In plain terms
- A standard homeowners policy (HO-3) has six coverages, labeled A through F.
- It pays for sudden damage like fire, wind, hail, theft and burst pipes.
- Floods, earthquakes, wear and tear and pest damage are not covered.
- Liability coverage protects you if someone is hurt on your property or you damage someone else's things.
In this article
Typical coverage levels
- Other structures: about 10% of your dwelling amount
- Personal belongings: about 50% to 70% of the dwelling amount
- Loss of use: often about 20% of the dwelling amount
- Liability: usually starts at $100,000, with $300,000 or more commonly suggested
Typical percentages from the Insurance Information Institute. Your policy may differ, so check your declarations page.
What does homeowners insurance cover, exactly? Open your policy and you will find a declarations page with letters A through F. Each letter is a separate pot of money with its own limit.
Below, each coverage is explained with a real-life example, followed by the gaps that surprise people most.
The six coverages in a homeowners policy
| Coverage | What it pays for | Example |
|---|---|---|
| A: Dwelling | The house itself and attached structures | A kitchen fire damages cabinets and walls |
| B: Other structures | Detached garage, fence, shed | A tree falls on your fence |
| C: Personal property | Furniture, clothes, electronics, even away from home | A laptop is stolen from your car |
| D: Loss of use | Extra living costs while your home is repaired | Hotel and meals after a fire |
| E: Personal liability | Injuries or damage you are legally responsible for | A guest slips on your icy steps |
| F: Medical payments | Small medical bills for guests, regardless of fault | A visitor's child needs stitches |
What homeowners insurance covers: the usual perils
A standard HO-3 policy covers the house itself against any cause of loss that is not specifically excluded. Your belongings are usually covered for a list of named perils, including:
- β Fire and smoke
- β Windstorm and hail
- β Lightning
- β Theft and vandalism
- β Weight of ice, snow or sleet
- β Sudden and accidental water damage from plumbing, heating or air conditioning
- β Damage caused by vehicles or aircraft
- β Explosion
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- β Flood from rising water, storm surge or heavy rain runoff
- β Earthquakes and earth movement
- β Wear and tear, rot and slow leaks you could have fixed
- β Termites, rodents and other pests
- β Mold, beyond small limits in some policies
- β Sewer or drain backup, unless you add an endorsement
Flood is the exclusion that costs people the most. It needs its own policy, and there is usually a 30-day wait. Read our flood insurance guide before storm season.
Special limits most people miss
Even covered belongings can have small sub-limits for theft. Jewelry, watches, firearms, cash and collectibles are common examples. If you own valuable items, ask about scheduling them on a rider so they are covered for their full appraised value.
Dana's stolen engagement ring
Dana's $8,000 ring is stolen during a break-in. Her policy limits jewelry theft to $1,500, so that is the most she can collect for it.
Her neighbor scheduled a similar ring for about $100 a year. When it was lost, the full appraised value was covered with no deductible.
Illustrative example. Names and numbers are made up to show how it works.
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Liability: the coverage that protects your savings
If someone sues you after an injury at your home, liability coverage pays for your legal defense and any settlement up to your limit. Dog bites are one of the most common liability claims.
Many experts suggest at least $300,000 of liability coverage. If your savings and home equity are worth more than that, an umbrella policy adds $1 million or more for a modest yearly cost.
Frequently asked questions
Does homeowners insurance cover water damage?
It usually covers sudden and accidental water damage, such as a burst pipe. It does not cover flooding or damage from a slow leak that went unrepaired.
Does homeowners insurance cover a roof replacement?
It covers roof damage from a covered peril such as hail or wind. It does not pay to replace a roof that is simply old or worn out.
Are my belongings covered outside my home?
Yes. Personal property coverage usually follows your belongings anywhere in the world, subject to your limits and deductible.
Does homeowners insurance cover foundation problems?
Not when they come from settling, cracking or earth movement. A foundation damaged by a covered event, such as a fire, may be covered.
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