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What Does Homeowners Insurance Cover?

by Cristina Oprean
4 min. read

Although not required by law, homeowners insurance can be a real lifesaver in the event of an unexpected disaster. Most lenders will require you to take out a policy, and even if not, it’s worth having one. But what exactly does homeowners insurance cover? Let’s find out.

What Is Covered by the Standard Homeowners Insurance?

Standard homeowners insurance policies cover six main categories:

1.     The Dwelling

The standard policy will cover your dwelling and any internal or external damage that may affect its physical structure. It includes the foundation of the building, flooring, doors and windows, the roof and gutters, light fixtures and cabinets.

Types of damage commonly covered are:

  • Fire damage
  • Damaged caused by some natural disasters, such as lightning, hail, hurricanes and thunderstorms
  • Falling trees
  • Ice and snow damage
  • Damage caused by break-ins, vandalism and other malicious acts
  • Sudden and accidental water damage caused by burst pipes

Dwelling coverage will take up the bulk of your homeowners insurance. The coverage will provide reimbursement in case you need to repair and even rebuild your home, depending on the amount of damage.

2.     Stand-alone Structures

Any detached structures that are present on your property are also covered by homeowners insurance. These typically include sheds, garages, gazebos, driveways, and even fences and docks. In general, the insurance limit for all such structures combined is capped at 10% of the dwelling coverage.

3.     Personal Belongings

Homeowners insurance also extends to your personal belongings, and it covers items such as electronics, furniture or clothing. These items can either be repaired or replaced, depending on whether they are stolen or destroyed as a result of physical damage to the property (such as a house fire). Most insurance companies will also provide coverage in case your appliances are damaged by a power surge.

4.     Additional Living Expenses

Standard coverage will also protect you in case the damage to your property means you can’t temporarily live there. For example, suppose your home is damaged as a result of fire. In that case, the insurance will reimburse the cost of renting or staying in a hotel, restaurant meals, pet boarding, and any other expenses that result from the fact that you’re unable to live at home.

5.     Liability Claims

The liability coverage of your homeowners insurance protects you in case of lawsuits filed against you involving injury or property damage. For instance, if your dog bites someone and that person decides to sue you, the insurer will cover the resulting legal costs and payouts. Similarly, if you cause damage to someone’s property that results in them taking legal action, the insurer will cover compensatory and general damages.

6.     Medical Expenses

The last aspect of the homeowners insurance covers medical expenses in case anyone is injured on your property. For example, let’s say that someone slipped on your sidewalk and they need medical attention. Even if that person did not file a lawsuit, your coverage could be used to pay for having their injuries treated.

What Isn’t Covered by Homeowners Insurance?

Standard homeowners insurance does not provide coverage for damage that is the result of:

  • Wear and tear, poor property maintenance and neglect
  • Acts of war (including invasion, insurrections or terrorism)
  • Acts of God (natural disasters such as floods, earthquakes and landslides)
  • Acts by the government
  • Nuclear accidents

It’s important to understand where insurance companies draw the line between what they do cover and what they don’t. At first glance, it may seem that your policy will protect you from most types of damage you’re likely to come across. But reading the small print may unpack some surprises.

Natural disasters are a good example. Standard policies will have you covered in the event of a tornado or a hurricane, yet they don’t cover damage caused by flooding, even though the two often go hand in hand. This is an important point to bear in mind if you live in an area that’s prone to hurricanes: the insurance will cover damage caused by hail, wind or lightning, but not flood-related water damage.

Reading Between the Lines

It’s also essential to understand the difference between accidental damage and damage resulting from poor property maintenance.

For example, your insurance will cover damage caused by a burst pipe or electrical fires. However, if the water damage is caused by a pipe that’s been leaking for weeks, or if it turns out that the electrical wiring is outdated, the damage will fall outside the policy coverage. Vermin infestations are also considered the result of neglect and poor property maintenance, which is why standard policies won’t cover damage caused by termites, rodents, birds, and even mold.

Weigh out your needs, and if you find that you need to go beyond the limits of the standard homeowners insurance, you might consider looking into umbrella insurance policies as well.


This article is intended for informational purposes only and should not be deemed as legal, financial or investment advice or solicitation of any kind. Before purchasing real estate or insurance, always consult with a licensed attorney, financial advisor, insurance agent and real estate broker.

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