Buying a home is one of life’s biggest investments, and protecting that investment should be a top priority. Homeowners insurance serves as a crucial financial safety net, shielding you from devastating losses when unexpected events strike.
But what does homeowners insurance cover?
Understanding your homeowners insurance coverage isn’t just about ticking a box for your mortgage lender. It’s about protecting your home, your belongings, and your financial future.
This article explores what homeowners insurance covers, what it doesn’t, and why knowing the difference could save you thousands when the unexpected happens.
Breakdown of Standard Homeowners Insurance Coverage
A standard homeowners insurance policy provides protection through six main types of coverage.
So what does house insurance cover? Homeowners insurance is a safety net for your home, belongings, and financial well-being by protecting against risks like fire, windstorms, theft, and certain types of water damage.
Dwelling Coverage
Dwelling coverage protects your home’s physical structure, including walls, roof, foundation, and permanently attached structures like built-in appliances or attached garages. Coverage reflects your home’s replacement value rather than market value.
When fire or lightning strikes, which accounts for 21.9% of homeowners insurance claims, dwelling coverage helps rebuild or repair your home. The average fire claim reaches $83,991, making this protection invaluable.
Other Structures Coverage
Detached structures on your property — fences, sheds, detached garages, or gazebos — fall under separate structures coverage. This protection provides coverage limits of 10% of your dwelling coverage amount.
Personal Property Coverage
Personal property coverage protects belongings inside your home, including furniture, clothing, electronics, and appliances. This coverage extends beyond your home to protect items temporarily away from your property.
Most policies provide personal property coverage equal to 50-70% of your dwelling coverage amount. High-value personal items like jewelry, art, or collectibles may require additional coverage.
Loss of Use (Additional Living Expenses)
When your home becomes uninhabitable due to a covered loss, loss of use coverage helps pay for temporary housing, meals, and other additional living expenses. This becomes important, considering around 1 in 20 insured homeowners file a claim each year.
Personal Liability Coverage
Personal liability coverage protects you when someone gets injured on your property or when you accidentally cause property damage to others. This coverage handles legal expenses and damages, typically providing $100,000 to $500,000 in protection.
Bodily injury claims under personal liability can be over $30,000, making this protection essential. For additional protection, consider an umbrella insurance policy.
Medical Payments to Others
Medical payments coverage handles small medical expenses for guests injured on your property. Coverage typically ranges from $1,000 to $10,000.
Common Events Covered by Most Policies
When it comes to home insurance, "What does it cover, how much protection do you get, and which events trigger payouts?" are some of the most important questions to ask. Most policies cover:
- Fire damage, including smoke damage, ranks among the most expensive claims. Most policies offer comprehensive coverage for structural damage and personal belongings.
- Theft accounts for only 0.7% of claims but averages $5,024 per incident. Coverage includes stolen belongings and damage during break-ins.
- Windstorms and hail represent the most frequent claims at 40.7% of all incidents, with average claims of $13,511. This covers roof damage, broken windows, and related repairs.
- Vandalism coverage protects against intentional property damage, including graffiti removal and broken windows.
- Certain water damage incidents are covered, particularly sudden and accidental water damage like burst pipes. However, water damage homeowners insurance has specific policy limits.
What Homeowners Insurance Does Not Cover
So, what does homeowners insurance not cover? While standard policies provide broad protection, several significant exclusions could leave you vulnerable if you don’t realize there’s a gap in your coverage.
Flood and Earthquake Damage
Flood damage represents the most significant gap in standard coverage. Despite 99% of U.S. counties experiencing floods, only about 4% of homeowners nationwide carry flood insurance. Over 80% of homes under evacuation orders before Hurricane Ian lacked flood insurance.
Earthquake damage faces similar exclusions. Nationally, only about 11% of homeowners have earthquake insurance, and even in California, just 10% of residents carry this protection.
Wear and Tear or Maintenance Issues
Standard policies don’t cover damage from normal wear and tear, maintenance issues, or gradual deterioration. Types of neglect that aren’t covered include:
- Old plumbing failures
- Termite damage
- Mold from poor ventilation
- Roof leaks from aging materials
High-Value Personal Items
While personal property coverage protects most belongings, high-value items like expensive jewelry, art collections, or collectibles often exceed standard coverage limits and require separate insurance.
When To Consider Extra Coverage or Policy Add-ons
To fill coverage gaps, you might benefit from additional coverage. Flood insurance becomes essential in flood-prone areas, while earthquake coverage provides peace of mind in seismically active regions. Personal property replacement cost coverage ensures you can replace belongings at current prices rather than depreciated values.
How To Make Sure You’re Adequately Covered
With reports suggesting 75% of U.S. homeowners could be underinsured, finding adequate coverage requires careful attention. Start by conducting a thorough home inventory to document your belongings and their values.
Review your coverage annually to account for home improvements, local construction cost changes, and inflation. Your coverage limit should reflect replacement cost, not market value.
Work with an insurance professional to ask questions like, “What does my home insurance cover?” and assess your liability coverage needs based on your assets and risk exposure. Higher liability limits cost relatively little but provide significant additional protection.
Compare Customized Home Insurance Plans and Save
Insurance options vary by location and circumstances, so a personalized comparison is essential to make sure you get optimal home protection at a competitive price.
EverQuote makes it easy to compare customized home insurance options from multiple providers. Getting a custom comparison is always free, and it only takes a few minutes to see personalized rates.