What a Standard Homeowners Policy Covers
A standard homeowners insurance policy (HO-3) is the most common type in the United States. It includes six main coverage areas:
1. Dwelling Coverage (Coverage A)
Covers the physical structure of your home — walls, roof, floors, built-in appliances, and attached structures like a garage. This protects against perils such as fire, windstorms, hail, lightning, and vandalism.
2. Other Structures (Coverage B)
Covers detached structures on your property — a separate garage, shed, fence, or guest house. Typically set at 10% of your dwelling coverage.
3. Personal Property (Coverage C)
Covers your belongings — furniture, electronics, clothing, appliances — if they're damaged, destroyed, or stolen. Standard coverage is usually 50%–70% of your dwelling coverage. High-value items like jewelry, art, and collectibles often have sub-limits (e.g., $1,500 for jewelry) and may need a separate rider or floater for full coverage.
4. Loss of Use (Coverage D)
If your home is damaged to the point where you can't live in it, this covers additional living expenses — hotel stays, restaurant meals, and other costs above your normal expenses — while repairs are being made.
5. Personal Liability (Coverage E)
Covers legal and medical costs if someone is injured on your property or if you accidentally damage someone else's property. Standard coverage is $100K, but most experts recommend at least $300K–$500K, or adding an umbrella policy.
6. Medical Payments (Coverage F)
Covers minor medical expenses for guests injured on your property, regardless of fault. Limits are typically $1K–$5K per person. This helps avoid lawsuits over small injuries.
What's NOT Covered
Standard homeowners insurance has several important exclusions:
- Floods — requires a separate flood insurance policy (through NFIP or private insurers)
- Earthquakes — requires a separate earthquake policy or endorsement
- Sewer backups — typically excluded unless you add a rider
- Mold — usually excluded unless it results from a covered peril
- Normal wear and tear — gradual deterioration isn't covered
- Pest damage — termites, rodents, and insect infestations are considered maintenance issues
- Intentional damage — damage you cause deliberately is never covered
- Home business equipment — standard policies have limited coverage for business property
How to Fill Coverage Gaps
- Flood insurance — if you're in a flood zone (or even if you're not — 25% of flood claims come from outside high-risk areas), purchase a separate flood policy.
- Earthquake endorsement — essential in seismically active regions.
- Scheduled personal property — add riders for jewelry, art, musical instruments, or other valuables that exceed standard sub-limits.
- Umbrella policy — provides additional liability coverage beyond your homeowners and auto policies, typically in $1M increments.
- Sewer/water backup rider — an affordable add-on that covers damage from sewer or drain backups.
Tips for Homeowners
- Document your belongings — create a home inventory with photos, receipts, and estimated values. This makes filing a claim much easier.
- Review coverage annually — home values, renovations, and new purchases can mean you're under-insured.
- Understand replacement cost vs. actual cash value — replacement cost pays to replace damaged items at today's prices; actual cash value deducts depreciation.
- Increase your deductible to save — raising your deductible from $500 to $1,000 can reduce premiums by 10%–25%.