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What does homeowners insurance cover?

Homeowners insurance covers the costs if a disaster damages your home or personal belongings. It also protects your assets from expensive legal settlements. Learn what's covered and not covered by home insurance.

Pat Howard 1600Jennifer Gimbel

By

Pat Howard

Pat Howard

Managing Editor & Licensed Home Insurance Expert

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

&Jennifer Gimbel

Jennifer Gimbel

Senior Managing Editor & Home Insurance Expert

Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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Expert reviewed

This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice.

Learn more about oureditorial review process.

By

Fabio Faschi, PLCS, SBCS, CLCS

Fabio Faschi, PLCS, SBCS, CLCS

Licensed Property & Casualty Insurance Expert

Fabio Faschi is a licensed property and casualty insurance agent. His expertise on home and auto insurance has been featured on Forbes, Consumer Affairs, Realtor.com, Apartment Therapy, SFGATE, Bankrate, and Lifehacker.

Updated|5 min read

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Key takeaways

  • A homeowners insurance policy is made up of six main coverages: dwelling, other structures, personal property, loss of use, liability, and medical payments coverage.

  • Together, your home insurance coverages protect your home, belongings, and finances from unexpected damage or losses that are covered under your policy.

  • Home insurance will cover damage due to fire, wind, hail, or any other covered peril, but earthquake or flood damage is generally not covered.

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What is homeowners insurance?

Homeowners insurance is a type of financial protection that covers your home, possessions, and total assets from unexpected disasters or accidents. 

For example, if your home or belongings are damaged by a fire or major storm, homeowners insurance can cover the cost of repairs so that you don’t have to. If you need to live somewhere else during repairs, insurance can pay for that, too.

In addition to paying for damage or loss to your physical property, homeowners insurance can also cover the cost of medical bills and expensive lawsuits in the event you’re legally responsible for injuring someone or damaging their property. 

Homeowners insurance coverages types

Here’s a look at the six coverages included in every basic home insurance policy and how much of each you need, according to experts at the Insurance Information Institute: [1]  

Coverage type

What it does

How much you need

Dwelling

Pays to repair or rebuild your house and structures attached to it

Enough to completely rebuild your home from the ground up

Other structures

Pays to repair or rebuild your shed, guest house, fence, or other structures on your property not attached to your home

10% of your dwelling coverage limit

Personal property

Pays to replace furniture, electronics, kitchen appliances, and other stuff you own

50% to 70% of your dwelling coverage limit

Loss of use

Pays for hotel stays, rentals, restaurant bills, and other temporary expenses while your home is being rebuilt

20% of your dwelling coverage limit

Personal liability

Pays for guests' medical bills and legal expenses if you’re found legally responsible

$100,000 to $500,000

Medical payments to others

Pays for guests' medical bills from minor injuries — regardless of who’s at fault

$1,000 to $5,000

Dwelling coverage

The dwelling portion of your homeowners insurance covers physical damage to the home itself, including the walls, roof, windows, and foundation. This coverage also covers your home’s plumbing, electrical, HVAC systems, and built-in appliances like furnaces and water heaters. If your home has an attached garage, deck, or porch, that’s generally covered as well.

Home

What type of losses are covered?

Most home insurance policies come with open perils dwelling coverage, meaning you’re covered against any type of damage or loss unless it’s specifically listed in your policy. Fire and smoke, wind, hail, snow, lightning, and many of the other most common causes of damage are covered by dwelling coverage.

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Example of when to use this coverage

Say lightning strikes a tree in your yard, causing it to fall on your roof. If you file a claim for the damage and your insurer approves it, they’ll help cover the cost of roof repairs and any other damage caused by the lightning strike — minus your policy deductible

Learn more >> How does dwelling coverage work & how much do you need?

Other structures coverage

The other structures portion of your homeowners insurance covers structures on your property not attached to your home, including detached garages, guest houses, fences, sheds, and mailboxes.

Home

What type of losses are covered?

Other structures also come with open perils coverage, meaning fire, wind, theft, vandalism and other causes of loss are covered as long as they’re not specifically excluded from your policy.

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Example of when to use this coverage

Say wind from a hurricane causes your backyard fence to blow away. You can file a claim with your home insurance company to replace your fencing — minus your policy deductible.

Learn more >> How does other structures coverage work?

Personal property coverage

Personal property coverage covers damage or theft to furniture, electronics, clothing, washing machines, sports equipment, and basically anything that you can move into or out of your home. This coverage applies to belongings inside your house and anywhere else in the world, meaning if someone steals a laptop from your hotel room, home insurance may be able to help pay for a new one.

Home

What type of losses are covered?

Unlike the dwelling and other structures portions of your policy, personal property comes with named perils coverage, meaning your belongings are protected against the 16 perils specifically listed on your policy. Examples of named perils include fire, wind, lightning, sudden and accidental water damage, and more. 

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Example of when to use this coverage

Say your laptop, cell phone, and jewelry are stolen from your hotel room while you’re on vacation. You can file a claim with your home insurance company to have your items replaced — after meeting your deductible. While homeowners insurance protects your belongings from theft both on and off your property if they’re stolen, less than 1% of home insurance losses in 2020 were theft-related, according to the Insurance Information Institute.

Learn more >> What is personal property coverage?

Loss of use coverage

The loss of use portion of your home insurance policy pays for the additional living expenses you incur if your house is badly damaged and you need to live somewhere else during repairs. Expenses that are typically covered include hotels, restaurant meals, pet boarding, dry cleaning, and transportation costs.

Home

What type of losses are covered?

If your home is being rebuilt due to a covered disaster — like a fire, hurricane, or tornado — then you’re likely eligible for loss of use payments. But if your home is damaged by a disaster that isn’t covered by home insurance — like a flood or earthquake — you wouldn’t be able to tap into your loss of use coverage.

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Example of when to use this coverage

Say your home is destroyed by a tornado and you need to live somewhere else for the time being. Your home insurance will pay for you to live in a rental home of similar value, along with any other additional living expenses while your home is being rebuilt.

Learn more >> What is loss of use coverage in homeowners insurance?

Liability coverage

Liability coverage protects your financial assets if someone is injured or their property is damaged while at your home and you’re found legally responsible and they sue you for damages. Bodily injury and property damage losses only accounted for 2% of home insurance claims in 2020, according to data from the Insurance Information Institute. [2]

Home

What type of incidents are covered?

Here are a few circumstances where your personal liability insurance will kick in to cover legal, medical, and repair bills you’re responsible for:

  • Guest is injured using your pool or trampoline

  • A food delivery person slips on your icy sidewalk

  • Your dog bites a stranger

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Example of when to use this coverage

Say a food delivery driver slips on your icy sidewalk and breaks their arm. Since it’s easy to prove you were negligent in not salting your sidewalk, your home insurance company would likely cover the driver’s medical bills and any legal bills that arise if they sue you for damages.

Learn more >> What is personal liability coverage?

Medical payments coverage

The medical payments portion of your policy covers minor injuries to guests if they’re injured on your property, whether you’re to blame or not. This is the least common type of claim — it only accounted for 0.3% of homeowners insurance losses in 2020, according to the Insurance Information Institute. [3]

Home

What type of incidents are covered?

Minor physical injuries that occur to a guest on your property — regardless of who is at fault. Covered expenses include:

  • Health insurance deductibles and copays

  • Doctor or hospital visits

  • Medical, dental, or surgical procedures

Keep in mind this does not cover injuries to family or friends who are permanent residents of the home.

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Example of when to use this coverage

Say your child’s friend slips on your pool deck, causing them to slice open their foot. Your insurance company will cover the medical payments for the child to get stitches — up to the coverage limits in your policy. If the medical expenses are any more than that, you’ll have to pay the difference out of pocket.

Learn more >> What is medical payments coverage?

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What type of damage is covered & not covered by home insurance?

Your homeowners insurance policy will list out which perils are covered and excluded. There’s some gray area to consider here as well, as some exclusions (like water damage) may actually be covered under a certain set of circumstances. 

What home insurance covers

Here’s an example of perils that are often covered and sometimes covered by homeowners insurance.

Often covered

  • Fire or lightning

  • Smoke

  • Windstorm or hail

  • Theft

  • Vandalism

  • Explosion

  • Falling objects

  • Weight of snow or ice

  • Freezing

  • Power surges

Sometimes covered

What home insurance does NOT cover

A standard home insurance policy generally won't cover the following under any circumstances:

  • Earthquakes, landslides, and sinkholes

  • Flooding, including drain and sewer backups

  • Termites, rats, and other pest infestations

  • Routine wear and tear

  • Poor maintenance or neglect

  • Home business liability

  • Local building ordinance or law requiring you to bring your home up to code

  • Intentional damage caused by you or another resident family member

  • Nuclear hazards

  • War

  • Government action

For an additional cost, some of the best home insurance companies will let you add flood or earthquake coverage to your homeowners insurance as an optional add-on. If your insurer doesn’t offer this, you’ll have to purchase separate flood or earthquake insurance to protect your home and belongings from those disasters.

Learn more >> Home insurance policy exclusions

Increase your home insurance coverage with endorsements

Most insurance companies offer a variety of optional coverages that can add an extra layer of protection for the structure of your home, increase coverage limits on expensive items like jewelry, and expand coverage to protect against losses that aren’t normally covered by a standard policy. 

Here’s a look at some popular home insurance endorsements you can add to your policy.

  • Scheduled personal property: This increases coverage limits on high-value items with lower sublimits in a standard policy, including jewelry, fine art, and firearms.

  • Water backup: This covers water damage to your home or belongings when it's caused by backed up drains, septic tanks, sewer pipes, and sump pumps.

  • Equipment breakdown: This covers this covers the cost of appliance replacement or repairs in the event the appliance breaks down due to mechanical or electrical failure.

  • Service line: This covers excavation and repair costs if there's a service line break on your property. This coverage applies to cable lines, drain pipes, Internet lines, power lines, sewer lines, and more.

  • Ordinance or law: This covers the increased cost of construction if your house is damaged and needs to be rebuilt or repaired according to local building codes.

Learn more >> 13 home insurance policy endorsements 

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How home insurance coverage works

Just about every type of homeowners insurance policy provides the same basic coverages, but the amount you’re reimbursed on a claim will depend on which level of coverage you have.

Most standard home insurance policies come with actual cash value personal property coverage and replacement cost dwelling coverage. But depending on your insurer and what they offer, you may be able to upgrade to the next level of coverage for an additional fee.

Here’s a look at how each coverage level works and which part of your policy it applies to.

Coverage level

How does it work?

Which coverage is it for?

Actual cash value

Subtracts depreciation from your claim payout

Personal property

Replacement cost value

Covers the value of damaged or stolen property without subtracting depreciation from your payout

Dwelling, other structures, and personal property

Extended replacement cost

Increases your dwelling coverage limit a specified percentage (usually 25% or 50%) if your home is damaged and your dwelling limit isn't high enough

Dwelling and other structures

Guaranteed replacement cost

Reimburses you for a full rebuild — regardless of how much it costs

Dwelling and other structures

Understanding your policy deductible

Your home insurance deductible is the amount you're responsible for paying out of pocket before your insurance kicks in to cover the rest of your claim. For example, if your house incurs $20,000 in storm damage and your deductible is $1,000, you'll need to pay $1,000 before your insurer reimburses you the remaining $19,000.

Choosing a high deductible can lower your homeowners insurance rate — in some cases significantly — but that also means you'll have to pay more out of pocket in the event of a claim.

How to find out how much coverage you need

With the rise in inflation and construction costs skyrocketing since the start of the COVID-19 pandemic, many homeowners don’t have enough coverage to fully rebuild their homes and replace their belongings should disaster strike.

Follow these steps to estimate how much coverage you need for each of the six different sections of your home insurance policy.

Home

Dwelling coverage

Multiply the square footage of your home by the average cost per square foot to build in your area

More

Other structures coverage

Multiply the square footage of the other structures on your property by the average cost per square foot to build in your area

Renters

Personal property coverage

Make a home inventory of all of your personal belongings

Save

Loss of use coverage

Add up how much you spend on living expenses like food, rent, and gas in a typical month

Disability

Personal liability coverage

Add up all of your assets — including your home, belongings, cars, investments, retirement funds, and savings

Health

Medical payments coverage

Increase limits if you own a pool, dog, or trampoline that put your guests at greater risk of injury

Most home insurance companies will help you estimate how much coverage you need for each by answering a few questions about yourself and your home. Our team of licensed insurance experts at Policygenius can also help you review your coverage limits to ensure everything you care about is fully protected.

Learn more >> How much home insurance do I need?

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Frequently asked questions

What coverages are included in a standard home insurance policy?

A standard home insurance policy includes six core coverages: dwelling, other structures, personal property, additional living expenses, liability, and medical payments to others. Together, these coverages can help pay for damage to your home and personal belongings, unexpected temporary living expenses after a disaster, and legal and medical expenses.

What is the best home insurance company?

There is no one best home insurance company — it’s all going to depend on your coverage needs and priorities. For example, Acuity topped our list of the best home insurance companies thanks to its cheap rates, while Hippo is ideal for techie homeowners and Travelers is a great option for green homes. You can learn more by checking out our complete list of the best home insurance companies of 2022.

Does homeowners insurance cover foundation issues?

Most homeowners insurance companies will cover the cost to repair or replace your foundation if the cause of damage is covered by your policy. Unfortunately, damage from the settling and shrinking of your home’s foundation, as well as earthquakes and pests are not covered by most homeowners insurance companies. You’ll need to purchase additional coverage to protect your home and property from these hazards.

What type of water damage is covered by homeowners insurance?

Water damage from burst pipes and rain or snow are covered by most homeowners insurance companies. Water damage from outside flooding and sewer backups are not covered, but you can buy separate flood insurance or add water backup coverage as an endorsement to make sure you’re fully protected.

What is the 80% rule in homeowners insurance?

If you buy a home with a mortgage, your lender will likely require you to insure your home for at least 80% of its true replacement cost, or the amount it would cost to rebuild the home from the ground up. The 80% rule also applies to how you’re paid out on a claim. If your house is insured for less than 80% of its true replacement cost and you file a dwelling coverage claim, your insurer will only pay out for the actual cash value, or depreciated value of the home.

Does homeowners insurance cover windstorm damage?

Whether or not your home insurance policy covers windstorm damage depends on where you live. Some home insurance companies exclude coverage for wind and hail if you live in an area of the country at high risk for tornadoes, hurricanes, or other types of severe weather. In this case, you'll want to look into separate windstorm insurance or coastal home insurance.

Does homeowners insurance give you both property and liability protection?

Yes, a standard homeowners insurance policy includes protection for both property damage and personal liability. That means if your home or belongings are damaged by a covereed loss, home insurance can help cover the cost of repairs. And if you're found legally responsible for someone else's injury or damage to their property, your personal liability coverage can help cover the cost of medical expenses or legal fees if you're taken to court over the matter.

Does home insurance cover "acts of God"?

An "act of God" is a natural event that is out of human control, like a hail storm, hurricane, tornado, or wildfire. Only certain acts of God are covered under a standard homeowners insurance policy, specifically hurricanes, tornadoes, lightning storms, wildfires, windstorms, and volcanic eruptions. Flood and earthquake damage is not covered by homeowners insurance, so you’ll need to add seperate flood or earthquake insurance to be covered for those losses. You can learn more with our guide to home insurance and acts of God.

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our

editorial standards.
  1. Insurance Information Institute

    . "

    What is covered by standard homeowners insurance?

    ." Accessed May 24, 2022.

  2. Insurance Information Institute

    . "

    Facts + Statistics: Homeowners and renters insurance

    ." Accessed May 24, 2022.

Authors

Managing Editor & Licensed Home Insurance Expert

Pat Howard

Managing Editor & Licensed Home Insurance Expert

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Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Senior Managing Editor & Home Insurance Expert

Jennifer Gimbel

Senior Managing Editor & Home Insurance Expert

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Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

Expert reviewer

Licensed Property & Casualty Insurance Expert

Fabio Faschi, PLCS, SBCS, CLCS

Licensed Property & Casualty Insurance Expert

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Fabio Faschi is a licensed property and casualty insurance agent. His expertise on home and auto insurance has been featured on Forbes, Consumer Affairs, Realtor.com, Apartment Therapy, SFGATE, Bankrate, and Lifehacker.

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