Top 4 Homeowners Insurance Questions

FAQ: What Does Homeowners Insurance Cover?

Table of Contents

Q. What does homeowners insurance cover?
What is not covered by homeowners insurance?
How much does homeowners insurance cost?
What other policies can I purchase to get more coverage for my home?

Q. What does homeowners insurance cover?

I recently bought my first home. I just purchased homeowners insurance, and I would like to know under what circumstances I’ll have coverage. What is covered by homeowners insurance? What is not covered? Can I purchase additional coverage if needed? 

Homeowners insurance covers a wide range of perils that could potentially damage your home, your belongings, or certain other structures on your property. A homeowners insurance policy typically categorizes coverage and coverage limits as follows. 

Dwelling coverage

Dwelling coverage in a home insurance policy covers your house and attached structures. It also covers items like plumbing, heating, and permanently installed air-conditioning systems, and electrical wiring.

Other structures coverage

This coverage protects other structures on the property, such as detached garages, tool sheds, retaining walls, and so on. 

Personal property coverage

Personal property coverage protects the contents of your home and other personal belongings owned by you or family members who live with you. Coverage for certain rare or valuable types of property (jewelry, furs, art, etc.) may be limited, but additional coverage can be added for individual items or categories of items to make sure your valuables have adequate coverage. 

Loss of use coverage

Loss of use coverage helps you with additional living expenses if your home is damaged by a covered peril (e.g., a fire) and you cannot live in your home while repairs are being made. It typically covers expenses like housing, meals, storage, and more, as long as they are in line with your usual living expenses. 

Personal liability coverage

The liability coverage portion of your homeowners insurance provides coverage if you or a resident of your household is legally responsible for causing property damage or an injury to someone else. It covers damage (property replacement or repairs, medical expenses), as well as attorney fees and financial settlements or judgments if you are sued. 

Medical payments coverage

This coverage pays for reasonable medical expenses for persons accidentally injured on your property. 

Homeowners insurance may also offer additional coverage for things like debris removal; replacement of trees, plants, and shrubs (if damaged by a covered peril); and damage caused by fungi, wet or dry rot, or bacteria. 

Q. What is not covered by homeowners insurance? 

A homeowners insurance policy offers coverage for property damage to your home and your belongings. Homeowners insurance also provides liability insurance, which protects you if you or a family member is sued for some type of negligence. 

The liability coverage will not protect you in all situations, such as if you hurt someone because of an intentional act. All of the exclusions to your liability coverage can be found in your policy documents. 

Most states offer a variety of standard homeowners insurance policies. The dwelling and personal property coverage exclusions for each type are laid out in detail, as well.

One type of policy, the HO-2 or “broad form” policy, lists 16 covered perils, or causes of loss. If your home is damaged by one of the following and you have an HO-2 policy, you are likely to be covered for: 

  • Fires or lightning
  • Windstorms or hail
  • Explosions
  • Riots or civil commotion
  • Damage caused by aircraft
  • Damage caused by vehicles
  • Smoke
  • Vandalism or malicious mischief
  • Theft
  • Volcanic eruptions
  • Falling objects
  • Weight of ice, snow or sleet which causes damage to a building
  • Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system, or from a household appliance
  • Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system or an air conditioning or automatic fire-protective system
  • Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system or of a household appliance
  • Sudden and accidental damage from artificially generated electrical current 

An HO-3 policy, which is the most popular type of home insurance policy, covers everything except certain perils outlined in the policy. 

Both the HO-2 and HO-3 policies specifically exclude coverage for damage caused by: 

  • Ordinance or law (e.g., demolition or construction required to bring your house up to code)
  • Earth movement (e.g. earthquakes, sinkholes, landslides)
  • Water damage due to floods, sewer back-ups, and water that seeps through the foundation
  • Power failures
  • Neglect
  • War
  • Nuclear hazards
  • Intentional acts
  • Governmental actions (e.g., destruction, confiscation, or seizure of covered property by any governmental or public authority)
  • Loss to property resulting from faulty zoning, bad repair or workmanship, faulty construction materials, and defective maintenance.

Q. How much does homeowners insurance cost? 

Homeowners insurance rates are definitely not one-size-fits all, so it’s hard to know exactly what homeowners insurance premiums will be for your unique home. 

According to the National Association of Insurance Commissioners, the annual average premium for homeowners insurance in the US is  $1,192.

Your rates may be higher or lower than average, depending on your home’s characteristics, your individual risk factors, and your coverage needs 

Some of the individual risk factors that insurance companies consider include:

  • The size, age, and value of your house 
  • Whether the property is your primary residence or a second home
  • The number of stories in your house and whether it has a basement
  • The crime rate and weather risks in your ZIP code
  • Your claims history and credit score
  • The amount of coverage you need and your deductible

If you live in a ZIP code with a high crime rate or that is highly susceptible to natural disasters, you can expect to pay more than someone living in a safer area. 

A local independent insurance agent can help you shop around for the best rates and coverage for your needs. Independent agents aren’t tied down to one carrier, so they can obtain multiple quotes and help you make an informed choice. 

Q. What other policies can I purchase to get more coverage for my home? 

In addition to the basic coverage offered by your homeowners insurance policy, you can buy additional coverage for your specific needs by adding endorsements (also called “riders”) to your basic policy. An endorsement modifies the terms of the basic policy by adding a specific kind of coverage or changing a limit on an area of coverage. 

Many homeowners will add endorsements such as: 

  • Guaranteed replacement cost coverage: Ensures that if the stated dwelling coverage limit on your policy is not enough to cover the loss to your home, the insurance company will pay the difference.
  • Refrigerated property coverage: Protects property stored in refrigerators and freezers on the premises when damaged by specific events (e.g., a utility interruption), typically subject to a maximum coverage limit and a special deductible.
  • Scheduled personal property endorsement: Covers specific high-value items like jewelry, furs, coins, guns, and computers.
  • Water backup and sump overflow: Covers losses from water backup and sump overflow, which are not covered under the basic home insurance policy.
  • Watercraft endorsement: Extends personal liability and medical payments coverage to others while you are operating certain watercraft.
  • Identity theft endorsement: Typically offers reimbursement for costs related to repairing your identity.
  • Home business endorsement: Extends your liability limits and property coverage to a home-based small business. 

You can also purchase a personal umbrella policy, which offers excess personal liability coverage beyond the limit of your home insurance policy. An umbrella policy comes into play if you are faced with a lawsuit where a judgment against you exceeds the coverage limit of your home insurance.  

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