as the cryptocurrency markets have moved toward center stage. One reason for its rapid adoption is that blockchain is designed to offer unparalleled security to digital information.

In its short life, blockchain—also known as distributed ledger technology—and the cryptocurrencies it powers has seen its share of successes and failures. And as its applications spread, blockchain security has become more important—and not just for cryptocurrency investors.

How Blockchain Works

In some ways, blockchain technology is like the internet, which relies on a decentralized network rather than just a single server.

Blockchain uses a decentralized, or distributed, ledger that exists on a host of independent computers, often called nodes, to track, announce, and coordinate synchronized transactions. This differs from traditional trading models that rely on a clearinghouse or exchange which tracks everything in a central ledger.

Each node in the decentralized blockchain constantly organizes new data into blocks, and chains them together in an “append only” mode. This append-only structure is an important part of blockchain security. No one on any node can alter or delete the data on earlier blocks—they can only add to the chain. That the chain can only be added to is one of the core security features of blockchain.

By referring to the chain, participants can confirm transactions. It cuts out the need for a central clearing authority.

Blockchain Security Basics

Blockchain is not immune to hacking, but being decentralized gives blockchain a better line of defense. To alter a chain, a hacker or criminal would need control of more than half of all the computers in the same distributed ledger (it’s unlikely, but possible—more on that later).

The largest and best-known blockchain networks, such as Bitcoin and Ethereum, are public, and allow anyone with a computer and an internet connection to participate. Instead of creating a security crisis, having more people on a blockchain network tends to increase security. More participating nodes means that more people are checking one another’s work and calling out bad actors.

That’s one reason why, paradoxically, private blockchain networks that require an invitation to participate can actually be more vulnerable to attack and manipulation.

Permissioned vs. Permissionless Blockchains

As the names imply, permissioned or private blockchains are closed systems that require an invitation to join. This can be useful for businesses like companies and banks, which may want more control over data and thus would restrict outsiders from joining. Ripple, which was created by the banking industry as a way to make low-cost transactions, is an example of permissioned blockchains.

Permissionless blockchains are public—anyone can transact on these blockchains, with no one in control. The data is copied and stored on nodes worldwide, and individuals can remain more or less anonymous. Bitcoin, Ethereum, and Litecoin are all examples of permissionless blockchains.

The Role of Miners in Blockchain Security

As Bitcoin and other forms of crypto have grown in popularity, so has the process of mining. For speculators, cryptocurrency mining is a way to receive crypto coins or tokens. For the cryptocurrencies themselves, mining contributes to blockchain security, as it’s a way to ensure the integrity of the underlying blockchain of their currencies.

Miners verify the transactions to make sure that they are valid and in line with the blockchain code. For popular crypto currencies like Bitcoin and Litecoin, they submit their proof of work (POW) algorithmic evidence supporting or denying each transaction, and receive payment in the form of coins.

How Blockchain Security Prevents Double Spending

For payments and money transfers, blockchain is useful in preventing “double-spending” attacks. These attacks are a core concern for cryptocurrencies. In a double-spending attack, a user will spend their cryptocurrency more than once. It’s an issue that doesn’t arise with cash. If you spend $5 on a sandwich, then you no longer have the $5 to spend. But with crypto, there’s a risk that a user will spend the crypto multiple times before the network finds out.

Blockchain helps prevent this. Within the blockchain of a given cryptocurrency, the entire network needs to reach consensus on the transaction order, to confirm the latest transaction, and to post them publicly.

Bitcoin was the first form of crypto to solve the problem of double spending. And it serves as an example of how blockchain helps preserve the integrity not just of currency, but of records as a whole. If someone wanted to spend the exact same bitcoin in two places by sending it to two recipients simultaneously, then the two transactions would first go into a pool of unconfirmed transactions.

The first transaction to be confirmed would be added to the coin’s blockchain as the next data block in its transaction history. The second transaction—being connected with the block in the chain that had already been added to—wouldn’t fit into the chain, and the transaction would fail.

Blockchain Security Risks

But even with the security provided by the very nature of blockchain itself in addition to a global network of nodes and miners constantly confirming and protecting the integrity of a blockchain, there are still risks.

No Human Safeguards

One risk is also a supposed benefit: blockchain creates a seamless way to execute transactions. There’s no manual intervention required to send or receive money, which eliminates some of the more human safeguards that have evolved over time. While the technology has benefits for ensuring the integrity of the assets identity, or information involved, it is completely agnostic about the sender and receiver. This is one area where a central clearinghouse can exercise valuable discretion.

While this doesn’t pose a direct risk to any crypto assets an investor may hold at the moment, it could lead to issues later. Many critics of bitcoin and other forms of crypto point to its growing use by criminal and terrorist groups to circumvent money-laundering and other bank regulators. The anonymity that crypto allows also made it popular on the Silk Road online bazaar of illegal goods and services that flourished between 2011 and 2013.

That criticism has led to increased interest from regulators in the US and abroad, which could ultimately lead to new laws about how blockchain can and can’t be used.

High Costs

Other critics point to the high cost of maintaining the networks that make blockchain function. The process of mining these coins, which is vital to their integrity and survival as a working currency, consumes vast amounts of energy. The total energy consumption of the bitcoin network is equal to the electricity needs of 2 million U.S. homes, according to Morgan Stanley.

Because miners are paid in coins, that creates a real risk. If the price of the coins go down low enough, or the price of electricity rises high enough, then people may decide the game isn’t worth the candle.

Hacker Activity

While the very nature of how blockchain works—using decentralization, consensus, and cryptography—ensures that transactions are basically tamper-proof, hackers have still found ways to defraud the system over the years. In 2019 alone, twelve crypto exchanges were hacked.

These are a few ways the system is vulnerable to hackers.

•  Phishing is one problem, in which scammers send bogus emails in an attempt to get wallet key credentials from crypto users. (Securely storing your cryptocurrencies isn’t enough—it’s also essential to stay vigilant about protecting sensitive information.)
•  There’s also a chance that one miner or a large enough group of miners could eventually gain control of more than 50% of a network’s mining power. In that case, they’d gain control over the ledger.
•  In other situations, hackers can access real-time data as it’s being routed between internet service providers.

How to Choose a Secure Blockchain Network

There are a few things a user can do to make sure the crypto exchange they select is secure. Here’s a checklist to use when choosing an exchange:

•  Does the exchange engage auditors to look for flaws in the system?
•  Does the exchange store assets in “cold storage” (someplace without an internet connection—think of a paper wallet with a private key)
•  Do they offer security options like alerts for suspicious transactions? Two-factor authentication? Multi-signature transactions?

The Takeaway

For Blockchain, security is both a strength and a concern. Cryptocurrency transactions—including paying with crypto, investing in crypto, and crypto lending—is anonymous and protected in part by the very way blockchain technology is built. But as with most other technologies, it’s not completely immune to tampering.

That said, users can protect themselves by securely storing their private keys and not falling prey to phishing emails looking for personal information in order to hack your account.

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SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

²Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

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