Most people read their home policy only after something breaks. Then come the surprises: the $200 cap on cash, the mold exclusion, the flood that isn’t covered.
Key takeaways
- A standard HO-3 policy has six parts: your house, other structures, belongings, extra living costs, liability and guests’ medical bills [1].
- Your house is covered for any cause that isn’t excluded. Your belongings are covered only for 16 named perils [1].
- Flood, earthquake, sewer backup, wear and tear, pests and most mold are excluded [1].
- Valuables have low built-in caps, such as $1,500 for stolen jewelry [1].
What does homeowners insurance cover? The short answer
A standard homeowners policy pays to repair or rebuild your home and replace your belongings after sudden damage, like a fire, a windstorm or a burst pipe. It also pays if you’re legally responsible for someone else’s injury or property damage, and it covers extra living costs if you can’t stay at home during repairs [1][4].
Most policies are written on the HO-3 “special form,” the most common type [3][9]. It covers your house on an “open perils” basis: everything is covered unless the policy excludes it. Your belongings are covered on a “named perils” basis: only the causes the policy lists [1][3].
What it won’t cover matters just as much. Floods, earthquakes and slow damage from age, neglect or pests are excluded, so you’ll need separate policies or add-ons for some of those [1]. For quotes and local agents, see our home insurance page.
What are the six parts of a homeowners policy?
Your declarations page lists a limit for each of the six coverages, A through F. Here’s what each one does, with limits state regulators call typical:
| Coverage | What it pays for | Typical limit |
|---|---|---|
| A: Dwelling | Your house and attached structures, like an attached garage or deck | What it would cost to rebuild [4] |
| B: Other structures | Detached garage, shed, fence, gazebo | Usually 10% of Coverage A [1][4] |
| C: Personal property | Furniture, clothes, electronics, anywhere in the world | Usually 50% to 70% of Coverage A [4][7] |
| D: Loss of use | Extra costs for a hotel, meals and mileage if your home is unlivable | Often 20% of Coverage A [4] |
| E: Personal liability | Injury or damage you’re legally responsible for, plus your legal defense | Most policies start at $100,000 [4] |
| F: Medical payments to others | Guests’ medical bills, whoever is at fault | Most policies start at $1,000 [4] |
A few details catch people out:
- Coverage A should match rebuild cost, not market value. Insurers price the rebuild from your square footage, construction and features [4]. Estimate yours with our home replacement cost calculator.
- Coverage C may pay depreciated value. The standard form pays for belongings at actual cash value [1]. Even replacement cost policies often pay the used value first, then the rest once you replace the item [4].
- Coverage D pays extra costs only. Your normal mortgage and utility bills aren’t covered [4].
- Coverages E and F never pay for your own household. Injuries to you or relatives who live with you are excluded [1]. For higher liability limits, look at an umbrella policy.
Extras built into the policy
The standard form also includes smaller “additional coverages” [1]:
- Debris removal, plus an extra 5% of the limit if the damage uses up the main limit.
- Ordinance or law: up to 10% of Coverage A to bring repairs up to current building codes.
- Credit card fraud and forgery: up to $500, with no deductible.
- Loss assessment: up to $1,000 toward a homeowners association charge.
- Damage to other people’s property: up to $1,000 per occurrence for damage someone in your household causes.
What does a homeowners policy actually protect against?
Your house (Coverages A and B) is covered against “direct physical loss” from any cause the policy doesn’t exclude [1]. That’s why most of the fine print lists exclusions.
Your belongings (Coverage C) work the other way around. The standard form lists 16 perils [1]:
- Fire or lightning, windstorm or hail, explosion, smoke
- Riot or civil commotion, aircraft, vehicles, falling objects
- Vandalism or malicious mischief, theft, volcanic eruption
- Weight of ice, snow or sleet
- Accidental discharge or overflow of water or steam
- Sudden cracking, burning or bulging of a heating, AC or water heating system
- Freezing of plumbing or appliances
- Sudden damage from artificially generated electrical current
Homeowners policy types at a glance
Not every policy is an HO-3. The NAIC defines the standard forms this way [2]:
| Form | Who it’s for | How it covers |
|---|---|---|
| HO-1 (basic) | Homeowners | Named perils only, such as fire, lightning, windstorm and theft |
| HO-2 (broad) | Homeowners | More named perils, including falling objects and some water damage |
| HO-3 (special) | Homeowners | All perils except exclusions for the house; named perils for belongings |
| HO-4 (renters) | Renters | Belongings on a broad named-perils basis |
| HO-5 (comprehensive) | Homeowners | Open perils for both house and belongings |
| HO-6 (condo) | Condo owners | Your unit’s interior and belongings |
| HO-7 (mobile home) | Mobile home owners | Open perils for the home, named perils for belongings |
| HO-8 (modified) | Older or high-risk homes | Limited coverage |
What doesn’t homeowners insurance cover?
The standard form excludes these causes of loss, even when another cause contributes [1]:
- Flood and surface water, including waves, tides and storm surge. You need separate flood insurance [4].
- Sewer or drain backup and sump pump overflow, unless you add an endorsement [1][4].
- Groundwater seeping through a foundation, driveway or pool.
- Earth movement: earthquake, landslide, mudslide and sinkhole. Earthquake insurance is sold separately [4].
- Wear and tear, mechanical breakdown, rust, rot and settling or cracking.
- Mold, fungus and wet rot, except hidden mold from a covered leak.
- Birds, rodents and insects, and damage from animals you own.
- Neglect, intentional damage, war, nuclear hazard and power failures that start off your property.
There’s a useful exception. If an earthquake or flood causes a fire, explosion or theft, that resulting loss is covered [1].
Liability has its own exclusions. Your home policy won’t pay for accidents involving your registered car, your business, or injuries you meant to cause [1].
Vacancy matters too. Vandalism isn’t covered once the home has sat empty for more than 60 days in a row [1].
What are the special limits on cash and jewelry?
Your Coverage C limit might be $200,000, but some items have much lower caps. These come from the standard form [1]:
| Property | Most the policy pays per loss |
|---|---|
| Cash, coins, gold and silver bullion | $200 |
| Securities, deeds, passports, tickets, stamps | $1,500 |
| Jewelry, watches and furs (theft only) | $1,500 |
| Firearms (theft only) | $2,500 |
| Silverware and goldware (theft only) | $2,500 |
| Business property at home | $2,500 |
| Watercraft, including trailers and motors | $1,500 |
| Belongings in a self-storage unit | 10% of Coverage C or $1,000, whichever is more |
If a $6,000 engagement ring is stolen, the policy pays $1,500 at most. A valuable items policy or scheduled endorsement covers the full value. Either way, you’ll need proof of what you owned, so start a list in our home inventory builder.
Does homeowners insurance cover it? A quick yes/no table
This table follows the standard HO-3 form. Your own policy and endorsements decide the final answer.
| Situation | Covered? | What decides it |
|---|---|---|
| Fire and smoke | Yes | Fire is covered for your house and belongings [1] |
| Theft | Yes | Includes items stolen from your car; caps apply to jewelry, cash and guns [1] |
| Burst pipe | Yes | If sudden and accidental. The pipe itself isn’t covered; tearing out walls to reach it is [1] |
| Slow plumbing leaks | No | Gradual leaks usually aren’t covered [5] |
| Frozen pipes | Usually | Only if you kept the heat on or drained the system [1] |
| Water damage from rain | Sometimes | Belongings are covered only if wind or hail first opens the roof or a wall [1] |
| Roof leaks | Sometimes | Yes after storm damage; no for age or wear. Delaying repairs can void coverage [1][5] |
| Roof replacement | Sometimes | Only if a covered peril damaged it. Actual cash value policies subtract for age [6] |
| Mold | Rarely | Only hidden mold from a covered leak; some insurers sell limited mold cover [1][5] |
| Foundation issues | Rarely | Settling, cracking, earth movement and groundwater are excluded [1] |
| Termite damage | No | Insects are excluded, except collapse from hidden damage you didn’t know about [1] |
| Hurricane damage | Partly | Wind is covered, often with a separate deductible. Storm surge is not [1][11] |
| Flood | No | Excluded, even in flood zone X [1] |
| Earthquake | No | Excluded; separate policy or endorsement [1][4] |
| Dog bites | Usually | Covered by liability up to your limit. Some insurers restrict breeds [10] |
| Storage unit | Yes | Up to 10% of Coverage C or $1,000 [1] |
| AC unit | Sometimes | Not for breakdown or age; yes if fire, lightning or a falling tree damages it [1] |
| Sewer backup | No | Needs an endorsement [1][4] |
| Tree removal | Limited | $500 per tree, $1,000 per loss; see tree removal rules [1] |
| Car in the driveway | No | Vehicles are excluded; that’s auto insurance [1] |
Two rows deserve a closer look. The average dog-related liability claim cost $65,450 in 2025, according to Triple-I and State Farm data [10]. And Texas regulators note that home policies on the Gulf Coast usually don’t cover wind and hail [6].
How do claims get paid?
Three rules shape the size of your check.
Deductibles. You pay the deductible on each loss. If two deductibles apply, only the highest one counts [1]. Nineteen states and Washington, D.C., have hurricane deductibles, usually 1% to 5% of the home’s insured value [11]. On a $300,000 home, a 2% hurricane deductible is $6,000. Earthquake deductibles are usually 10% to 20% [4]. Try different amounts in our deductible calculator.
Replacement cost vs. actual cash value. Replacement cost pays to rebuild at today’s prices. Actual cash value subtracts depreciation. Texas regulators give this example: a 10-year-old roof costs $10,000 to replace, its actual cash value is $7,000, and after a $2,000 deductible you’d get $5,000 [6]. Tennessee’s regulator adds that insurers may pay actual cash value first and the difference once you send a receipt [8]. Under the standard form, the insurer pays actual cash value until repairs are done, unless the job is under $2,500 and under 5% of your coverage [1].
The 80% rule. You get full replacement cost only if your dwelling limit is at least 80% of the rebuild cost [1].
Say your home would cost $400,000 to rebuild, you insured it for $280,000 (70%), and a kitchen fire does $40,000 of damage.
- 80% of $400,000 = $320,000
- $280,000 ÷ $320,000 = 87.5%
- 87.5% × $40,000 = $35,000, minus your deductible
Insure for $320,000 or more and the policy pays the full $40,000, minus the deductible. If actual cash value is higher than the reduced amount, the form pays that instead [1].
What are the most common homeowners claims?
Wind and hail top the list. Here’s each cause’s share of homeowners losses in 2023, from ISO data published by Triple-I [9]:
- Wind and hail: 42.5%
- Water damage and freezing: 22.6%
- Fire and lightning: 21.6%
- Theft: 0.6%
- Liability (injuries and damage to others): 2.1%
About 5.3% of insured homes had a claim in 2023, and the average claim paid was $20,062 [9]. That data excludes Texas and Alaska.
If you need to file, our claim checklist covers photos, receipts and deadlines. The standard form asks for a signed proof of loss within 60 days of the insurer’s request [1].
How can you fill the gaps?
Most gaps can be closed for an extra premium. Washington’s insurance regulator lists these common add-ons [4]:
- Flood insurance, through the National Flood Insurance Program.
- Earthquake coverage, with its own deductible.
- Sewer backup or sump pump overflow endorsement.
- Home business coverage, since business liability is excluded [1].
- Umbrella liability above your home and auto limits.
Texas regulators list foundation and slab damage and mold removal among common endorsements [6].
Not sure where your policy stops? Run our coverage gap check or browse coverage types. An independent agent can quote add-ons side by side. Find an insurance agent or search agencies near you.
Homeowners insurance FAQ
Is homeowners insurance required?
If you have a mortgage, in practice yes. Lenders generally require proof of homeowners insurance, according to the Consumer Financial Protection Bureau [12]. If you own your home outright, it’s still the main protection for what’s likely your biggest asset.
Does homeowners insurance cover my belongings away from home?
Yes, the standard form covers your personal property anywhere in the world [1]. Items usually kept at a second home or in a storage unit are capped at 10% of Coverage C or $1,000, whichever is more [1].
Does homeowners insurance cover injuries to my own family?
No, personal liability and medical payments coverage exclude you and relatives who live with you [1]. Your family’s injuries go through health insurance instead.
How much does homeowners insurance cost?
The national average homeowners premium was $1,569 in 2022, according to NAIC data published by Triple-I [9]. Your price depends on your rebuild cost, location, construction, claims history and deductible [4].
The bottom line
Homeowners insurance covers sudden, accidental damage to your home and belongings, plus your liability to others. It doesn’t cover floods, earthquakes or slow damage you could have prevented. Check your Coverage A against rebuild cost, look at the special limits, and add the endorsements your area needs. More guides are on our insurance blog.
Sources
- ISO Homeowners 3 Special Form HO 00 03 05 11 (Maine Bureau of Insurance copy)
- NAIC, Definitions for State Regulator: Homeowners Market Data Call 2026
- Nebraska Department of Insurance, “Policy Forms: What You Need to Know”
- Washington State Office of the Insurance Commissioner, “A consumer’s guide to: Homeowner insurance” (Rev. 3/26)
- Washington State Office of the Insurance Commissioner, “Leaks, water damage and mold”
- Texas Department of Insurance, “Home insurance guide” (updated June 1, 2026)
- South Carolina Department of Insurance, “Understanding Basic Homeowners Insurance”
- Tennessee Department of Commerce and Insurance, “Knowing Your Insurance Policy: Actual Cash Value v. Replacement Cost” (updated Mar. 30, 2026)
- Triple-I, “Facts + Statistics: Homeowners and renters insurance”
- Triple-I, “Spotlight on: Dog bite liability”
- Triple-I, “Background on: Hurricane and windstorm deductibles”
- Consumer Financial Protection Bureau, “What is homeowner’s insurance? Why is homeowner’s insurance required?” (reviewed Aug. 8, 2024)