Whenever a building, exempted as a homestead, is insured in favor of the person entitled to the exemption, and a loss occurs, entitling such person to the insurance, such insurance money shall be exempt to the same extent as the building would have been had it not been destroyed.
12-907.Insurance proceeds.
Article XII. Judgments - Enforcement · Part 9. Exemption of Homestead · Not amended since adoption on record · Last verified July 20, 2026
In one sentenceExtends the homestead exemption to insurance money paid out when an exempt home is destroyed, protecting it to the same extent the building itself would have been.
Full Text of 735 ILCS 5/12-907
Plain-English Summary
Fire or another loss shouldn't strip a homeowner of protection just because the asset changed from a building into an insurance check. When a building exempted as a homestead is insured in favor of the person entitled to the exemption, and a loss occurs entitling that person to payment, the insurance money is exempt to the same extent the building would have been.
The protection tracks the building's own exemption level rather than creating a separate cap, and it only reaches insurance payable to the person who held the homestead exemption.
Frequently Asked Questions
If an exempt home burns down, is the insurance payout protected too?
Yes, to the same extent the building would have been exempt.
Who must the insurance be payable to for this protection to apply?
The person entitled to the homestead exemption.
Does this section create a new dollar cap for insurance proceeds?
No. The protection matches whatever level applied to the building itself.
Does this protection apply to any insured building?
No, only to a building that was exempted as a homestead.
What event triggers this protection?
A loss occurring that entitles the insured person to the insurance payment.
Amendment History
(Source: P.A. 82-280.)
Source & verification. Section text and amendment history are
reproduced verbatim from the Illinois Compiled Statutes, published by the
Illinois Compiled Statutes, Illinois General Assembly / Legislative Reference Bureau. Last verified July 20, 2026.
· Official source
Also known as: homestead exemption fire insurance illinoisinsurance proceeds homestead exemption illinoisexempt home destroyed insurance payout illinoisis homeowners insurance payout protected from creditors illinois