What Does Homeowners Insurance Cover?

There isn’t a simple way to answer the question of what does home insurance cover. It ultimately comes down to what is written in your policy. That being said, homeowners’ insurance coverage does generally cover the same categories and list of disasters with most major providers.

According to the Insurance Information Institute (III), most basic home insurance policies have some level of coverage for the structure of your home, your personal belongings, liability, and additional living expenses.

In the homeowner’s insurance industry, a disaster is referred to as a peril. Most basic home insurance policies cover a similar list of perils. In other words, if the damage is caused by a peril you’re covered for, your policy would kick in and cover some level of the costs. Some of the more common perils covered (complete list below) include fire, lightning, windstorms, smoke, falling objects, the weight of cold weather elements, vandalism, riots, and theft.

Again, you must check your policy to see the exact list of perils covered. Additionally, the levels of coverage within each peril will be different. By dedicating the time now to understanding your policy or selecting the right options if you’re buying, you can save yourself a lot of confusion and headaches down the road. Ideally, you never have to use your homeowner’s insurance policy, but it’s good to know you’re protected. Once you know the kind of coverage you need, you can start looking for the best homeowners insurance for you.

Homeowners Insurance Coverage Types

Coverage for structures

When you think about homeowners’ insurance, you probably think of dwelling coverage first. This coverage refers to the repair or rebuild of covered damage within your home. For example, if your gutters are damaged in a windstorm, most policies would cover this. What’s most important to consider here is what your deductible is (the amount you have to pay before coverage kicks in) and the level of coverage you have (what percentage of the damage is covered).

Your home itself is more straightforward, but you might be left with questions like, does home insurance cover your detached garage? If you have other structure coverage, this extends the protections of your home to the other structures on your property, including your detached garage. This can also include things like fences, swimming pools, and gazebos.

Personal property coverage

A homeowner’s insurance policy covers your house, and it can also cover the items you have inside. Personal property coverage is highly customizable and will vary greatly from policy to policy. Generally, you can include things like jewelry, furniture, electronics, clothes, and more.

The most important factors to look at when adding personal property coverage are the limitations (the maximum the plan will payout) and exactly what items are covered. If you have $10,000 in jewelry, but your policy only covers $500, the maximum you’d get if something happened to your jewelry is $500.

Expenses covered when you can’t stay home

Known as loss-of-use coverage or additional living expenses (ALE), this part of your policy deals with expenses if you are temporarily displaced from your home by a covered peril. For example, if your home burns down because of a lightning strike, ALE kicks in with most policies.

Generally, this covers things like the cost to live somewhere else (hotel or short-term rental), additional costs incurred for things like food or transportation, and other unexpected expenses you incur while displaced. While you hope to never need this part of your homeowner’s insurance coverage, it’s important to understand what’s available in the case of the unexpected.

Protection for medical bills and lawsuits

Many people are unaware that they may be held financially and/or legally responsible for accidents and injuries that occur on their property. The liability component of your homeowner’s insurance policy works to protect you in these worst-case scenarios.

For example, if someone trips and falls on your property, you may be held financially liable if the fall was due to something you could have prevented (such as a spill that wasn’t cleaned up). This aspect of your homeowner’s insurance coverage could cover your legal defense bills as well as medical bills for the injured person. With this area of coverage, it’s all about the coverage limits. Ensure you’ve got adequate levels of coverage, so you’re not left footing a major bill in case something happens.

Homeowners Insurance Gray Areas

Not all homeowner’s policies are created the same, which is why it’s so important to study your policy for the most complete and accurate information. Additionally, coverage can vary between different states and different insurance companies, which can’t be ignored. You may be surprised by some of the coverages that may be included in your policy.

There are some areas of coverage that are considered gray areas. Some policies will cover these, and others will only cover them partially, if at all.

Hail damage

Coverage for hail in a basic home policy depends heavily on where you live. If you live in an area where hail is rare, it’s most likely going to be covered. However, if you live somewhere that hail is common, it might not be included in basic coverage.

Fences

Generally, fences are covered under the other structures portion of your homeowners’ insurance coverage. However, it’s not always the case. You also need to see what perils qualify for coverage for your fence. According to Home Advisor, the average cost of fence installation is $2,800 — not an inexpensive fix if yours is damaged.

Plumbing

The level of coverage for plumbing varies from policy to policy. For example, sudden and accidental damage to your plumbing may be covered, but leaky pipes might not be. As plumbing repairs can be costly, take the time to understand your coverage here.

Major appliances

In general, most appliances are counted as personal property. However, the way these items can get damaged (and what is covered) may vary from plan to plan. Even if it seems tedious, find out how each major system in your home is treated under your policy or prospective options.

Jewelry

While jewelry is covered under most basic home insurance coverage plans, the maximum amount covered may be quite low. Make sure the level of coverage is adequate for the value of the jewelry you have.

Firearms

Much like jewelry, firearms are covered under a lot of homeowners’ insurance policies. Again, though, there may be a limit to the level of coverage that might not cover your collection without an amendment to the policy.

Windstorms in coastal areas

Some homeowner’s insurance policies in coastal areas prone to hurricanes may have specific limiting language written into your policy. You may be required to carry additional coverage for this unique breed of storms. You want to know what is covered long before storm clouds start gathering in the distance. 

Pets

Coverage for our furry friends tends to vary from policy to policy. Make sure you take a moment to see how your pets are covered under things like loss-of-use and liability. Some companies may have restrictions for certain breeds or species. Pets can be expensive in unique situations, and you want to know how you’re going to be covered.

Understanding Deductibles

A deductible is an amount of money that you’re required to pay before your insurance kicks in. Generally, the higher your deductible, the less expensive your monthly premium will be, because you’re agreeing to pay more money upfront before the policy kicks in.

With homeowners’ insurance policies, deductibles vary with different claim types by size and requirement. Structural and personal belongings coverage generally carry a deductible, while liability and additional living expenses do not. The size of your deductible will vary based on your unique policy. Generally, the deductible is a flat dollar amount or a percentage of the value of your home.

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