Homeowners Insurance: Coverage and How It Works

Home insurance covers damage from fires, windstorms and theft and more.

But damage from floods and earthquakes is not automatically covered. Home insurance covers your house and the stuff inside. You also have coverage if someone sues you for injuries.

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What does homeowners insurance cover?

Home insurance covers damage from things like fires, wind and rain storms, theft and vandalism.

The most popular types of home insurance policies cover at least 16 types of damage, called "named perils."

  • Windstorm or hail
  • Fire and lightning
  • Smoke
  • Theft
  • Vandalism
  • Weight of ice and snow
  • Freezing pipes
  • Power surges
  • Explosions
  • Riots
  • Damage caused by aircrafts
  • Damage caused by vehicles
  • Volcanic eruptions
  • Falling objects
  • Accidental water or steam overflow from an appliance
  • Sudden cracking, tearing or bulging of an AC or heating system

Some types of home insurance automatically cover more causes of damage. The two most common types cover any type of damage to your house that isn't specifically called out as not covered. This is called "open perils" coverage.

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Say a bear wanders onto your property and tears up your siding. If you have an open perils policy, you'll have coverage unless your policy specifically says that wildlife damage isn't covered.


What homeowners insurance doesn’t cover

Home insurance doesn't cover every kind of damage. Knowing what your home insurance doesn't cover can help you fill the gaps with other policies.

  • Floods: Flood damage is never covered by home insurance. You have to buy a separate policy from the National Flood Insurance Program (NFIP) or from a private insurance company that sells flood coverage.
  • Earthquakes: Earthquake damage is also not covered by home insurance. If you live in a high-risk area, you'll probably have to buy another policy to be covered. But in lower-risk areas, you might be able to add this coverage to your home policy by paying an extra fee.
  • Wear and tear: Home insurance doesn't cover things in your house that wear out. It could be an old TV that stopped working or a 30-year-old roof that has seen better days. But you'll have to pay for those repairs yourself.
  • Maintenance: Similarly, home insurance doesn't cover home maintenance. For example, if you have a dead tree that needs to be removed, you have to pay for it yourself unless it has fallen and caused damage.
  • Pests: Damage caused by most pests and animals — like insects, mice or birds — is usually not covered. This varies from company to company. If you have animal damage, call your company to find out if you have coverage.
  • Mold and fungi: Mold and fungus is usually excluded unless it's caused by something that is covered. For example, if your roof is damaged in a storm and water gets in, that might cause mold. Your policy could cover removing the mold in that case.
  • Government action and war: If your house or belongings are damaged by the government or during a war, you won't have coverage.
  • Aggressive dogs: While home insurance pays for some dog bites, it usually won't cover certain dog breeds if they bite or hurt someone. Commonly excluded dogs include Pitbulls, Rottweilers and Dobermans. Other companies only exclude a dog if it has a history of aggression.

Other common events you're not protected for are nuclear damage, contamination and intentional damage.

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You can also add extra home insurance coverage with add-ons. For example, water backing up in a sewer or drain line isn't automatically covered. But you can get coverage by paying extra. Other common add-ons include coverage for expensive jewelry or collectibles, earthquake damage (in low-risk areas) and more. Add-ons are also called endorsements or floaters.


How does homeowners insurance work?

Home insurance pays for repairs or replacement when your house or belongings are damaged.

When damage happens, you file a claim with your home insurance company. They will review the claim and pay you for the damage if the cause was covered.

Each home insurance policy has different parts that cover different things.


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Dwelling coverage

This is the main coverage on a home insurance policy, and it pays for damage to the structure of your house. That includes the roof, exterior walls, interior walls, doors and attached structures like decks. It also covers parts of your home that aren't visible, like the foundation.


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Other structures coverage

This covers sheds, gazebos, fences and other detached structures that are on your property. Most of the time, the coverage limit is automatically set at 10% of your home coverage. You can buy more coverage if you need to.


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Personal property

This covers your stuff, including your furniture, clothing, pots and pans, electronics and home decor. High-value items like jewelry, artwork or collectibles are usually only covered between $500 and $1,500, though. Usually, you should buy an add-on to properly cover expensive things.

To make sure you have enough coverage for your stuff, create a home inventory. You can also use this during a claim to show the insurance company proof that you owned a damaged or destroyed item and how much it cost.


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Loss of use

Also called "additional living expenses," this coverage pays for you to live somewhere else if you can't stay in your house after a claim. For example, if your home is damaged by a tornado and not safe to stay in, this coverage would pay for a hotel or rental home. It also pays for things like food and laundry services.


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Liability coverage

This coverage helps protect you from lawsuits if you are at fault for someone's injuries or damage to their belongings. For example, if someone trips on an uneven part of your sidewalk, breaks their hip and sues you, your liability coverage will kick in. You could have prevented their injury by fixing your sidewalk, so it might be your fault they got hurt. Liability coverage also pays if someone's stuff is damaged and you're at fault.

Covered by homeowners liability coverage
Not covered by liability coverage
You spill wine on your neighbor's rugYou spill wine on your own rug
You tear a guest's fur coatYou tear your own coat
Your dog bites someone on the streetYou are at fault in a car accident

Some situations aren't covered by liability insurance. If you have a type of dog that your insurance doesn't cover and it bites someone, for example, your home insurance won't pay for the medical bills.


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Medical payments coverage

This coverage pays if someone is hurt at your house, even if it's not your fault. Say your child has a friend over who falls and breaks her arm. Even though you aren't at fault, medical payments coverage will pay for her bills up to your coverage amount.

Medical payments coverage doesn't cover you, your family or your pets. For that, you'd need to file a claim with your health insurance or pet insurance.


Other home insurance coverage

Most home insurance policies also have other coverage types. You might not think about these things often, but they give you valuable protection.

  • Identity fraud: Identity fraud coverage pays for some of the costs involved in restoring your identity. You can usually buy this as an add-on coverage.
  • Debris removal: Home insurance policies usually pay to help you clean up your property after a claim. For example, if a storm knocks a tree down and it's blocking your driveway, your policy might pay to have someone remove it.
  • Service line damage: Some companies have add-ons that cover the water, gas, electricity and internet lines that run under your yard and into your home. If these lines are damaged, the add-on helps pay to dig it up and repair it.
  • Loss assessment: This coverage helps you pay your portion of the cost for damage to shared community spaces in your neighborhood. For example, if you live in a neighborhood with a shared park and a storm damages it, your homeowners association (HOA) might split the cost to repair the damage among all the homeowners. This coverage helps you pay your share.
  • Ordinance and law: This coverage is especially important if you have an older home. If your home is damaged, you might be required to bring it up to current building codes as you repair the damage. Ordinance and law coverage pays the cost for you to update your home to the current standards.

Frequently asked questions

What does home insurance cover?

Home insurance covers your house and your stuff from certain types of damage. Things like fires, theft, vandalism and storm damage are usually covered. You can add coverage for more situations by buying add-ons, also called endorsements.

What does a homeowners policy not cover?

Home insurance does not cover damage caused by floods or earthquakes. You can only get flood coverage with a flood insurance policy. You might be able to buy coverage for earthquake damage on your home policy, but it depends on where you live. Home policies also don't cover intentional damage, wear and tear, maintenance, pest damage or mold.

What does dwelling insurance cover?

Dwelling coverage is the part of your homeowners insurance policy that covers the structure of your house. This means your roof, walls, foundation and attached things like decks, carports and garages.

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