The 80% rule in homeowners insurance states that you should insure your home for at least 80% of its total replacement cost. This ensures that you have sufficient coverage to rebuild or repair your home in the event of a covered loss. By meeting this requirement, you may avoid penalties or reduced claim payouts. However, if you fail to meet the 80% threshold, you may be subject to a penalty known as the "coinsurance penalty." This means that you will be responsible for a portion of the cost when filing a claim, even if the loss is covered. It's important to review your policy regularly and adjust your coverage limits accordingly to ensure you stay compliant with the 80% rule. Remember, having adequate insurance coverage helps protect your biggest investment, your home, from unforeseen events.