What does homeowners insurance cover? Learn more about the different types of coverage to be certain your dwelling and property are sufficiently covered.
Homeowners insurance protects you, your personal property, and your home from covered losses. What counts as a covered loss depends on the type of homeowners policy you choose.
|Home Insurance Type||Property Covered Against||Contents Covered Against|
|HO-2 - Broad Form||Named perils||Named perils|
|HO-3 - Special Form||Open perils||Named perils|
|HO-5 - Comprehensive Form||Open perils||Open perils|
Home insurance covers both your property and your liability — an important distinction. Explore the standard coverages that come with a homeowners insurance policy, what it covers and additional coverage options for fortifying your policy below.
Home property coverage consists of four primary categories. Each of these home insurance categories carries different coverage limits:
|Property Coverages||Amount of Coverage|
|Coverage A - Dwelling||Replacement cost of your home|
|Coverage B - Other Structures||10% of Coverage A|
|Coverage C - Personal Property||50-70% of Coverage A|
|Coverage D - Additional Living Expenses||Actual Loss Sustained/Maximum Days or Amount|
This coverage works to replace the structure of your home if it is destroyed as a result of a covered loss. The value of your home is not factored into this amount. Because the value of your land does not change the cost of building a dwelling, the market value of a home and the amount of coverage provided by Coverage A may differ. The cost of your dwelling coverage may depend on the age of your home, among other factors (brand new homes can be relatively affordable to insure).
Dwelling insurance coverage is subject to a deductible, i.e, what you pay before an insurance company steps in to handle the losses.
If Coverage A amounts to $250,000, the policy's other structures coverage would be $25,000 — 10% of Coverage A. Coverage B is subject to a deductible. This coverage applies to the following types of other structures:
This 10% is a general percentage used by insurance companies. Depending on the value of the other structures, you can increase this coverage level amount.
This coverage applies to the insured party's personal belongings. If a policy has a replacement cost of $250,000, the maximum personal property coverage would be $187,500 — 75% of $250,000. The policy could extend 50% personal property coverage, providing a max claims payout of $125,000. Each of these payouts would be subject to a deductible.
Personal property coverage extends to cover covered losses occurring away from the home, but usually at a decreased coverage level and not always for the same threats. For the exact limitation on your worldwide coverage personal property coverage, refer to your policy details.
Coverage C may come with sub-limits on certain items. Most insurance companies will cap the amount of coverage on valuable items, creating sub-limits. Below are some common sub-limits for personal property home insurance.
|$200||Money, Gold, Coins|
|$1,500||Jewelry, watches, furs||Theft-only|
You can increase personal property sub-limits by adding an endorsement — a rider or floater — to your policy. An endorsement raises the sub-limit to a certain amount for a general collection of items. For example, a jewelry endorsement raises the level of coverage for all jewelry owned by the insured party.
If you have one particularly valuable item for which you want individual coverage, consider a scheduled endorsement. This requires an appraisal and that the item is explicitly listed on the policy. This is a common practice for engagement or wedding rings.
If your home were to be destroyed or unlivable because of a covered loss, your additional living expenses would provide coverage for you to live elsewhere — up to the limits listed in your policy. Usually, your policy will give you a set amount of money or duration they will compensate for. Unlike Coverages A, B, and C, additional living expenses — also known as loss of use — are usually not subject to a deductible.
Homeowners insurance liability protection includes the following types of coverage:
|Liability Coverages||Amount of Coverage|
|Coverage E - Your Personal Liability||Varies|
|Coverage F - Your Medical Payments to Others||Varies|
Home insurance personal liability provides coverage for bodily injury or property damage suffered by others for which you are deemed legally responsible. If your child throws a ball through a neighbor’s window and breaks their TV, you could be held liable for the damage to the window and the TV. Your personal liability coverage would provide settlement to the not-at-fault party as well as provide you with legal services if you are sued.
There are no state requirements for personal liability insurance. Typically, liability coverage is a fairly inexpensive part of homeowners insurance. High personal liability limits are recommended — greater than Coverage A level is a good place to start. A common measurement for personal liability coverage is it should be equal to or greater than your net income. If your personal liability limits are exhausted, you could be sued and be forced to forfeit your assets.
If someone injures themselves on your property (and they do not live at the residence), med pay coverage can cover their medical care.
While it can vary, the following medical expenses are typically covered:
This coverage is based on a limit you can set and is not subject to a deductible.
It's important to remember that home insurance doesn't cover every source of damage. Learn more about whether or not a standard policy covers the following losses or perils:
|Natural Disasters||Other Perils|
|Flood damage||Animal damage|
Continue reading to learn more about what's not covered by home insurance.
Many exclusions on a standard homeowners insurance policy can be added via endorsements. Below are major exclusions worth keeping in mind when buying a homeowners policy.
There are perils that are never covered by a homeowners policy, regardless of whether the policy is a named peril or open peril policy.
* Coverage for these perils can be bought as a separate policy. See more information on this below.
Owning a home is a major investment — you should make sure it is properly protected. Below are some common additional coverage options.
An endorsement for artwork, for example, will increase the coverage level for your entire art collection. If you have one particular piece that you’d like to cover at a higher amount, consider a scheduled homeowners insurance endorsement. This ensures your item is individually appraised and insured at its exact value.
For a small additional fee, you can usually upgrade your reimbursement on your personal property from Actual Cash Value (ACV) to Replacement Cost Coverage. With an ACV reimbursement policy, your claims check would factor into depreciation. With a replacement cost policy, you would get the value to replace your belongings at its current value.
Damage caused by earthquakes is excluded from every insurance policy. But depending on your location and company, you can add it back or add a complementary policy. If you live in an earthquake-prone area, you should definitely consider this coverage. If your current provider does not provide it, you can use outside providers. In California, the California Earthquake Authority (CEA) is a major provider of homeowners earthquake coverage.
Because of the risk and cost of claim payouts, most standard insurance providers will not provide flood insurance coverage. If you live in a flood plain, you should acquire flood insurance via the National Flood Insurance Program (NFIP) or a private flood insurance policy. This will be separate from your homeowners insurance but can turn out to be equally important in the event of a flood.
Explore how these additional coverage add-ons and endorsements work to protect your property.
|Home Insurance Endorsements|
|Sewer backup||Builders risk|
|Service line||Airbnb hosts|
|Fallen tree damage||Home daycare|
|Equipment breakdown||Home business|
|Ordinance or law||Scheduled personal property|
What is covered by home insurance varies based on what type of home insurance policy you have. HO-2 offers the least coverage. HO-3 is a middle point between HO-2 and HO-5.
Below are The Zebra's top recommendations to make sure your home is properly insured:
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