Q

What does homeowners insurance cover?

A

Homeowners insurance covers your house and personal belongings if they’re damaged or burglarized, but certain types of property damage isn't covered.

Pat Howard 1600

Pat Howard

Published October 8, 2019

KEY TAKEAWAYS

  • Homeowners insurance covers your home, your personal property, and your combined assets in the event you’re sued or held liable for medical payments

  • Homeowners insurance covers you against hazards, or perils listed in your policy

  • Each coverage in your policy is insured up to the limit detailed on your declarations page

Homeowners insurance is perhaps the most essential form of financial and personal property coverage, as most of your assets and wealth are tied up in your home. With homeowners insurance, you have coverage for the home itself, your personal belongings, and legal and medical expenses in the event you’re held liable for an accident.

So what types of damage does homeowners insurance cover, and what doesn’t it cover? The most common perils associated with homeowners insurance coverage are fire, wind and hail, water damage, and theft, but some types of water damage—such as flooding and gradual leaks—aren’t covered, and while theft is covered, there are limits on how much they’ll pay out to cover certain types of personal property.

In this article:

What does homeowners insurance protect you from?

A regular homeowners insurance policy clearly spells out which perils are covered and which perils aren’t covered.

With dwelling and other structures coverage, you’re covered by what’s referred to as open perils or all risks, which is a slightly misleading way of saying that you’re covered against everything except what’s specifically listed in that section of the policy.

With personal property coverage, you’re covered by named perils, meaning you’re covered from the 16 perils named in the policy.

What perils are covered?

According to a standard Insurance Services Office (ISO) HO-3 policy (the template for most insurance policies), you’re insured against the following perils.

What does homeowners insurance not cover?

The most common exclusions that not even the best homeowners insurance company will cover include the following.

  • Earth movement (earthquakes, landslides, mudslides, subsidence, sinkholes, and so on)
  • Water damage (when it’s from flooding, surface water, waves, tidal water, a sewer backup, or groundwater seeping up into the home)
  • Power failure
  • Neglect
  • Ordinance of law (meaning the government orders you to tear down, rebuild, or renovate your home to meet local ordinances)
  • War
  • Nuclear hazard
  • Intentional loss
  • Governmental action
  • Mischievous acts
  • Birds, vermin, rodents, or insects
  • Animals owned by an insured
  • Mold, fungus, or wet rot (unless it’s hidden within the walls or ceilings or beneath floors after an accidental discharge or overflow of water from plumbing or HVAC systems)
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What does homeowners insurance cover?

Coverage typeWhat does it cover?What's the coverage limit?Do you have to pay a deductible?
Dwelling coverageCovers the structure of your home and built-in appliancesShould be equal to your home's replacement costYes
Other structures coverageCovers detached structures on your property10% of dwelling coverageYes
Personal property coverageCovers your personal belongings both inside and outside the home50% of dwelling coverageYes
Loss-of-use coveragePays for additional living expenses while your home is being repaired20% of dwelling coverageYes
Personal liability coveragePays for legal and medical bills if you're held liable for injury or personal property damage to someone else$100,000-$500,000No
Medical payments coverageIf a guest is injured in your home, it pays for their medical bills, regardless of who is at fault$1,000-$5,000No

A standard homeowners insurance policy is made up of six basic protections that provide financial protection against disasters, burglary, and accidents. Those protections include coverage for the structure of your home and other structures on your property; coverage for your personal property; coverage for additional living expenses; and personal liability protection. Insurance companies also offer expanded protection or endorsements that you can add to your homeowners insurance policy for a small additional premium.

Coverage for the structure of your home and additional structures

Also referred to as your policy’s dwelling coverage, it provides coverage against physical damage to the structure of the home up to your dwelling coverage limit. With dwelling coverage, your home’s foundation, exterior walls, interior walls, floors, cabinetry, plumbing, water heaters, and basically anything that is built into the home is covered.

In a standard HO-3 homeowners policy, your home is typically covered at its replacement cost, meaning the amount you’re reimbursed for a loss is equal to what it would cost to rebuild the home at today’s prices. Your insurer may offer extended or guaranteed replacement cost coverage, which insures you for an amount beyond your home’s coverage limit in the event that rebuild costs suddenly increase.

Your policy also covers detached structures on your property such as your garage, work shed, fence, or gazebo. Your other structures coverage limit is typically 10% of your policy’s dwelling coverage limit.

Learn more about dwelling coverage and other structures coverage.

Coverage for your personal property

Homeowners insurance also includes coverage for your personal belongings regardless of where they’re located. If someone breaks into your home and steals your stuff, it’s covered; if someone breaks into your hotel room or storage unit and takes your stuff, that is also covered. Personal property coverage also covers guests’ personal property from damage or theft as long as their property is on your property at the time of the loss.

Your personal property by default is covered at its actual cash value, but most insurance companies will let you upgrade your personal property reimbursement terms to replacement cost coverage.

Certain types of personal property have special limits of liability, or sublimits, which essentially is a maximum amount they’ll pay out for certain items. For example, a standard policy will typically only pay out a maximum of $1,500-$2,000 for theft loss of jewelry, watches, precious stones, and furs. Expensive art, electronics like an entertainment system, and firearms have similarly strict sublimits. You’ll need to add a scheduled personal property endorsement to your policy to increase your coverage limits on expensive valuables.

Learn more about personal property coverage here

Coverage for your additional living expenses

Also referred to as loss-of-use coverage, your homeowners policy also covers the cost of additional living expenses if a covered peril damages your house and you need to live somewhere else while it’s repaired or rebuilt. It covers everything from hotel bills to restaurant meals to the rental value of the property if you were renting it out as a source of income.

Your coverage may be time-limited, or depending on your policy it may last as long as it takes to repair or rebuild your home. Your loss-of-use coverage limit is also typically limited to 20% of your dwelling coverage limit. Once you run out of coverage, you’ll need to pay for additional living expenses out of pocket.

Learn more about additional living expenses here

Coverage for your personal liability and medical payments to others

In addition to several property coverages, homeowners insurance also includes personal liability protection in the event you’re held liable for someone’s injury or damage to their property. It pays for court or medical expenses up to your coverage limit if it’s determined that you’re liable and that the claimed occurrence was an accident and not intentional.

Like personal property coverage, personal liability coverage covers occurrences that happen on your property as well as away from the premises. If a guest slips and falls on the walkway to your home, that’s covered. If you accidentally concuss an opponent playing rec league basketball and the injured party sues you, that may also be covered by personal liability coverage.

You can choose anywhere from $100,000 to $500,000 in personal liability coverage. If you have assets in excess of $500,000 and you’d like more financial security, you can add personal umbrella insurance to your policy. It provides broader liability protection and higher coverage limits than standard homeowners insurance.

Your policy also includes no-fault medical payments coverage, so if a guest is injured in your home, they can simply bill your insurer for the medical expenses. You have the choice of anywhere from $1,000 to $5,000 in medical payments coverage.

Learn more about personal liability and medical payments coverage

Additional homeowners insurance coverage considerations

There are certain kinds of personal property and hazards whose coverage status varies depending on the type of policy or insurer you have, what state you live in, and generally require more nuance when discussing when they’re covered and when they’re excluded from a policy. It's important to read the fine print or talk to your insurance agent directly about these gray areas.

To give you a better idea of what we’re talking about, we put together a list of property types and hazardous instances that are sometimes covered, but sometimes aren’t.

Aluminum wiring

Most homeowners insurance companies won’t cover damage or losses if aluminum wiring is either the direct or indirect cause of a fire or fire-related hazard, but there are special exceptions, like if certain safety modifications are made to the wiring by a licensed electrician.

If there is still a wiring hazard after the insurer-requested modifications are made, the losses and damage are covered. Otherwise, the insurance company will either list aluminum wiring as an exclusion, or they’ll flat out refuse to insure a home with aluminum wiring altogether.

Pool

Property damage to a pool is typically covered if it’s damaged by one of the covered perils in a named or open peril policy; an in-ground pool is covered by personal property coverage, while an above-grounder is typically covered by other structures coverage.

Liability coverage is where owning a pool gets a little tricky. Most homeowners insurance plans have a base liability coverage amount of $100,000. If you have a pool, the Insurance Information Institute suggests adding a personal umbrella policy to increase your liability coverage above the limits of your homeowners insurance policy.

Pets

Dog bites are typically covered under standard homeowners insurance policies, but it's common for insurers to exclude certain breeds or turn you down entirely because of your dog’s breed.

Trampolines

Varies by the state and type of policy. Trampolines are generally covered by personal property coverage and liability coverage unless they’re specifically excluded.

Insurance companies may also require safety precautions like protective netting around the trampoline exterior as a condition for coverage.

Air conditioning units

Covered under the same risk-events as the rest of your home, unless specifically excluded in an open peril policy. Damage done to your A/C as a result of use or wear and tear isn’t covered by homeowners insurance.

Fences

Fences are usually covered by the other structures provision of a homeowners insurance policy as long as the perils that caused its damage are part of your policy’s accepted risk events, such as fallen trees or storms.

Common exclusions to fence damage coverage are damage as a result of neglect or lack of maintenance, fence mold, or fence termites. The policy may also have a cap on other structure repairs, commonly $20,000, so if your fence damage is above that limit, you may have to pay out-of-pocket expenses.

Foundation repair

Damage to your housing foundation is covered by homeowners insurance unless specifically excluded in a policy. Similar to A/C units and fencing, foundation repairs are covered by accepted risk-events in a standard policy.

Plumbing

Plumbing issues are covered by standard homeowners insurance policies, but typically only if the damage was sudden or abrupt. If there was a leak that accumulated over a number of years and eventually the pipe burst and ruined all your stuff, the plumbing might not be covered and unfortunately, the same goes for your personal belongings. Make sure to check with your insurance agent about the types of plumbing-related hazards that are covered.

Roof damage

In most cases, roof damage is considered structural damage and covered by dwelling coverage. If your tool shed or detached garage incurs roof damage, it would be covered under other structure coverage. Homeowners insurance may also cover roof leaks if they’re caused by a covered peril.

If the roof is old and you never took steps to repair it and it fell through, that counts as neglect and won’t be covered. Keep in mind that roof damage can be expensive, so depending on the size of your house, you’ll want to carefully select a deductible and coverage limit that covers potentially pricey repairs.

Tree removal

Tree removal is covered by most policies if the following conditions are met:

Cause of tree fallingWhere tree fellIs tree removal covered?
Windstorm, hail, iceOn the houseYes
Windstorm, hail, iceOn empty space or lawnNo
Fire, lightningHouse, empty space, or lawnYes
Explosion, vandalismHouse, empty space, or lawnYes
AircraftHouse, empty space, or lawnYes
Rot, ageHouse, lawn, empty spaceNo
Flood, earthquakeHouse, lawn, or empty spaceNo

If the tree originated in your neighbor’s yard and fell on your house or lawn, your insurance company will cover it, but they may try and recoup the losses through your neighbor’s homeowners insurance company.

Your policy may also include a limit on how much your insurance company is willing to pay in tree-removal expenses, usually about 5% of your dwelling coverage. If your dwelling coverage is $200,000, that leaves you about $10,000 in coverage for tree removal. Furthermore, there’s a limit on how much your insurer will pay to have individual trees removed—$500 in most cases, and ostensibly enough cash to remove a single tree.

Understanding deductibles

Before your insurance company will pay you for a loss, you first need to pay your policy deductible.

Deductibles range from anywhere from $500-$2,000—some companies offer even higher deductible plans homeowners looking for a lower premium. You typically need to pay a deductible for property-related claims, but you don’t have to pay a deductible for liability claims.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.