The 4 Main Coverage Areas
A standard homeowners policy (called an HO-3) covers four main areas: your dwelling, other structures, personal property, and liability. Here's what each covers:
| Coverage Type | What It Covers | Typical Limit |
|---|---|---|
| Dwelling (Coverage A) | Your home's structure — walls, roof, floors, built-ins | Full replacement cost |
| Other Structures (B) | Detached garage, fence, shed, driveway | 10% of dwelling coverage |
| Personal Property (C) | Furniture, electronics, clothing, appliances | 50–70% of dwelling |
| Loss of Use (D) | Hotel/rent while your home is repaired | 20–30% of dwelling |
| Personal Liability (E) | Injuries or damage you cause to others | $100K–$500K |
| Medical Payments (F) | Guest injuries on your property | $1K–$5K |
What Is and Isn't Covered
✅ Typically Covered
- Fire and smoke damage
- Wind and hail damage
- Lightning strikes
- Burst or frozen pipes
- Theft and vandalism
- Falling objects (trees)
- Explosion damage
- Riot or civil commotion
- Ice dam damage
- Electrical surges
❌ Typically NOT Covered
- Flooding (needs flood policy)
- Earthquakes (needs separate policy)
- Normal wear and tear
- Pest/termite damage
- Mold from neglect
- Sewer backup (add-on needed)
- Home business equipment
- Intentional damage
- Nuclear hazard
- Government action
Water Damage: The Most Misunderstood Coverage
Water damage is the most common source of confusion for homeowners. The rule of thumb: water that comes from inside your home (burst pipe, overflowing appliance, ice dam) is typically covered. Water that comes from outside your home (rising floodwater, storm surge, heavy rain entering through foundation) is NOT covered and requires a separate flood insurance policy through the NFIP or a private insurer.
Important: Only about 4% of homeowners have flood insurance, yet flooding is the most common and costly natural disaster in the U.S. If you're in a flood-prone area, a separate flood policy is essential.
Personal Property: What's the Limit?
Your personal property coverage has an overall limit (usually 50–70% of your dwelling coverage), but also has per-item sublimits for high-value categories. Standard policies typically cap coverage at:
- Jewelry — $1,500–$2,500 per item (add a rider for expensive pieces)
- Firearms — $2,500 total
- Cash — $200–$500
- Electronics — usually covered at full value up to policy limit
- Business property at home — $2,500 (very limited for home offices)
- Fine art/collectibles — may need a scheduled floater
Liability Coverage: Often Overlooked
Your personal liability coverage protects you if someone is injured on your property or if you accidentally damage someone else's property. It covers legal defense costs and any settlement or judgment, up to your policy limit. Most standard policies include $100,000 in liability coverage — many experts recommend $300,000–$500,000, especially if you have a pool, trampoline, or dog.
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