What Does Homeowners Insurance Cover and Exclude?

Here are the six standard homeowners insurance coverages:

*Coverage requirements and availability vary by state. Check with licensed agents in your area for specific regulations.

Dwelling coverage pays to repair or rebuild your home after fires, storms or other disasters. This includes the walls, roof, foundation and built-in systems like plumbing and electrical.

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 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.

This coverage includes:

• 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 gives you $30,000 (10%) for other structures, but you'll need more if you have a large detached garage or pool house.

Personal property coverage replaces your belongings when damaged, destroyed or stolen. This includes furniture, electronics, clothing and most items you own. Your policy covers these belongings:

• 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 policies default to 50% to 75% of your dwelling coverage. For example, a $300,000 dwelling policy provides $150,000 to $225,000 in personal property coverage. Adjust this amount based on your belongings' actual value.

High-value items like expensive jewelry or fine art exceed standard coverage limits. To fully cover these high-value items, add a scheduled personal property endorsement.

Your policy pays for belongings using one of two methods:

1. Replacement Cost Value: 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.
2. Actual Cash Value : 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.

Loss of use coverage pays for temporary housing and 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 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 for legal costs and damages if someone gets injured on your property or you accidentally damage their property. Without this financial protection, you'd pay these costs yourself.

Liability coverage applies when:

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

Your liability coverage handles:

• 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. Our home insurance experts recommend at least $300,000. If you have high-value assets, consider $500,000 or adding an umbrella policy.

Medical payments coverage pays 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.

Medical payments cover:

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

This coverage ranges from $1,000 to $5,000 per person and handles smaller injuries quickly. Larger claims fall under your liability coverage, which has higher limits.

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 covers sudden disasters and accidents, such as fires or theft. We've compiled a table showing which types of damage are covered.

Items marked “No” mean that you’ll likely need additional coverage, while items marked “Yes” mean they're 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's how to know 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 homeowners need $150,000 to $225,000 in coverage (50% to 75% of a typical $300,000 dwelling policy), though your needs differ based on your actual belongings.
• Consider liability risks based on your assets and lifestyle. You need higher liability limits if you have large savings, investments or future earnings potential.

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 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.

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

• Structural damage
• Furnace replacement
• New windows
• Other structures

Water and Plumbing Coverage

• Water damage
• Plumbing
• Sewer line replacement
• Septic tanks

Personal Property and Valuables

• Jewelry
• Damage by pets
• Theft from a car
• Theft outside the home

Natural Disasters and Tree Damage

• Natural disasters
• Tree removal after a storm
• Tree damage to the neighbor's property

Liability and Special Situations

• Dog bites
• College students
• Vehicles in the driveway
• Asbestos removal