What Does Homeowners Insurance Really Cover?

Answer

Homeowners insurance is a type of property insurance policy that protects you against financial loss from damage to your home and belongings. Whether you’re buying your first house or renewing your existing policy, understanding what’s covered—and what isn’t—helps you avoid surprises when you file a claim.

Most standard U.S. homeowners insurance policies combine several coverages into one package. Here’s what to expect:

• Dwelling coverage: Pays to repair or rebuild your home if it’s damaged by covered perils, such as fire, windstorm, hail or vandalism. Typical limits range from $150,000 to $500,000, depending on your home’s replacement cost and the policy you choose.
• Other structures: Covers detached structures on your property—like a garage, fence or shed—usually at 10% of your dwelling limit.
• Personal property: Reimburses you for belongings (furniture, electronics, clothing) damaged or stolen in a covered incident. Standard policies often insure at 50%–70% of the dwelling amount; replacement‑cost or actual‑cash‑value options are available.
• Liability protection: Protects you if someone is injured on your property and sues for medical bills or damages. Limits commonly start at $100,000 per occurrence, with higher limits available.
• Additional living expenses (ALE): Covers temporary housing and living costs if your home is uninhabitable due to a covered loss. Insurers typically provide up to 20%–30% of your dwelling limit.

What’s not covered? Floods and earthquakes usually require separate policies or endorsements. Wear and tear, maintenance issues, and pest damage are also excluded. To protect against these risks, buyers are recommended to verify coverage options with their insurer or consider a standalone flood or earthquake policy through vendors like the NFIP or private carriers.

Key factors that affect your premium:

• Location (flood zones, crime rates, local building costs)
• Home age and construction type
• Deductible amount (higher deductibles lower your premium)
• Credit score and claims history
• Safety features (alarm systems, smoke detectors, storm shutters)

Before you finalize a policy, compare quotes from multiple insurers and review specific limits and exclusions in your state. Every homeowner’s situation differs, so it’s advisable to consult a licensed insurance agent or attorney to tailor coverage to your needs.