Your home is likely your biggest investment, and protecting it is crucial. That’s where homeowners insurance comes in. While most policies cover a wide range of risks, they also have limitations and exclusions that can surprise homeowners when filing a claim.
This guide breaks down the essentials: what’s usually covered, what’s not, and how to ensure your policy offers the protection you truly need.
What Homeowners Insurance Typically Covers
Most standard homeowners insurance policies (HO-3 in the U.S.) cover:
- The Structure of Your Home
Covers the house itself—walls, roof, floors, and built-in appliances—against risks like fire, windstorms, hail, lightning, and vandalism. - Detached Structures
Garages, sheds, and fences are usually included, though with limits (often 10% of your home’s insured value). - Personal Belongings
Furniture, clothing, electronics, and appliances are protected against theft and certain disasters. High-value items (jewelry, art, collectibles) may require additional riders. - Liability Protection
Protects you financially if someone is injured on your property or if you accidentally cause damage to someone else’s property. - Additional Living Expenses (ALE)
If your home becomes uninhabitable due to a covered peril, ALE covers hotel bills, meals, and other costs while repairs are made.
Common Exclusions in Homeowners Insurance
- Flood Damage – Standard policies don’t cover floods. Separate flood insurance is often required.
- Earthquakes – Earth movement (earthquakes, landslides, sinkholes) is excluded, though optional add-ons are available.
- Neglect or Poor Maintenance – If damage results from lack of upkeep—like a leaky roof ignored for years—it won’t be covered.
- Mold, Pests, and Termites – These are considered preventable through maintenance.
- Sewer Backups – Backups or sump pump overflows often require additional coverage.
Optional Coverage to Consider
- Flood Insurance: Required in flood-prone areas, available through FEMA’s NFIP or private insurers.
- Earthquake Endorsements: Important for homeowners in seismic regions.
- Scheduled Personal Property: Adds coverage for high-value jewelry, art, or collectibles.
- Water Backup Coverage: Protects against sewer or sump pump backups.
How to Ensure You’re Fully Protected
- Review Your Policy Annually: Update coverage limits as your home’s value or possessions grow.
- Ask About Riders and Endorsements: Tailor your policy to your risks.
- Bundle Policies: Combining home and auto insurance may lower costs.
- Work with a Trusted Agent: A professional can spot gaps in coverage.
Homeowners insurance is essential for financial protection, but it’s not all-encompassing. Understanding what’s covered and what isn’t helps you avoid surprises and make informed choices. With the right mix of coverage and add-ons, you can secure peace of mind knowing your home and family are protected.