Understanding what’s covered by home insurance—and what homeowners insurance does not cover—is a must-know when choosing the right protection and avoiding unexpected out-of-pocket expenses when filing a claim.

---

ADVERTISEMENT

---

What does home insurance typically cover?

Homeowners insurance policies typically offer six different types of coverage:

• Dwelling
• Other structures
• Personal property
• Loss of use
• Personal liability
• Medical payments coverage

Together, these coverages can help reduce the financial impact of sudden, unexpected damage, injuries, or liability claims involving your home or property, subject to your deductible, coverage limits, and policy exclusions. You may also be able to add optional coverage, known as endorsements, for an additional cost.

Dwelling coverage (Coverage A)

Dwelling coverage, also called Coverage A, protects the physical structure of your home, along with attached structures and built-in fixtures, such as:

• Walls, both interior and exterior
• Roof
• Foundation
• Floors
• Ceilings
• Built-in appliances
• Built-in systems, such as plumbing, electrical, and HVAC
• Attached structures, like garages, decks, or porches

After you pay your deductible, dwelling coverage can help pay for covered repairs up to your policy limit.

Your dwelling coverage limit should generally equal at least 100% of your home’s replacement cost, or the cost to rebuild your home with similar materials at current labor and construction prices. 

Other structures coverage (Coverage B)

Other structures coverage, also called Coverage B, provides protection against damage to structures that aren’t directly attached to your home but are on your property, such as:

• Sheds
• Fences
• Gazebos
• In-ground pools
• Driveways
• Detached garages

Your other structures coverage limit is typically set at 10% of your dwelling coverage limit. For example, if you have a dwelling coverage limit of $300,000, you’d get a coverage limit of $30,000 for detached structures. 

This means if you want to increase coverage for detached structures, such as after adding a new greenhouse, in-ground pool, or detached garage to your home, you may need to raise your dwelling coverage limits.

Personal property coverage (Coverage C)

Personal property coverage, also called Coverage C, protects against damage to your belongings inside your home, like:

• Electronics 
• Furniture
• Clothing
• Decor
• Small appliances
• Tools

Coverage limits for personal property are typically set between 50%–70% of your dwelling coverage limit. 

While personal property typically covers items within your home, it may also cover personal items when they’re off-premises, such as while traveling or when left in your car. However, coverage for lost, stolen, and damaged items outside of your home may be less than your normal coverage–typically 10% of your personal property coverage limits.

Loss of use coverage (Coverage D)

Loss of use coverage, also called Coverage D, can help reimburse you for temporary living expenses when your home is rendered uninhabitable due to a covered loss. Additional living expenses covered typically include:

• Hotel or rent for a temporary stay
• Storage rental for personal belongings
• Food costs
• Laundry expenses
• Transportation costs and parking fees
• Pet boarding

Coverage limits for loss of use are typically set between 20% and 30% of your dwelling coverage. Additionally, coverage may only last up to a specific amount of time that varies between insurance companies—often 12 to 18 months. However, coverage for additional living expenses will usually extend up to the full time limit, even if your policy ends before the limit is reached.

Personal liability coverage (Coverage E)

Personal liability coverage, also called Coverage E, protects you when you or anyone in your household is found liable for injuries or property damage to someone else–whether inside or outside your home. 

Personal liability protection can help cover:

• Medical bills for bodily injuries
• Replacement or repair of property damage
• Legal fees and settlements for related lawsuits

While personal liability coverage doesn’t feature a deductible, you’ll still be subject to the coverage limits you choose. Ideally, you’ll choose between $300,000 and $500,000 to ensure you’re protected in the event of an accident. If you’re high net-worth, you may need much more than that.

Medical payments coverage (Coverage F)

Medical payments coverage, also called Coverage F or MedPay, helps pay for minor expenses when a guest is injured on your property–regardless of fault. It may also cover injuries that occur away from the home, although these claims typically require you or a household member to be liable. 

Expenses for guests and those outside your household that are covered under medical payments coverage often include:

• Ambulance fees
• Hospital stays
• Emergency medical services
• Surgery
• X-ray and diagnostic imaging
• Dental services
• Doctor visits
• Health insurance deductibles and co-payments

Medical payments coverage is designed for smaller injuries, meaning limits are typically capped at $1,000 to $5,000 per occurrence.

What events are covered by home insurance?

Your home insurance coverage applies under either open “perils,” sometimes called all-risk, or named perils policy, depending on the type of coverage.

• Open perils coverage: Covers all perils that aren’t explicitly excluded in the policy.
• Named perils coverage: Only covers perils that are explicitly listed in the policy.

While named perils policies can vary in what they cover, there are a handful of perils generally covered by homeowners insurance:

• Fire or lightning
• Windstorm or hail
• Explosions
• Riot or civil commotions
• Vehicle damage
• Aircraft damage
• Smoke
• Vandalism
• Theft
• Volcanic eruptions
• Falling objects
• Weight of sleet, snow, and ice
• Water or steam discharge from home systems and appliances 
• Sudden and accidental tearing, cracking, burning, or bulging of home systems 
• Freezing
• Sudden and accidental power surges

Whether your coverage is on an open or named perils basis depends on the type of homeowners insurance policy you have. For example, an HO-1 policy only provides named perils coverage, even for dwelling and other structures. Meanwhile, an HO-3, the most common type of homeowners policy, features open perils coverage for dwellings and named perils coverage for personal property.

What isn’t covered by home insurance?

Regardless of whether your coverage operates on an open or named perils basis, your policy will typically outline exclusions for certain types of claims.

Specific exclusions will vary depending on your policy, so ensure you review yours to determine whether you need a separate policy or endorsement to fill any gaps that are important to you

Below are some of the more common home insurance exclusions to know.

Flood damage

Flood damage to your dwelling, detached structures, and personal property is typically excluded from standard home insurance coverage, regardless of how the flooding occurs. However, this coverage is typically available as a separate policy through the National Flood Insurance Program (NFIP) and some private insurers.

Earthquakes and ground movement

Most homeowners insurance policies exclude damage caused by earthquakes, sinkholes, landslides, and other forms of ground movement. 

However, while damage from earthquakes and ground movement typically isn’t covered without a separate policy, damage resulting from an earthquake could be covered. For example, while homeowners insurance won’t cover you for damage to your foundation caused by an earthquake, damage to your home from a fire that started due to the earthquake’s aftershocks would typically be covered.

Maintenance problems

Damage from lack of maintenance or from general wear and tear is typically excluded from homeowners coverage. For example, if you don’t regularly clean your chimney and a house fire results when you light your fireplace, you may not be covered for damage to your home or personal belongings.

Pest and rodent control

Pest and rodent control for infestations is typically excluded from homeowners coverage, as it is considered part of routine homeownership maintenance. Getting routine pest inspections and taking necessary precautions to keep pests out of your home can help you prevent infestations and reduce the cost of regular pest control.

Mold damage

Mold damage is often excluded when resulting from a lack of maintenance, such as water dripping from a leaky pipe over a long period of time. Additionally, mold caused by water from outside your house, such as flooding, is typically excluded. However, mold damage resulting from a sudden, unexpected accident, such as a burst pipe, may be covered.

Sewer backups

Damage caused by wastewater that flows into your home through your toilet, drain, or floor from the sewer or a septic system is typically excluded from homeowners insurance coverage, as the connection between your home and the sewer is considered a maintenance issue and is the homeowner’s responsibility to fix. Regularly having your pipes and the area around them inspected can help you prevent future issues, such as preventing a tree root from growing into the sewer line on your property. A separate endorsement can also help you cover damage from sewer backups.

Intentional damage

Damage you intentionally cause to your home or personal property is excluded from homeowners insurance coverage Your personal liability protection also likely excludes property damage or injuries intentionally caused.

High-value items above policy limits

Individual items with high values, such as jewelry or fine art, may be subject to a sublimit, which caps the amount they’re covered for in a claim. For example, you may have a sublimit of only $1,000 to cover all of the pieces of jewelry in your home, even if the total value of your collection is significantly higher.

Even if you receive some coverage for high-value items that are lost, stolen, or damaged, you may not be covered for their full value.

Coverage homeowners should consider

While homeowners insurance provides broad coverage against a range of costly losses, there are ways to expand coverage through optional endorsements or separate policies. Some coverages that homeowners should consider include:

• Flood insurance
• Earthquake insurance
• Identity theft coverage
• Umbrella insurance
• Commercial insurance for a home business
• Scheduling high-value personal property
• Water backup coverage

The right optional coverage depends on your home’s location, personal property, lifestyle, and financial situation. For example, homeowners in flood-prone areas may benefit from flood insurance, while those with valuable jewelry, collectibles, or fine art may opt for scheduled personal property coverage (individually listed high-value objects).

An insurance agent can help you to identify coverage gaps and recommend endorsements or policies that fit your needs.

---

ADVERTISEMENT

---

What is and isn’t covered by home insurance at a glance

Here’s what you need to know about home insurance coverage and exclusions:

• Home insurance coverage will protect you from losses or damage to your home, detached structures, your personal property, accidents you’re liable for, expenses when your home becomes uninhabitable, and small medical bills for guests injured on your property.
• Your home insurance typically only protects up to your policy’s limits for each type of coverage. You’ll need to pay out of pocket for costs that exceed your limits.
• Home insurance coverage operates as either open perils (all perils are covered except for those explicitly excluded) or named perils (the only perils covered are those explicitly listed in the policy).
• Commonly covered perils include fire, lightning, hail, windstorms, theft, vandalism, falling objects, and more, although specific covered perils can vary between types of home insurance policies.
• Commonly excluded perils include losses due to intentional acts, lack of maintenance, floods, earthquakes, pests, and sewer backups.

How to review your homeowners coverage before you need it

You should ideally review your homeowners coverage annually to stay up to date on any exclusions and to check that your current coverage meets your needs. A few things to keep in mind during coverage review include:

1. Review your home’s value and the cost to rebuild, as material costs may have increased. You may need to increase your coverage limits to account for higher rebuild costs.
2. Determine whether your deductible is correct, as it’s the amount you’ll need to cover out of pocket when making a claim.
3. Check whether you’re in an area vulnerable to floods or earthquakes, and consider purchasing the relevant coverage if you are at risk.
4. Understand what portions of your policy are open perils compared to named perils, as some home insurance policies may vary between coverage types.
5. Learn what your policy explicitly covers and excludes, as you may need to supplement your policy with optional endorsements based on your coverage needs.

The takeaway

You’ve got myriad options when it comes to home insurance. Don’t assume that you’ve got the coverage you need just by opening a standard policy. While most cover events like fire and hail, you’ll still be on the hook for disasters like flooding and sewage issues. Fortunately, there’s an endorsement for (nearly) every need.

Frequently asked questions

How much homeowners insurance coverage do I need?

Here’s a quick rule of thumb to calculate how much homeowner’s insurance coverage you need: Consider a minimum amount of dwelling coverage equal to the square footage of your home multiplied by the local rebuilding cost for each square foot. You should also review your personal property, liability, and loss-of-use coverage limits to ensure they adequately protect your household.

Is home insurance required by law?

No, you’re not required by law to purchase home insurance. However, you may be required to purchase a homeowners insurance policy as part of your house’s mortgage agreement.

Does home insurance cover water damage?

Sudden and accidental water damage, such as a burst pipe or ruptured water heater, is typically covered under your homeowners insurance policy. However, water damage caused by negligence or lack of maintenance, sewage and drain backups, and flooding aren’t typically covered and may require a policy endorsement.

What perils are excluded from home insurance?

Perils that are commonly excluded from homeowners insurance coverage include, flooding, earth movements (earthquakes and sinkholes), intentional acts and negligence, war and nuclear hazards, pests, power failures from outside your home, general wear and tear, and more. However, some of these commonly excluded perils could be covered with optional endorsements.

Is foundation damage covered by homeowners insurance?

Foundation damage is typically covered by your homeowners insurance, provided the damage is caused by a covered event. For example, damage to your foundation due to a falling tree may be covered, but damage due to a lack of maintenance likely won’t be.

What happens if my home is underinsured?

If your home is underinsured, you will need to pay the difference for losses and repairs beyond your coverage limits. In some cases, that’ll result in delayed or incomplete repairs and a lack of additional living expenses if your house is left uninhabitable.