What Does Homeowners Insurance Cover?

A standard HO-3 policy (the most common form) provides six distinct coverages. Coverage A protects your dwelling—walls, roof, built-in appliances, attached structures—typically for the home's replacement cost. Coverage B covers other structures like detached garages or fences, usually 10% of Coverage A. Coverage C insures personal property (furniture, electronics, clothing) at 50-70% of Coverage A, often at actual cash value unless you purchase replacement cost coverage. Coverage D pays additional living expenses (hotel, meals) if you must live elsewhere during repairs, commonly 20% of Coverage A for up to 12 months. Coverage E provides personal liability protection, typically $100,000 to $500,000, if someone sues you for injuries on your property. Coverage F covers medical payments to others (usually $1,000-$5,000) regardless of fault for minor injuries.

Coverage A operates on a named-perils or open-perils basis depending on your policy form. The HO-3 (most common) uses open perils for the dwelling, covering all risks except those explicitly excluded—you're protected unless the policy says otherwise.

Coverage E protects you if you're found legally responsible for bodily injury or property damage to others. If a delivery driver slips on your icy steps and breaks an arm, suing for $75,000 in medical bills and lost wages, your liability coverage pays legal defense costs and any settlement or judgment up to your limit.

Standard homeowners insurance excludes flood damage entirely—neither water entering through doors/windows during a storm nor rising water from rivers or heavy rain is covered. You need a separate National Flood Insurance Program (NFIP) policy or private flood insurance, costing $400-$2,000 annually depending on flood zone. Earthquake damage requires an earthquake endorsement or separate policy, adding 10-20% to your premium in high-risk areas. Sewer and water backup coverage, protecting against damage when drains reverse ($5,000-$20,000 typical limit), costs $40-$250 yearly as an endorsement. Home business operations need a business owner's policy (BOP) if you have clients visiting or significant equipment—homeowners policies limit business property to $2,500 and exclude business liability.

Does homeowners insurance cover foundation cracks or settling?

No, standard policies exclude foundation damage from settling, soil movement, or earth sinking unless caused by a covered peril like a burst pipe. Foundation repair from age or construction defects isn't covered.

Will my policy pay if a tree falls on my house?

Yes, if a covered peril (windstorm, lightning, ice) causes the tree to fall. Policies typically cover removal costs ($500-$1,500 limit) only if the tree damages a covered structure—not if it simply falls in your yard.

Does coverage extend to items stolen from my car?

What happens if my home is underinsured when disaster strikes?

Most policies include an 80% coinsurance clause—if you insure for less than 80% of replacement cost, you become a co-insurer and receive only a proportional payout. On a $400,000 replacement cost home insured for $250,000 with $100,000 damage, you'd receive roughly $78,000 ($250,000 ÷ $320,000 × $100,000).