A homeowners insurance policy can look like a long legal document, but most policies follow the same structure. Once you understand the six main coverage sections and the most common exclusions, you can read your own declarations page and know exactly what is protected and what is not.
Coverages A to D protect your property; E and F protect you from liability and guest medical costs.
Flood, earthquake, wear and tear, and gradual damage are usually excluded.
Endorsements let you add coverage the standard policy leaves out.
The declarations page
The first page of your policy, called the declarations page, lists your name, address, policy period, coverage limits, deductibles and premium. It is the quickest way to check what you have.
Property coverages
Coverage A: Dwelling
Pays to repair or rebuild the house itself and attached structures such as an attached garage. The limit should match the cost to rebuild your home.
Coverage B: Other structures
Covers detached structures like a fence, shed or detached garage. Often set at about 10% of Coverage A.
Coverage C: Personal property
Covers your belongings, such as furniture, clothes and electronics, at home and often while traveling. Many policies set this at 50% to 70% of Coverage A. Expensive items like jewelry have lower sub-limits for theft unless you schedule them separately.
Coverage D: Loss of use
Also called additional living expenses. If a covered loss makes your home unlivable, this pays extra costs such as a hotel, rent and meals above your normal spending.
Liability coverages
Coverage E: Personal liability
Pays legal defense costs and damages if you are found responsible for injuring someone or damaging their property, for example if a visitor falls on your stairs or your dog bites someone.
Coverage F: Medical payments to others
Pays small medical bills for guests injured on your property, regardless of fault. Limits are usually a few thousand dollars.
Common exclusions
Flood: requires separate flood insurance.
Earthquake and earth movement: requires a separate policy or endorsement.
Wear and tear, maintenance problems and gradual leaks.
Mold, rot and pests, except limited coverage in some policies.
Sewer or drain backup unless you add an endorsement.
Intentional damage and some business activities run from home.
Useful endorsements
Water backup coverage
Scheduled personal property for valuables
Extended or guaranteed replacement cost on the dwelling
Ordinance or law coverage for code upgrades when rebuilding
Home business coverage
Perils: named vs. open
A “named perils” policy only covers causes listed in the policy, such as fire, lightning, windstorm, hail, theft and vandalism. An “open perils” policy covers every cause except those excluded. Standard HO-3 policies cover the house on an open-perils basis and belongings on a named-perils basis. For help choosing a policy type, see how to choose the right home insurance.
How to review your own policy
Check that Coverage A matches a current rebuild estimate.
Confirm whether belongings are covered at replacement cost.
Look at your deductible, including any separate wind or hurricane deductible.
Read the exclusions list and decide whether you need flood, earthquake or water backup coverage.
Frequently asked questions
Does homeowners insurance cover a burst pipe?
Sudden and accidental water damage, such as a pipe bursting, is usually covered. Damage from a slow leak over time usually is not.
Is homeowners insurance required?
No state law requires it, but mortgage lenders almost always do.
This article is general information, not insurance advice. Always read your own policy wording, which can differ from these general descriptions.
