What Does Homeowners Insurance Cover and Not Cover? (2024)

Learning what is and isn’t covered by homeowners insurance often requires reading the fine print on your insurance contract before you purchase a policy. Although every homeowners insurance policy is different, almost all insurance policies have some coverages in common.

Key Takeaways

  • Most homeowners insurance covers certain basics, but policies vary, so read the fine print before you purchase one.
  • Your homeowners insurance coverage may overlap with other types of insurance.
  • All policies have deductibles before coverage of your residence's structure and the property inside it kicks in.
  • Damage or destruction due to vandalism, fire and certain natural disasters are all usually covered. So is your liability if someone is injured on your property.
  • Certain catastrophes, like flooding or earthquakes, are generally not covered by basic homeowners policies and require specialized insurance.

What Homeowners Insurance Covers

Homeowners insurancetypically covers a broad range of possible damages. Your actual, physical dwelling should becovered, as well as some other structures on theproperty, like a garage, fence, driveway, or shed. However, if you run a business on your propertyin a separate structure, it is generally not covered by homeownersinsurance.

Personal property is typically accounted for in your policy as well. The specific protection for it is sometimes known as contents insurance. Coverage may be limited on certain types of high-value items, such as jewelry or artwork; often, additional coverage is purchased specifically for such assets. So when policy shopping, don’t forget to ask your agent whether you’ll need to get additional coverage to cover your belongings.

Replacement Cost vs. Fair Value

Not all insurance policies offer homeowners the replacement cost of the property. Buying coverage for replacement cost helps to bridge the gap caused by inflation and the loss of value when property is no longer new. Otherwise, when you claim a loss, the item in question will be assessed at the current fair market value.

Since some items depreciate quickly, this means you may not get enough money from a claim toreplace the items that were lost or damaged. Replacement-cost coverageensuresyou’re able to replace the items that were lostwith similar items. If having this coverage is important to you, you’ll want to be sureboth your home and personal property are covered in this way.

Car Coverage

Most homeowners insurance policies include coverage for personal effects and separate structures on your property. But what happens if your car is broken into while it’s in your driveway or garage? This is where the distinction between your home and auto insurance policies can become a little blurry.

While homeowners insurance won’t cover damage to the car itself, many policies will provide some coveragefor personal items that are stolen from it. But some of the more comprehensive auto insurance policies may cover this, too. Insurance companies may also limit the coverage available through your policyif the items stolen were purchased exclusively for use in the vehicle.

Fire Coverage

House fires are one of the most common causes of damage to homes, and almost every homeowners insurance policy protects structures and belongings against them.If a home is completely destroyed by fire, most standardpolicies that cover fire also cover the cost ofadditional living expenses, such as hotel stays, rentals, or food and restaurant bills.

Natural Disaster Coverage

A wide range of natural disasters is typically covered by your homeowners insurance policy, though not all of them. The typical inclusions for natural disasters includelightning, thunderstorms, hurricanes, and hail. Your policy may also include coverage for smoke damage, damage caused by falling items, or severe winds.

Earthquakes and other natural movements of the earth are not typically covered by insurance policies.If you live in certainregions that are high-risk for these or other types of natural hazards, you’ll want to be sure to inquire about special, separate types of catastrophe insurance, like windstorm or flood insurance.

If your home is at risk of damage from hurricanes, it's essential that you have enough insurance coverage in place to protect your property. Your standard homeowners policy may not cover all hurricane damage, but you may consider purchasing a hurricane policy that supplies this additional protection. These policies often match the coverage of your homeowners insurance.

Flood Coverage

Flooding caused by an interior problem, like a leaking pipe or an overflowing toilet, is generally covered by homeowners insurance. However, flooding due to external conditions is much the same as earthquakes. Whether the causes are natural (rising rivers, flash floods) or man-related (burst dams, sewer backups), they are not generally covered in basic policies. You can ask your insurance company about adding coverage to your policy, or (more likely) buying separate flood insurance, especially if you live in a region that is prone to flooding. In fact, you may be requiredto, if you need a mortgage.

Vandalism Coverage

Vandalism is generally covered under an all-risks or all-perilspolicy unless it is specifically excluded. Vandalism coverage applies to unoccupied homes but not to vacant homes after a certain period of time.An unoccupied home is one that still contains the personal property of the policy owner, even though the property owner is absent.

A vacant home is empty and free of the owner’s personal property. An example of this would be if you were selling your home and moved out, taking all of your belongings and furnishings with you. After a setperiod of time, vandalism coverage would no longer apply to your policy.

Personal Injury

Most homeowners insurance policies include coverage for injuries incurred on your property where you are liable. This could include something like someone slipping on a patch of ice that’s on your front walk, or falling as a result of a broken step on your porch.

This coverage is usually limited to a certain dollar value, so you definitely want to know how much coverage you have and exactly what’s included. Umbrella insurance can provide additional liability coverage if you think you need it.

What Is a Homeowners Insurance Deductible?

The deductible is the amount the insured party has to pay when a claim is made. You can decrease your insurance costs by increasing the amount of your deductible, meaning you’ll be required to pay more if you ever do have an incident that requires you to make a claim. Keep in mind many mortgage providers require homeowners to carry a certain amount of insurance on their property with a deductible that’s below a specified limit.

Check with your mortgage provider before opting for the lowest possible rate with the highest possible deductible. It might be tempting to go for the lower rate, but if you ever do have to make an insurance claim, you might fine you’re responsible for a $10,000 deductible.

The Bottom Line

Your insurance policy’s fine print may not seem like particularly interesting reading material, but it’s better to take the time to thoroughly understand whatyour insurance policy covers—before you’restuck in an unfortunate situation and discover you’re not covered for that particular loss or liability. At the end of the day, doing your homework before purchasing a policy could really pay off when you actually need to rely on your homeowners insurance coverage.

What is the 80% rule in Homeowners Insurance?

Insurance companies often follow the 80% rule, which states that a homeowner must purchase coverage for at least 80% of the house's total replacement value or they will not be fully covered. The insurance company will instead only reimburse a proportionate about of the costs.

How do Insurance Companies Determine Value of a House?

Insurers determine the value of a house by using a number of factors, including location, size, condition, age, and values of properties nearby that have recently sold.

What is the Most Basic Home Insurance Coverage?

The most basic type of home insurance coverage is the HO-1 policy, which only includes dwelling coverage. It protects the home from specific circumstances listed in the policy. This type of policy is not commonly offered by insurance companies.

What Does Homeowners Insurance Cover and Not Cover? (2024)

FAQs

What Does Homeowners Insurance Cover and Not Cover? ›

Damage or destruction due to vandalism, fire and certain natural disasters are all usually covered. So is your liability if someone is injured on your property. Certain catastrophes, like flooding or earthquakes, are generally not covered by basic homeowners policies and require specialized insurance.

What does homeowners insurance actually cover? ›

It pays to repair, replace, or rebuild your home's structure after a covered peril. This could include fire, theft, vandalism, or a weather event such as lightning, wind, or hail. It could also cover damage from external forces like a falling tree branch.

What damage doesn't homeowners insurance cover additionally ___________? ›

Events typically not covered by standard homeowners insurance include: Floods. Earthquakes, sinkholes and other "earth movement" Other natural disasters (depending on geographic location)

What is the most common damage to your home that insurance does not cover? ›

Earthquake and water damage

In most states, earthquakes, sinkholes, and other earth movements are not covered by your standard policy. Earthquake insurance can be purchased as an endorsement (an addendum) for an additional fee in all states except California.

What homeowners policy offers the least amount of coverage? ›

HO-1 Basic Form Policy: The HO-1 policy is the most basic and limited homeowner insurance option. It provides coverage for a specific list of perils, such as fire, lightning, hail, theft, and vandalism.

What is not covered in a homeowners policy? ›

Home insurance does not cover any willful loss or damage you or any in-house family members committed. So, for example, if your dog chews through part of your house, causing considerable damage, you'll have to pay for the repairs.

What are the six categories typically covered by homeowners insurance? ›

A standard homeowners insurance policy covers the following:
  • Dwelling Coverage.
  • Other Structures Coverage.
  • Personal Property Coverage.
  • Loss of Use / Additional Living Expenses Coverage.
  • Liability Coverage.
  • Medical Payments to Others Coverage.

What is not protected by most homeowners insurance? ›

Normal wear and tear is typically excluded from standard homeowners insurance coverage. For example, if your home's plumbing system becomes worn out over time, your home insurance likely won't pay for damages. However, damages are covered in accidental events, such as in the case of burst pipes.

What is usually excluded from typical homeowners insurance? ›

Earthquakes, landslides and sinkholes generally aren't covered under home insurance. Exceptions include Florida and Tennessee, where insurers must offer optional sinkhole protection. Aside from that, you'll need separate coverage for these disasters, which your insurer can help you find.

What disasters usually aren t covered by homeowners insurance policies? ›

Homeowners insurance will usually cover damage to the dwelling and personal property. A resulting explosion or fire should also be covered. Earth movement, landslide, tremors, mudslide or earthquake caused by a volcano is not usually covered under homeowners insurance.

What not to say to home insurance? ›

Avoid admitting fault or underestimating damages as this might lead to lower compensation or even denial of your claim. Honesty is crucial when dealing with an insurance adjuster, so avoid providing false information which can lead to serious consequences like claim denial or legal repercussions.

What home repairs do most insurance cover? ›

The most common appliances and systems covered by home repair insurance include clothes washers and dryers, ovens and stovetops, refrigerators, water heaters, air conditioning, sewer, and plumbing lines, and electrical systems.

Which of the following losses would not be covered by a homeowners policy? ›

Protecting that investment from fire and other perils is extremely important. Please note, homeowners insurance policies do not provide protection against losses from floods, earthquakes, mudslides, mudflows or landslides. You can learn more about what homeowners policies cover in this guide.

What is the 80% rule in homeowners insurance? ›

When it comes to insuring your home, the 80% rule is an important guideline to keep in mind. This rule suggests you should insure your home for at least 80% of its total replacement cost to avoid penalties for being underinsured.

What is the most extensive home insurance policy? ›

HO-5 (comprehensive form)

The HO-5 policy offers more protection than any other type of homeowners insurance. Personal property losses are repaid based on the replacement cost for the item, instead of the actual cash value. You'll have higher coverage limits and less restrictions on perils.

Who has the best and most affordable homeowners insurance? ›

Top 5 Cheap Homeowners Insurance Companies
  • State Farm: Our pick for new homeowners.
  • Auto-Owners: Our pick for discounts.
  • Erie: Our pick for customer service.
  • USAA: Our pick for military members.
  • Allstate: Our pick for extended coverage.
May 17, 2024

Which of these are not usually covered by homeowners insurance? ›

There are all sorts of surprising things your home insurance likely doesn't cover, like sewer backups, sinkholes, and pest infestations, including termites. Mold damage is another one—most policies exclude it except when it's caused by something covered in your policy.

Which of the following would be covered by a home insurance policy? ›

Homeowner's insurance is designed to protect against risks to your home such as fire, wind damage, theft, and personal liability, but would not typically cover hospital expenses, damage to another person's car while driving, workplace injuries, or theft of business supplies from an office.

What does coverage A include under a homeowners policy? ›

Coverage A: Dwelling

The homeowner policy's first coverage section protects your house and any attached structures, such as garages, decks, or fences. The typical policy covers your home when it is damaged by many perils (also known as causes of loss) including fires or storms.

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