What does homeowners insurance cover?

Your home insurance policy financially protects what is possibly your largest investment: your home and belongings. A standard home insurance policy provides coverage for your dwelling, belongings, liability and more, but you may be able to build a more robust policy with endorsements for things like earthquake insurance, water backup coverage and scheduled personal property coverage.

What does home insurance cover?

A standard home insurance policy, or HO-3 policy, typically offers six coverage types:

• Your home’s structure (dwelling coverage)
• Other structures
• Your personal belongings
• Liability protection
• Guest medical payments
• Additional living expenses (loss of use)

So what kinds of damage does your home insurance policy cover? The unexpected things that cause damage to your home and property are called perils. Your dwelling and other structures coverage include ‘open perils’ or ‘all risk’ coverage.’ Open perils insurance provides coverage for any disaster that is not specifically excluded in your policy. Your belongings, on the other hand, usually fall under what’s known as ‘named perils.’ That means that only the perils that are named in that portion of your policy are covered.

Additional types of coverage, known as endorsements, or add-ons, are also available from some carriers and may include coverage options like scheduled personal property (for expensive items) and sewer backup. Some types of coverage, like flood coverage, are rarely available as a policy add-on and must usually be purchased as a separate policy altogether. We’ll cover more on that later. First, let’s dive into what each of the standard six coverage types mean.

Dwelling coverage

Your homeowners policy is designed to pay to rebuild or repair your home in the case of damage caused by things like fire, wind, hail and lightning. Dwelling coverage includes the main structure of your home and any attached structures, such as a deck or attached garage, but not any other detached structures on the same premises.

It’s important to note that, in a standard policy, a dwelling coverage claim is typically designated to be paid out as replacement cost, which means that no depreciation is factored into what the insurance company pays to make the repairs or replacements.

Other structures coverage

When you have detached structures on your property, other structures coverage is designed to financially protect them. These other structures can include detached garages, sheds, barns, gazebos and fences. Other structures coverage is also typically designed to be paid out at replacement cost.

Personal property coverage

Coverage for your personal belongings will pay for the value of your damaged or lost possessions, including furniture, electronics, clothing and collectibles. Even trees, plants and shrubs are covered in some cases. Coverage for personal items may also include items that are stored off-premises.

If you are unsure about how much coverage you need, you can conduct a home inventory to determine the right home insurance coverage plan for you.

Your personal property coverage in a standard policy is often designated to be paid out as actual cash value, which means that your insurance company would only pay for what the original item would be worth today at depreciated values. Replacement cost for your belongings is often available as an endorsement, but is likely to increase your premium.

Liability coverage

Liability insurance covers you from financial losses resulting from damage to others’ property and personal injury to others if you are found legally responsible. Unless they are excluded, this insurance also covers damage caused by your family members and even your pets. Liability insurance covers court awards and expenses, depending on your policy.

If you think you need more liability insurance than the average homeowners policy offers, consider an umbrella liability policy, which provides broader coverage and higher liability limits.

Guest medical payments

If a visitor to your home injures themselves, this type of coverage would pay to cover some of their medical expenses, such as ambulance fees, hospital stays and more. The amount varies by home insurance company, so it’s important to review the coverage limit to see if you want to make any adjustments. Guest medical payments coverage differs from liability coverage in that it can pay out regardless of who is found legally responsible for the injury.

Additional living expenses (ALE)

If damage makes your home uninhabitable after a covered claim, this coverage pays for the additional costs of living somewhere else while your home is repaired or rebuilt. This could include hotel and restaurant expenses, laundromat fees, bed boarding and other costs you may incur during that time. This coverage does have financial limits, and in some cases, a time limit as well.

What is not covered by home insurance?

Certain types of damage are typically not covered by home insurance. There are some crucial exclusions to note under homeowners insurance that will help you decide whether additional coverage is necessary. Some of these types of damages can be covered by purchasing an endorsement, or add-on, to your policy, while others will require an entirely separate insurance policy.

Keep in mind: If you live in an area that is prone to disasters, like hurricanes or earthquakes, it’s important to choose coverage that will provide the best financial protection for damage to your home and personal belongings. Consulting a licensed insurance professional can help you determine if your home insurance policy meets your coverage needs.

Flood damage

Damage from floods is not covered by your standard home insurance policy. You may be required by your lender to purchase flood insurance if your home is located in or near a flood zone. But flooding can (and does) happen anywhere. Given how expensive water damage from even a small flood can be to repair, you may want to consider purchasing flood coverage even if you aren’t in a high-risk zone or required to do so.

Most flood insurance in the U.S. is purchased through the National Flood Insurance Program (NFIP), which works with private insurers to offer coverage for those in regions that may experience flooding. One helpful resource for flood information is FEMA’s Flood Map Service Center, which shows if your home is in a flood zone based on your address. Note, however, that even if you are not in a flood zone, you could still be at risk. Just one inch of water can cause $25,000 in damage to your home.

Flood insurance premiums are typically paid in full up front, so if you need flood insurance, you might want to budget for that in advance if possible. Additionally, there is typically a 30-day waiting period before flood coverage goes into effect, so purchasing a policy when a major storm is already on the way won’t help.

Earthquake damage

Generally, damage caused by earthquakes is not covered by a standard homeowners policy, but can be purchased as a separate policy — or as an endorsement in some cases. An earthquake insurance policy is typically optional but may be something to consider if you live near an active fault line.

Water damage

While a standard home insurance policy covers some types of water damage, such as if your refrigerator leaks and it wasn’t caused by neglect, many instances are excluded. Water damage issues involving your sewage systems, such as an overflow or backup, are typically not covered, but that type of coverage can be purchased as an endorsement. And of course, damage from flooding caused by storms needs to be purchased as a separate policy.

Homeowners neglect

Proper care and routine maintenance are crucial to keeping your property in tip-top shape. Staying current on cleanings, home systems repairs and inspections can save you from a financial headache down the road. Any damages caused by neglect or failure to properly maintain your home are not covered by homeowners insurance.

Those damages include but are not limited to:

To avoid costly repairs that your policy might not cover, it’s a good idea to maintain your home regularly.

Identity theft

Homeowners insurance typically does not cover expenses related to identity theft, but many carriers offer identity theft coverage as a home insurance endorsement. Some insurers automatically include this coverage on standard home insurance policies. This coverage typically helps pay for identity restoration services and may reimburse you for fraudulent charges.

Choosing the right homeowners insurance coverage

When choosing the right homeowners insurance company, the cost of coverage is just one factor. Each person has different criteria they want their insurance company to meet, whether it’s 24/7 claims response, online and mobile accessibility or the ability to speak with a dedicated agent who recognizes their name each time they call.

If you have unique coverage needs or home characteristics, such as living in a historic home, consider a company that offers special endorsements that fit your needs. Knowing how to choose the best home insurance company for you will help ensure you’re financially protected if a loss occurs.

Learn more: Affordable home insurance companies

How much does homeowners insurance cost?

In the U.S., the average cost for homeowners insurance is $1,687 per year for a home insurance policy with $250,000 in dwelling coverage. Depending on your location, average premiums can range from $700 to more than $3,000 per year. Depending on your location, average premiums can range from $700 to more than $3,000 per year.

Some of the factors that may impact the cost of your policy include your ZIP code, the age of the home, the size of the home, your insurance claim history and the insurance company that underwrites your policy.

Note that adding additional coverage through separate policies or endorsements, like flood insurance or earthquake insurance, will affect your premium. If you need to purchase additional policies or supplemental coverage beyond what’s typically included in a basic home insurance policy, your home insurance costs will increase. Flood or earthquake insurance may be required in some areas.

To find the most affordable home insurance policy, it’s a good idea to shop around and get quotes from a few different insurers. You might want to think about getting new quotes every year or after a major event, like getting married or making renovations, and not just when you move.

Frequently asked questions

• • Are personal belongings covered through my homeowners insurance?

    Personal belongings are covered through homeowners insurance, but there are limits on specific items. High-value possessions, like jewelry and fine arts, are capped at set dollar amounts, so it’s important to know that you’ll need to add an endorsement to your homeowners insurance policy, known as scheduled personal property, if you have expensive items you want fully covered. Maintaining receipts and photos of your belongings as part of your home inventory could be very helpful if you ever need to file a claim.

  • Do all home insurance policies include the same coverage types?

    No, not all home insurance policies include the same coverage types. Home insurance policies can vary significantly depending on the insurance provider, the type of policy purchased and any additional endorsements added to the policy. Standard HO-3 policies include the six coverage types listed above, but depending on the carrier, other coverage types may also be automatically included in a policy. There are other types of home insurance as well, with different coverage options, such as HO-4 insurance for renters. Checking your policy’s declarations page can show you what coverage types are included in your own policy.

  • What do I need for a homeowners insurance quote?

    For a home insurance quote, most insurance agents and online quoting platforms will ask for information about your home, such as the age, square footage, roof material and more. If you have an existing policy, you can also provide the declaration page to ensure that you have a baseline for coverage types and limits. If you don’t have this, working with a licensed agent could help you determine what you need to insure your home.

  • How do I get coverage for damage not covered by homeowners insurance?

    Most insurance companies offer the ability to purchase separate policies or add endorsements to home insurance in order to cover any gaps that may not be protected under primary coverage. These can be purchased for things like floods and earthquakes, mold and water damage, and additional coverage for specific valuables that you may keep in your home. Another financial protection tool, home warranty coverage, could also help pay for repairs when things are damaged  or break that are not covered by your home insurance.