A standard homeowners insurance policy typically provides financial protection for your insured property, certain personal belongings and living expenses during a covered incident.
Most claims involve natural disasters, theft and accidents. Let’s say a storm hits your city. If you have sufficient homeowners insurance coverage, your policy could pay for the damages caused by wind and hail.
However, insurance has limitations. While homeowners insurance may pay for wind and hail damage, it might not compensate you for damages resulting from uncovered causes, like flooding or earthquakes. Understanding the scope and limits of your policy will help you gauge how much home insurance you need.
Table of Contents
What Does Homeowners Insurance Cover?
Homeowners insurance coverage varies from policy to policy. A standard policy doesn’t cover flood damage. In the event of a storm, you could file claims for the damages caused by strong winds and hail, but you may have to shoulder property damages caused by flooding.
Insurance compensation follows coverage limits. Let’s say you have a $20,000 policy. Even if your property sustains $30,000 worth of damage from a covered event, your claims can’t exceed your dwelling coverage limits.
Apart from structural damage, homeowners insurance also protects you against financial and legal liabilities of third-party accidents and bodily injuries that occur within your property. Your insurance may cover you for personal injury lawsuits.
What Does Homeowners Insurance Not Cover?
Insurers don’t automatically approve claims for qualified losses. Most companies won’t cover damages if the structure has pre-existing defects or underlying issues. Homeowners insurance only covers losses caused by damage, not negligence.
Let’s take burst pipes as an example. Although homeowners insurance may cover water damage, your claim will likely get rejected if your plumbing system is in bad shape. The damage must directly stem from covered incidents.
You can work around policy limits by maximizing add-ons to fill coverage gaps. Although the best homeowner insurance riders will spike your premiums, they’ll take your protection to the next level.
What Does Homeowners Insurance Cover & Not Cover: Damages & Perils
Understanding the types of damages and perils that are and aren’t covered in home insurance can help you figure out how much personal property insurance you need. MoneyGeek has compiled a table highlighting different damages and perils to help you identify what’s covered.
Items marked “No” mean that you’ll need additional coverage, while items marked “Yes” mean they are included in standard policies. Those marked “Sometimes” can depend on the insurer, as they can sometimes be included to a certain extent or need an additional policy.
What Homeowners Insurance Does & Does Not Cover
Standard Homowners Insurance Policy Coverages
Electrical Panel Replacement
Floods (Natural Disasters)
Items in storage units
Landslides and Mudslides
Sewer Line Replacement
Slips and Falls
Trampolines and Tree Houses
Wild Animal Damage
What Does Homeowners Insurance Cover for Plumbing?
Homeowners insurance provides water damage coverage on unforeseen, accidental damages. For instance, let’s say your pipes burst. If the damaged pipe froze in the middle of winter despite getting proper heating, your claim would likely get approved.
However, you may not receive compensation for damages involving issues that were blatantly overlooked. In the same example, insurers will likely reject your claim if the burst pipe stems from a leak or blockage that was ignored.
What Does Homeowners Insurance Cover for Floods?
Homeowners insurance policies come with flooded basement coverage. At a basic level, this covers flood damage resulting from sudden and accidental issues with various residential water systems, like pipes, toilets or sinks.
However, a standard policy doesn’t provide coverage for natural disaster floods stemming from hurricanes, storms or tsunamis. You need a separate flood insurance plan for these claims. Expect insurers to charge you significantly more if you live in flood-prone areas.
What Do Medical Payments on Homeowners Insurance Cover?
The medical payment insurance on a standard homeowners insurance policy pays for treatment and rehabilitation for bodily injuries sustained on your property. Note that it only covers third parties, not the policyholder or their household members.
Medical payment is not to be confused with liability insurance. The latter only provides compensation if you or a household member are at fault for the injury sustained. Medical payment insurance provides compensation regardless of who’s held liable.
Homeowners Insurance Jewelry Coverage
A standard homeowners insurance policy pays for lost and stolen jewelry. You can file a claim on losses that involve theft or peril.
For instance, if someone break into your house and steals your belongings, special personal property insurance might pay for your stolen jewelry.
Basic coverage for jewelry is relatively low. Most policies cap coverage at $1,500, which might not be enough to compensate for rare or expensive pieces with precious stones and metals.
Homeowners Insurance Service Line Coverage
Homeowners are responsible for maintaining and repairing utility lines on their property, including plumbing systems, cables, sewer lines and power lines. Utility systems will rarely need work done. However, if they get damaged due to accidents or calamities, repair bills can be steep.
If you don’t want to shoulder these expenses, a service line coverage rider can help. It will cover certain utility line damages stemming from peril and accidents.
What Does Homeowners Insurance Cover in a Fire?
Wildfire coverage pays for structural damages and covers damages to your personal belongings and expenses for temporary lodging. You could file claims until your living space becomes habitable again.
However, note that qualified claims can never exceed your policy limits. Recovering from a house fire costs a lot, and the standard coverage of a homeowners insurance policy might not suffice.
What Does Homeowners Insurance Cover for a Roof?
Roof leak coverage pays for roofing damage sustained from accidents and perils, like strong winds, hail and house fires. Note that insurers only cover well-maintained structures. Even if your claim involves a covered incident, it might get rejected if your roofing was already damaged.
What Does Homeowners Insurance Cover for Theft?
Homeowners insurance provides coverage for theft. Insurers might help pay for the items you lose and structural damages your home sustains during break-ins. To speed up claims processing, provide a detailed breakdown of all your losses.
However, don’t expect one policy to cover everything — after all, your benefits cannot exceed your personal property coverage limits. Bolster your insurance plan with other policies and riders instead.
Homeowners Insurance Coverage for Trees
Standard homeowners insurance provides coverage for fallen trees that damage your property, regardless of who owns the downed tree. Expect insurers to assess what caused the tree to fall. Although companies process claims differently, most will approve claims involving natural calamities and perils.
If the tree belongs to your neighbor, your insurer might charge the expenses to the insurance policy of the homeowner responsible. In this case, you’ll receive a deductible reimbursement.
Homeowners Insurance Fence and Additional Structure Coverage
You get limited coverage for other structures with a standard homeowners insurance policy. Insurers follow different guidelines, but most will likely extend protection to detached structures like your garage, shed, fence or mailbox. Generally, any additional structure outside your home should be covered.
Just note that coverage caps at 10% of your policy limit. If several detached structures get damaged along with your home, you might have to pay for some repairs out-of-pocket.
Homeowners Insurance Foundation Coverage
Standard homeowners insurance provides limited coverage for foundation repair. You can file claims involving perils and accidents, like ice damming, fallen trees, plumbing system issues, house fires, explosions and vehicular damage.
Standard policies don’t cover damages stemming from earthquakes, maintenance neglect or old age. Let’s say your foundation collapsed from ice damming. Your insurer might reject your claim if your foundation had hairline cracks before the incident happened.
Homeowners Insurance Mold Coverage
Contrary to popular belief, personal property insurance provides some coverage for mold growth. However, the infestation has to result from a covered incident, like extinguishing a house fire or a plumbing system leak.
That said, standard homeowners insurance still won’t cover mold growth stemming from flood damage, old age or poor upkeep. Fortunately, you can purchase extra mold contamination insurance. Expect a rigid underwriting process if you live in a humid city notorious for mold infestations.
Homeowners Insurance Pet Coverage
If your pet damages someone else’s property, you can file a claim on your homeowners insurance policy. It provides coverage for pet damage. If your pet caused third-party property damage, it may be covered.
However, do not confuse pet damage coverage for pet insurance. The latter provides compensation for the treatment and recovery of your sick pets, while the former settles third-party financial liability for pet damage.
Homeowners Insurance Pool Coverage
Homeowners insurance provides coverage for swimming pools. It covers structural damage and might help pay for the repairs stemming from a covered peril or natural calamity, but note that earthquakes aren’t covered.
Liability insurance protects your guests. You can file a claim for the treatment and recovery of third parties that sustain bodily injuries in or around your swimming pool.
What Does Homeowners Insurance Cover in a Hurricane?
Standard homeowners insurance policies provide relatively extensive coverage for hurricanes. This covers structural damage to your home and detached structures and compensates for personal belongings lost during the incident.
However, standard plans don’t cover flooding. If you need extra coverage, consider adding flood insurance riders to your existing policy.
Does Homeowners Insurance Cover Additional Living Expenses?
Additional Living Expenses (ALE) will cover most of your daily needs while you recover from a covered incident. For instance, if a hurricane destroyed your roofing, standard homeowners insurance will pay for repairs and your accommodation and meals until your living space becomes habitable again.
Just be mindful of your coverage limits. Daily expenses could quickly spike over several grand, so try not to drag repairs out too long.
Levels of Homeowners Insurance Coverage Explained
There are several types of homeowners insurance policies on the market, such as HO-3 or HO-5 policies, that differ based on their type of coverage. Coverage can either be replacement cost, actual cash value (ACV) or extended replacement costs.
Replacement cost: This pays for the cost to repair or replace property at the same or equal value.
Actual cash value: This pays for the cost to replace the property minus depreciation.
Extended replacement value: This pays for additional costs above the coverage limit if the costs to repair or replace have increased. It is often limited by a maximum percentage of your current benefit, as established by your insurer.
HO Policies Explained
There are several types of homeowners insurance policies on the market, with the most common ones being HO-3 and HO-5, reaching up to HO-8. Each type of policy covers different perils and has different coverages. If you’re in the market for a homeowners insurance policy, you’ll likely come across five policy forms, including:
HO-1: This is affordable but only provides coverage against 11 named perils. It doesn’t cover personal belongings. Most states don’t acknowledge HO-1 policies due to the narrow protection they provide.
HO-2: An HO-2 policy covers two more perils than an HO-1, namely HVAC overflow and structural damage from falling objects.
HO-3: This protects you against structural damage from a broad range of perils, excluding earthquakes and flooding. However, while it limits personal property coverage to specific incidents, it will cover your home at replacement cost and personal property at actual cash value.
HO-4: This policy form is typically reserved for those residing in apartment and condominium units. Under HO-4, personal property is covered at replacement cost.
HO-5: This is similar to HO-3. The difference between HO-3 vs. HO-5 is that the latter doesn’t limit personal property coverage to named perils, so no covered incidents are excluded.
HO-8: This is for historic landmarks and old architectural structures, with repairs and replacement costs exceeding their values.
Each policy form comes with advantages and disadvantages, but most homeowners end up with either an HO-3 or HO-5 policy form.
How to Get the Homeowners Insurance Coverage You Need
Determine How Much Coverage You Need
Your policy details shouldn’t revolve around your budget. Although it’s important to minimize expenses, settling for inadequate insurance can do more harm than good. Compute how much home insurance you need before determining your budget.
Otherwise, your household may end up underinsured and you could risk financial instability to save a few bucks a month. Don’t be afraid of exploring the riders and coverages you really need.
For accurate estimates, we suggest using a personal property calculator.
Consider How Much You Can Afford
After using a home insurance calculator to gauge your household’s coverage needs, assess how much you can afford. Insurance can get pricey. Try to keep your premiums under 10% of your income so that you have enough leeway for other expenses. Also, set realistic expectations by comparing online home insurance quotes within your budget.
Comparison Shop With Different Providers
Once you know your budget and coverage needs, it’s time to shop around for reliable yet cheap homeowners insurance. Don’t lower your coverage needs yet. Insurers follow varying pricing structures, and some companies will give you more coverage per dollar.
To jumpstart your research, read up on the average cost of home insurance.
Filing a Claim for Homeowners Insurance
Follow these steps to file a homeowners insurance claim seamlessly and efficiently.
- Step 1: Assess the damage and document everything you’ll include in your claims report. Some incidents might require police reports.
- Step 2: Reach out to your insurer, ask them to guide you through the process, and submit the necessary documents.
- Step 3: Wait for the insurance adjuster to survey your home.
- Step 4: Connect with contractors and ask for cost estimates. You might have to pay deductibles at this stage so that you can get started on the repairs. A deductible is how much you need to pay out of pocket before your insurance kicks in.
- Step 5: Wait for your insurer to assess how much you’ll receive, then decide whether to collect the settlement.
Frequently Asked Questions
We answered some common questions about what homeowners insurance covers to help you make the best decision about your coverage.
About Mark Fitzpatrick
- Insurance Information Institute. "Special coverage for jewelry and other valuables." Accessed November 22, 2022.