What Does Homeowners Insurance Cover and Exclude?

Home insurance protects you financially when unexpected events damage your house and belongings. Here's the simple way to explain what it covers:

Here’s the six standard homeowners insurance coverages:

Dwelling coverage pays to repair or rebuild your home after damage from covered events. This includes the walls, roof, foundation and built-in systems like plumbing and electrical.

What dwelling coverage includes:

• Walls and roof structure
• Foundation and floors
• Windows, doors and frames
• Built-in appliances like central air conditioning
• Plumbing, electrical and heating systems
• Attached structures like garages or decks

Your dwelling coverage limit should equal 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 pays for buildings on your property that aren't attached to your main house. Most policies provide 10% of your dwelling coverage for these structures.

Covered structures include:

• Detached garages and workshops
• Garden sheds and storage buildings
• Fences and gates
• Gazebos and pergolas
• Swimming pools and pool houses
• Driveways and walkways
• Guest houses or in-law suites

If you have expensive detached structures, you can increase this coverage. A $300,000 dwelling policy typically gives you $30,000 (10%) for other structures, but you might need more if you have a large detached garage or pool house.

Personal property coverage replaces your belongings when they're damaged, destroyed or stolen. This includes furniture, electronics, clothing and most items you own. Personal belongings covered by homeowners insurance include:

Items typically covered:

• Furniture and home decor
• Electronics and appliances
• Clothing and personal items
• Tools and sporting goods
• Jewelry up to a limit
• Cash up to a limit

How much coverage do you need? Most people need 50% to 75% of their dwelling coverage, but your unique situation may require more or less coverage. High-value items like expensive jewelry or fine art may exceed standard coverage limits. You should consider adding a scheduled personal property endorsement to your policy to ensure these valuables are fully protected.

Your policy coverage pays for belongings in one of two ways:

1. Replacement Cost Value (RCV): Pays 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.
2. Actual Cash Value (ACV): Pays current value after subtracting depreciation. That same five-year-old TV might only be worth half what you paid, so you'd get less money.

Most policies use actual cash value for belongings by default, but you can upgrade to replacement cost for better protection.

When your home becomes unlivable due to covered damage, loss of use coverage pays for temporary housing and extra expenses. You won't pay out of pocket while contractors rebuild.

What's covered:

• Hotel or rental housing costs
• Restaurant meals when you can't cook
• Laundry and dry cleaning services
• Extra transportation costs
• Storage fees for your belongings
• Pet boarding if needed

Example: After a kitchen fire, you 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 for most damage.

Liability coverage pays legal costs and damages if someone gets injured on your property or you accidentally damage their property. Without this protection, you'd pay these costs yourself.

Common liability scenarios:

• Guest slips on your icy sidewalk and breaks their leg
• Your dog bites a neighbor or delivery person
• Your tree falls and damages neighbor's car
• Your child accidentally breaks expensive artwork at friend's house
• Someone drowns in your swimming pool

What liability coverage pays:

• Medical bills for injured people
• Legal defense costs if you're sued
• Court judgments against you
• Property damage you cause to others

Most policies start with $100,000 in liability coverage, but our home insurance experts recommend at least $300,000. If you have significant assets, consider $500,000 or add an umbrella policy.

Medical payments coverage pays for guests' medical bills when they get hurt on your property, regardless of who's at fault. This helps handle smaller injuries quickly without involving lawyers.

Covered expenses:

• Emergency room visits
• Doctor appointments
• X-rays and diagnostic tests
• Physical therapy
• Prescription medications
• Ambulance rides

This coverage typically ranges from $1,000 to $5,000 per person. It's designed for minor injuries - serious accidents would fall under your liability coverage instead.

Why it matters: 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.

Homeowners insurance doesn't cover damage from floods, earthquakes, routine wear and tear or mold and rot. These exclusions require separate policies or specific endorsements for protection. Here's what isn't covered in your standard homeowners insurance policy:

In addition to standard home insurance coverages, homeowners can add endorsements or additional coverages to their policy, such as scheduled personal or sewer coverage. These optional policy enhancements provide extra protection tailored to specific risks or valuable items not fully covered under a standard policy.

Below are common home insurance endorsements, each offering distinct benefits to help safeguard your home and assets.

Homeowners insurance is designed to cover sudden and accidental incidents, such as a fire or theft. We've compiled a table highlighting different damages and perils to help you identify what’s covered.

Items marked “No” mean that you’ll likely need additional coverage, while items marked “Yes” mean they are typically included in standard policies. Those marked “Sometimes” can depend on the insurer because they can sometimes be included to a certain extent or need an additional policy.

Here is a summary of how to determine how much coverage you need.  

• Calculate dwelling coverage based on local rebuilding costs, not your home's purchase price or current market value. Online calculators provide estimates, but professional appraisals give more accurate figures.
• Estimate personal property value by creating a home inventory. Most people own $50,000 to $100,000 worth of belongings, but yours might be higher or lower.
• Consider liability risks based on your assets and lifestyle. If you have significant savings, investments or future earnings potential, you need higher liability limits.

Account for local factors:

• Hurricane-prone areas need wind/hail deductibles
• Wildfire risk areas should consider extended replacement cost
• Flood zones require separate flood insurance
• Earthquake areas need earthquake coverage

Your deductible is the amount you pay out-of-pocket before your insurance coverage begins.  Choosing a higher deductible typically results in lower insurance premiums, but it also increases your 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 percent and 5 percent of your dwelling coverage. For example, if your home is insured for $200,000 and has a 2 percent wind deductible, you would need to pay $4,000 before your coverage takes effect. Per-occurrence deductibles apply to each individual claim event, so if you file three separate claims in one year, you'd pay your deductible three times.

We answered some common questions about homeowners insurance coverage to help you make the best decisions about your coverage.

Learn more about specific homeowners insurance coverage scenarios:

Structural Coverage Questions:

• Does homeowners insurance cover structural damage?
• Does homeowners insurance cover furnace replacement?
• Getting homeowners insurance to pay for new windows
• Does homeowners insurance cover other structures?

Water and Plumbing Coverage:

• Does homeowners insurance cover water damage?
• Does homeowners insurance cover plumbing?
• Does homeowners insurance cover sewer line replacement?
• Does homeowners insurance cover septic tanks?

Personal Property and Valuables:

• Does homeowners insurance cover jewelry?
• Does homeowners insurance cover pet damage?
• Does homeowners insurance cover theft from car?
• Does homeowners insurance cover theft outside the home?

Natural Disasters and Tree Damage:

• Does homeowners insurance cover natural disasters?
• Does homeowners insurance cover tree removal after a storm?
• Does homeowners insurance cover tree damage to neighbor's property?

Liability and Special Situations:

• Does homeowners insurance cover dog bites?
• Does homeowners insurance cover college students?
• Does homeowners insurance cover vehicles in driveway?
• Does homeowners insurance cover asbestos removal?