Homeowners insurance covers some perils but not others. The table below answers common questions about what your standard policy covers, what requires endorsements and what needs separate insurance.
What Does Homeowners Insurance Cover?
Updated: October 29, 2025
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Key Takeaways
Homeowners insurance includes six coverage types: dwelling coverage for your house, other structures coverage, personal property protection, temporary living expenses, liability coverage and medical payments coverage.
Your policy covers stolen or damaged belongings, but expensive items like jewelry face coverage limits. Liability and medical payments coverage pay costs if someone gets injured on your property or you damage their property.
Standard homeowners insurance doesn't cover flood damage, earthquake damage, normal wear and tear, pest damage or damage caused by your pets.
Compare options from the best home insurance companies or find the cheapest home insurance rates to get the coverage you need at a price that fits your budget.
What Home Insurance Covers
Home insurance covers damage to your house and belongings from fires, storms, theft and other disasters. It also pays costs if someone gets injured on your property or you damage their property.
Your policy includes six coverage types:
Dwelling Coverage (Coverage A): Your Home's Structure
Dwelling coverage, also commonly known as hazard insurance, pays to repair or rebuild your home after fires, storms, vandalism or other covered disasters. This includes your walls, roof, foundation, built-in appliances and attached structures like decks.
Set your dwelling coverage limit to match your home's rebuilding cost, not its market value. Construction costs often exceed what you paid for your home, especially in areas with recent price increases.
Other Structures Coverage (Coverage B): Detached Buildings
This coverage pays for buildings on your property that aren't attached to your main house, like detached garages, sheds, fences, driveways, gazebos and pool houses. Most policies provide 10% of your dwelling coverage for these structures.
A $300,000 dwelling policy gives you $30,000 for other structures. You can increase this amount if you have expensive detached buildings like a large garage or guest house.
Personal Property Coverage (Coverage C): Your Belongings
Personal property coverage replaces your furniture, electronics, clothing, appliances, tools and other belongings when damaged, destroyed or stolen. Most policies provide 50% to 75% of your dwelling coverage for personal belongings.
For example, a $300,000 dwelling policy includes $150,000 to $225,000 in personal property coverage. Adjust this amount based on what you own.
Loss of Use Coverage (Coverage D): Temporary Living Expenses
Loss of use coverage pays for hotel bills, restaurant meals and other extra expenses when your home becomes unlivable due to covered damage. You won't pay out of pocket while contractors rebuild.
This coverage pays for hotel or rental housing, restaurant meals when you can't cook, laundry services, extra transportation costs, storage fees for your belongings and pet boarding if needed.
After a kitchen fire, you might stay in a hotel for two months while repairs happen. Loss of use coverage pays your hotel bill plus the difference between eating out and your normal grocery budget. Policies limit this coverage to 12 to 24 months, which covers typical repair timeframes.
Personal Liability Coverage (Coverage E): Protection Against Lawsuits
Liability coverage pays legal costs and damages if someone gets injured on your property or you accidentally damage their property. Without this coverage, you'd pay these costs yourself.
Liability coverage applies when a guest slips on your icy sidewalk, your dog bites someone, your tree falls and damages a neighbor's car or your child accidentally breaks expensive artwork at a friend's house.
Your liability coverage pays medical bills for injured people, legal defense costs if you're sued, court judgments against you and property damage you cause to others. Most policies start with $100,000 in liability coverage. If you have high-value assets, consider upping your limits or adding an umbrella policy for additional protection.
Medical Payments Coverage (Coverage F): Guest Injuries
Medical payments coverage pays guests' medical bills when they get hurt on your property, regardless of who's at fault. This coverage ranges from $1,000 to $5,000 per person and handles smaller injuries quickly without involving lawyers.
Medical payments cover emergency room visits, doctor appointments, X-rays, physical therapy, prescription medications and ambulance rides.
Quick payment of medical bills often prevents small incidents from turning into lawsuits. It shows good faith and helps maintain relationships with neighbors and friends.
HOW YOUR HOME INSURANCE POLICY PAYS FOR BELONGINGS
Your policy uses one of two methods to pay claims:
- Replacement Cost Value (RCV): Pays the full cost of buying new items without deducting for age or wear. If your five-year-old TV gets damaged, you get enough money to buy a similar new TV.
- Actual Cash Value (ACV): Pays current value after subtracting depreciation. That same five-year-old TV might only be worth half what you paid.
Most policies use actual cash value by default. You can upgrade to replacement cost for better protection.
What Home Insurance Doesn't Cover
Standard homeowners insurance excludes floods, earthquakes, normal wear and tear, pet damage and several other situations. You'll need separate policies or endorsements for these exclusions.
Here's what isn't covered in your standard homeowners insurance policy:
Flood and Earthquake Damage
Homeowners insurance doesn't cover damage from flooding, including water from rivers, storm surge or heavy rain that overwhelms drainage systems. Standard policies also exclude earthquake damage, including ground shaking and fault ruptures. You need separate flood insurance through the National Flood Insurance Program (NFIP) or private insurers, and separate earthquake insurance for seismic protection.
Normal Wear and Tear
Your policy covers sudden damage, not gradual deterioration from poor maintenance. Homeowners insurance doesn't cover leaking roofs from worn shingles, burst pipes from freezing in unheated areas, foundation problems from settling or mold from humidity issues.
Home-Based Business Operations
Business equipment, liability and lost income aren't covered if you run a business from home. You need separate business insurance to protect business property and liability.
High-Value Personal Items Beyond Standard Limits
Standard policies limit coverage for jewelry, art, firearms and other valuables to $1,500 each. Expensive items need separate scheduled personal property endorsements for their full replacement value.
Pet Damage to Your Property
Your pets' damage to your own property isn't covered. You pay for repairs yourself when your dog chews furniture, cats scratch floors or pets have accidents that stain carpets.
Sewer and Water Backup
Sewer backup damage can cause expensive damage but isn't covered without a special endorsement. This exclusion catches many homeowners by surprise.
Popular Homeowners Insurance Endorsements
Endorsements add coverage for situations your standard policy excludes or expand limits on existing coverages. You can customize your policy by adding endorsements based on your home's location, value and specific risks.
Natural Disaster Coverage
Earthquake coverage pays for damage to your home and belongings caused by earthquakes. Flood insurance covers damage from flooding through the National Flood Insurance Program (NFIP) or private insurers. Both require separate policies or endorsements.
Water Damage Protection
Sewer and drain backup coverage pays for water damage caused by sewer or drain backups or sump pump failures.
Scheduled personal property
Provides greater coverage for valuables that exceed the limits of your standard personal property coverage, such as jewelry, fine art or collectibles. This endorsement ensures these items are covered for their full value.
Scheduled Personal Property
Scheduled personal property coverage protects valuables beyond standard policy limits. This endorsement covers jewelry, fine art and collectibles for their full value instead of the typical $1,500 limit.
Specialized Coverage Options
Green home coverage pays additional costs for environmentally friendly materials when repairing or rebuilding your home. Identity theft and cyber coverage protects against financial losses from identity theft or cybercrime, including expenses for restoring your identity, legal fees and ransom payments in cyber extortion cases.
What Perils Homeowners Insurance Covers
Fire damage | Yes | Fire is a standard covered peril. Your policy pays to repair or rebuild your home, replace damaged belongings and cover temporary living expenses while repairs happen. |
Theft | Yes | Your personal property coverage replaces stolen belongings. Jewelry and valuables face $1,500 limits unless you add scheduled personal property coverage. |
Fallen trees | Sometimes | Covered if the tree damages your home or covered structures. Not covered if it falls on your lawn without hitting anything. |
Roof leaks | Sometimes | Covered when caused by sudden damage from storms or fallen objects. Not covered for leaks from normal wear and tear or aging shingles. |
Water damage | Sometimes | Covered for sudden pipe bursts. Not covered for flooding from natural disasters (requires separate flood insurance) or sewer backups (requires endorsement). |
Mold | Sometimes | Covered only when caused by a covered peril like a burst pipe. Not covered when caused by humidity problems or poor maintenance. |
Foundation problems | Sometimes | Covered if caused by a covered peril like sudden water damage. Not covered for settling or gradual deterioration. |
Pet damage | Sometimes | Your liability coverage pays if your pet damages someone else's property. Not covered for damage your pets cause to your own home. |
Electrical issues | Sometimes | Covered when damaged by covered perils like fire or lightning. Not covered for upgrades, routine maintenance or normal wear and tear. |
Earthquakes | No | Requires separate earthquake insurance. |
Floods | No | Requires separate flood insurance through NFIP or private insurers. |
Termites | No | Pest damage and infestations aren't covered. |
How to Determine Coverage Amounts
Calculate how much dwelling coverage you need based on local rebuilding costs, not your home's purchase price or current market value. Construction costs often exceed what you paid for your home, especially in areas with recent price increases. Online calculators provide estimates, but professional appraisals give more accurate figures for rebuilding costs.
Estimate your personal property value by creating a home inventory. Most homeowners need $150,000 to $225,000 in coverage, which represents 50% to 75% of a typical $300,000 dwelling policy. Your actual needs depend on what you own. Walk through your home room by room and document furniture, electronics, clothing and other belongings to understand your true replacement cost needs.
Consider your liability risks based on your assets and lifestyle. You need higher liability limits if you have substantial savings, investments or future earnings potential. Most policies start with $100,000 in liability coverage, but experts recommend at least $300,000. High-net-worth households should consider $500,000 or more, or add an umbrella policy for additional protection.
Understanding Coverage Deductibles
Your deductible is the amount you pay out of pocket before insurance coverage begins. Higher deductibles mean lower premiums but higher out-of-pocket costs when you file a claim.
Standard deductibles range from $500 to $2,500. In many states, percentage-based deductibles apply specifically to wind and hail damage. These are often between 1% and 5% of your dwelling coverage. For example, if your home is insured for $200,000 and has a 2% wind deductible, you must pay $4,000 before your coverage takes effect. You pay your deductible for each claim, so three claims in one year means paying your deductible three times.
Homeowners Insurance Coverage: FAQ
Here are answers to common questions about what your homeowners insurance policy covers and what it excludes.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.