Homeowners insurance sounds complicated, but a standard policy is really just a bundle of six coverages working together. Here’s what each one pays for, and the big risks that aren’t included.
The six core coverages
A standard policy (called an HO-3) is built from these parts:
- Dwelling (Coverage A): the physical structure of your home: walls, roof, floors, built-in systems. This is the foundation of your policy, set to your home’s rebuild cost.
- Other structures (Coverage B): detached structures like a garage, fence, or shed, usually covered at about 10% of your dwelling limit.
- Personal property (Coverage C): your belongings: furniture, electronics, clothing, appliances. Typically 50–70% of your dwelling limit.
- Loss of use (Coverage D): extra living expenses (hotel, meals) if your home is uninhabitable after a covered loss.
- Personal liability (Coverage E): legal and medical costs if you’re responsible for someone’s injury or property damage.
- Medical payments (Coverage F): smaller, no-fault medical bills if a guest is hurt on your property.
What “perils” are covered
An HO-3 covers your dwelling against all perils except those specifically excluded, and your belongings against a named list (fire, theft, windstorm, vandalism, and more). Common covered events include fire, lightning, windstorms, hail, theft, and water damage from a burst pipe.
What home insurance does NOT cover
This is where homeowners get caught off guard. Standard policies exclude:
- Flooding: needs a separate flood policy (NFIP or private).
- Earthquakes: needs a separate earthquake policy or endorsement.
- Normal wear and tear, neglect, and maintenance issues.
- Pest and mold damage in most cases.
Replacement cost vs. actual cash value
How much you actually receive after a claim depends on whether your coverage pays replacement cost (what it costs to rebuild/replace new) or actual cash value (replacement minus depreciation). It’s one of the most important settings on your policy, see our guide on replacement cost vs. actual cash value.
The bottom line
A standard policy protects your home, your belongings, and you from liability, but it won’t cover floods or earthquakes, and the payout depends on your coverage settings. Knowing what’s included (and what isn’t) is the first step; comparing quotes is how you get that coverage at the best price.