What Does Homeowners Insurance Cover?
Key Takeaways Your homeowners insurance policy will list exclusions, so review your documents carefully and speak to an agent if you have questions. Common policy endorsements include identity theft protection, inflation guard, and scheduled personal property coverage. Whether a policy covers certain damages often depends on several factors and isn’t always a straightforward yes or no.
Key Takeaways
- USAA is the No. 1 best bundle option, offering a multi-policy discount of up to 10%; however, it’s only available to the military community. Travelers is the No. 2 best bundle.
- Besides bundling, homeowners and drivers may be able to save money by staying claim-free, being a loyal customer, installing security devices and more.
- Bundling your home and car insurance with the same company may give you a discount, but that doesn’t mean it’s always the best deal. Shop around to see whether bundling is worth it.
Homeowners insurance provides financial protection against unexpected damages caused by disasters (e.g., fire, hurricane, hail), theft, and accidents. Standard policies include coverage in these categories, but you can add endorsements to extend your protection.
- Dwelling coverage
- Personal property
- Liability
- Additional living expenses
- Medical payments
Homeowners insurance premiums are highly individualized. Insurance companies will consider many factors when determining your rate, including:
- Policy limits and add-ons
- Property location
- Property claim history
- Homeowner claim history
- Home age, roof age, and roof material
- Homeowner credit-based insurance score
With that in mind, our homeowners insurance study reveals that the average sample premium for a wood-framed home with $300,000 in dwelling and $100,000 in liability coverage ranges from $146.20 per month with Amica to $444.53 per month with Travelers.
The best way to know how much you’ll pay is to shop around and get quotes from different insurance companies.
A standard homeowners insurance policy includes coverage in these areas. While this provides a general idea, keep in mind that policies differ. You should review your policy documents for details and/or speak to an agent for more information on what your standard policy covers.
Insurance companies offer endorsements, or add-ons, allowing you to extend your coverage. Here are some common home insurance endorsement options, but this is not an exhaustive list, and not every insurer offers each of these. Contact your insurance company for more details.
- Ordinance or law endorsement: This pays to rebuild or repair your home so it meets the most up-to-date building codes. It’s particularly helpful if you live in an older home.
- Inflation guard: This automatically increases your dwelling coverage to account for inflation and rising construction costs. Doing so ensures that you have enough coverage to repair or build your home.
- Scheduled personal property: Your policy’s scheduled personal property endorsement increases your coverage for high-value items like jewelry, furs, and technology beyond the liability limits in your standard policy.
- Increased limits on money and security: This increases the coverage amount on certain items like money, bank notes, securities and deeds.
- Identity theft protection: This pays for expenses related to restoring your identity.
- Home-based business insurance: This typically provides coverage for business-related liability (e.g., a client trips over your rug and breaks their nose) and equipment (e.g., your work laptop is damaged in a fire).
- Watercraft coverage: This pays for small sailboats and watercraft (e.g., jet skis, yachts, outdoor water boats) that are typically excluded from a standard home insurance policy. It also includes personal liability and medical payments coverage.
- Earthquake: This pays for earthquake-related damages. You will typically pay a separate earthquake deductible when you file a claim.
- Flood: This pays for weather-related flood damages. You may secure a policy through the National Flood Insurance Program or a private flood insurer, though most companies don’t offer independent flood insurance.
- Secondary residence: Also known as secondary premises coverage, this extends your primary policy’s coverage to a second home or vacation property.
Home insurance does not cover everything. In some cases, you can purchase an endorsement or separate policy to add coverage, but for issues like normal wear and tear, you typically won’t be able to get coverage. Contact your insurance company or review the declarations page of your policy documents for more details about home insurance exclusions, such as:
- Normal wear and tear: You’re responsible for the normal wear and tear that comes with being a homeowner.
- Negligence: If your insurer determines that your home got damaged because you failed to maintain it properly, your policy will not pay for it. Pests and mold are usually considered a result of negligence, which is why they’re rarely covered.
- Flood damage: Homeowners insurance policies don’t cover flooding coming from outside of your home. You typically have to purchase flood insurance separately, though some providers may offer an inland or overland flood endorsement.
- Earthquakes: Damages resulting from earth movements are usually excluded from home insurance policies. To get earthquake coverage, you’ll need to buy a separate earthquake insurance policy or add an endorsement to your current policy.
- Expensive jewelry, electronics, or art: Your policy will have a limit that typically won’t be high enough to cover more expensive items. You can increase your policy limits to account for the repair or replacement value of these items.
- Sewer backup: Most insurers offer a home insurance endorsement for your sump pump overflowing or water backing up from a sewer or drain.
- Equipment breakdown: You are not covered for appliances or systems that suddenly break down, such as your washing machine or air conditioning. However, some providers let you add this coverage for an extra fee.
- Intentional loss: If you or someone in your household deliberately damages your house or personal items, you cannot file a claim.
- War, nuclear hazards, and government action: These events are usually listed as exclusions in your home insurance policy.
Here are some common scenarios that occur, and whether home insurance will cover them.