What Does Homeowners Insurance Cover?

Updated June 6, 2026 · 5 min read

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.