What does homeowners insurance cover?

Why you should trust Insure.com

Quality Verified

At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria.

For many Americans, their home is their biggest investment, so it’s vital to get enough homeowners insurance to protect that investment in case of any damages.

Homeowners insurance coverage protects your assets from lawsuits and other liabilities. And homeowners insurance claims happen more often than you might think — damages are caused by fires, weather, theft, and more. Having this coverage will also protect you from financial liability for damage done to other people’s property, injuries suffered on your property and injuries caused by you or household pets to others.

Whether you’re buying your first house or want to know how to get the most out of your homeowners insurance policy, it’s critical to understand your homeowners insurance in its entirety. Read on to learn more.

What is covered by homeowners insurance?

Homeowners insurance has six major coverages:

Dwelling
Other structures
Personal property
Loss of use
Personal liability
Medical payments

Most home insurance provides coverage for loss to your property up to the limits of the policy caused by an event, called a peril. Common perils include:

Fire and lightning
Windstorm
Hail
Falling objects
Riot
Vandalism
Theft

However, some causes of damage are specifically excluded from the policy. Common exclusions include:

Flood
Earthquake
Sinkhole

Types of homeowners insurance coverage

Let’s take a look at these different types of homeowners insurance coverage.

Dwelling coverage

Dwelling coverage covers your residence and any structures attached to it up to the policy’s limits, which is usually the replacement cost. All perils are covered unless they’re specifically excluded. Land isn’t covered.

You can add extended limit replacement cost to your dwelling coverage. Extended limit increases the limits of the policy by 25% or 50% to cover any unexpected increases in construction or cost to repair. Guaranteed replacement coverage extends the policy limits without any cap. Land isn’t covered.

Dwelling coverage is also called coverage A.

Other structures coverage

Other structures coverage covers detached structures on your property, including a detached garage. Land, rental and business property aren’t covered.

Coverage is usually limited to 10% of the policy limits.

Other structures is also called coverage B.

Personal property coverage

Homeowners insurance covers the contents of the home, such as furniture, jewelry and appliances. The limits of personal property coverage are usually 50% of the dwelling coverage limits.

Most homeowners insurance policies limit coverage for jewelry, fine art, electronics, firearms and silverware to $2,500 or less. Animals, motor vehicles, aircraft, property of tenants or held in a rental property off the residence premises aren’t covered.

The coverage for personal property is generally the actual cash value, unless upgraded to replacement value. The details of your coverage can be found in the loss settlement section of the policy.

Personal property coverage is also called coverage C.

Loss of use coverage

Loss of use coverage covers living expenses if you must temporarily relocate, such as meals and lodging or the cost of a rental.

Loss of use coverage is also called additional living expenses coverage.

Personal liability coverage

Personal liability coverage pays out for claims of injury or property damage caused by you or a household member. It only pays out up to the policy limits.

For example, if a tree on your property falls on your neighbor’s house or a pet bites the mail carrier, your personal liability coverage would pay for the damages. Liability coverage excludes motor vehicle accidents, watercrafts and aircrafts.

Medical payments coverage

If someone is injured on your property, medical payments coverage pays for the medical bills.

How to get coverage for homeowners insurance exclusions

Homeowners insurance doesn’t cover everything. Here are some common home insurance exclusions or the things not covered by a standard home insurance policy:

Flood: You can buy a separate flood insurance policy through a private insurance company or the National Flood Insurance Program.
Earthquake: You can get a separate earthquake insurance policy; in California, the California Earthquake Authority offers policies.
Sinkhole: Sinkhole coverage is usually available as an endorsement on a homeowners policy. The insurance company inspects the property before offering coverage if you request the additional protection.
Landslides: A difference in conditions policy covers landslides as well as other perils. Difference in conditions policies are sold by surplus lines companies and may not be available in all states.

How much home insurance do you need?

Kelly Richards, a State Farm agent from Naples, Florida, advises her clients to focus on the amount needed to replace the home in case it’s destroyed.

“If the customer has a recent, professionally prepared estimate of the replacement cost, we can use that to discuss the amount of insurance purchased for the home or we can use a tool State Farm provides to estimate the replacement cost of the home.

We advise customers they have to consider how much it would cost to put the house back if it is destroyed, not the amount of their mortgage or the market value of the home, which can be different from the estimated replacement cost.”