Homeowners insurance is essential for protecting your home and your peace of mind. But while many people assume their policy covers everything, the truth is more nuanced. Knowing exactly what’s included—and what’s not—can save you from costly surprises when disaster strikes.
Here’s a breakdown of what your homeowners insurance typically covers, what it doesn’t, and how to fill the gaps.
✅ What Homeowners Insurance Typically Covers
Most standard homeowners insurance policies (often called HO-3 policies) include coverage in these key areas:
1. Dwelling Coverage
This protects the physical structure of your home—walls, roof, floors, built-in appliances—if it’s damaged by covered events like:
- Fire or smoke
- Lightning strikes
- Hail or windstorms
- Explosions
- Theft or vandalism
- Falling objects
Damage from vehicles or aircraft
2. Other Structures
Covers detached buildings on your property, like garages, sheds, or fences. Usually, this coverage is a percentage (often 10%) of your dwelling coverage.
3. Personal Property
This includes belongings like furniture, electronics, clothing, and kitchenware. Standard policies often cover these at 50–70% of your dwelling limit, for losses due to:
- Fire
- Theft
- Certain types of water damage
- Vandalism
You may also have off-premises coverage (for items stolen from your car or while traveling).
4. Loss of Use (Additional Living Expenses)
If your home becomes unlivable due to a covered event, this helps pay for hotel stays, meals, and other temporary living costs.
5. Personal Liability Protection
Covers legal and medical expenses if someone is injured on your property or if you accidentally damage someone else’s property.
6. Medical Payments to Others
Pays for minor medical costs if a guest is injured on your property, regardless of fault (usually limited to a few thousand dollars).
❌ What Homeowners Insurance Usually Doesn’t Cover
Here’s what’s commonly excluded from standard policies:
1. Flood Damage
Homeowners insurance does not cover flooding from heavy rain, rising rivers, or storm surge. You’ll need a separate flood insurance policy—especially if you live in a high-risk area.
2. Earthquakes and Sinkholes
Most policies don’t include coverage for earthquakes or land movement. Like flood insurance, this requires an additional rider or separate policy.
3. Maintenance Issues and Wear & Tear
Insurance isn’t a substitute for home maintenance. Damage caused by mold, pest infestations, rot, rust, or gradual deterioration is typically not covered.
4. Sewer Backup
Backups from drains or sewers usually require optional add-on coverage.
5. High-Value Items
Standard personal property coverage has limits on expensive items like jewelry, art, collectibles, and electronics. You may need scheduled personal property coverage to fully protect these valuables.
6. Business Use of the Home
If you run a business from home, your homeowners policy may not cover business equipment or liability. Consider home business insurance if applicable.
How to Make Sure You’re Fully Protected
- Review your policy annually to make sure coverage limits still match your needs.
- Create a home inventory to document belongings and simplify claims.
- Ask about riders or endorsements for anything not included.
- Consider umbrella insurance for extra liability protection if you have significant assets.
Final Thoughts: Know What You’re Paying For
Homeowners insurance is a powerful tool—but only if you understand what it actually covers. Don’t wait until disaster strikes to find out you’re underinsured. By knowing the limits and exclusions of your policy, you can take steps now to fill the gaps and protect what matters most.