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Homeowners insurance is required by your mortgage lender and provides broad protection — but specific events and damage types are excluded that surprise many homeowners when they file a claim. Here is a complete breakdown of what standard policies cover, what is excluded, and what additional coverage you need for the gaps.
What Standard Homeowners Insurance (HO-3) Covers
Dwelling Coverage
Covers the structure of your home — walls, roof, floors, built-in appliances — against damage from covered perils. HO-3 policies cover the dwelling on an open-perils basis, meaning all causes of damage are covered except those specifically excluded.
Common covered perils: fire and smoke, wind and hail, lightning, vandalism, theft, falling objects, weight of ice/snow, damage from water or steam from burst pipes or appliances.
Personal Property Coverage
Covers your belongings inside the home against the same named perils that cover the dwelling. Most HO-3 policies cover personal property on a named-perils basis (only listed causes), while the dwelling has open-perils coverage. This asymmetry catches homeowners off guard — verify your policy.
Personal property sublimits for high-value items apply: jewelry ($1,500-$2,500 typically), firearms ($2,500), cash ($200), silverware ($2,500), electronics. If you own items above these sublimits, add a floater endorsement to schedule them specifically.
Liability Coverage
Covers you if someone is injured on your property or if you accidentally damage someone else’s property. Standard liability: $100,000-$300,000. If you have significant assets, consider adding an umbrella policy for additional liability above your homeowners limit.
Loss of Use / Additional Living Expenses
If your home is uninhabitable due to a covered loss, ALE covers temporary housing, meals, and other increased living expenses while your home is repaired. Typically 20-30% of your dwelling coverage amount.
What Homeowners Insurance Does NOT Cover
Flooding
Standard homeowners insurance does not cover flood damage from external water sources. Floods from rivers, storm surge, heavy rainfall, and overflowing drainage are excluded. Flood insurance is purchased separately through FEMA’s National Flood Insurance Program (NFIP) or private flood insurers.
About 20% of flood insurance claims come from areas outside high-risk flood zones. If you live anywhere near water, evaluate your flood risk at floodsmart.gov.
Earthquakes
Earthquake damage is excluded from standard homeowners policies. California, the Pacific Northwest, the New Madrid Seismic Zone, and other seismically active areas require a separate earthquake endorsement or policy. CEA (California Earthquake Authority) is the largest source of earthquake insurance in California.
Maintenance and Wear and Tear
Insurance covers sudden, accidental damage — not the results of deferred maintenance. A roof that gradually deteriorated over 20 years, a foundation that settled due to soil conditions over decades, or appliances that failed from normal use are not covered. Insurance is not a home warranty.
Sewer Backup
Water damage from a backed-up sewer or drain is not standard. A sewer backup endorsement (typically $50-$100/year) adds this coverage. Worth considering in older homes or areas with aging sewer infrastructure.
Home Business Equipment
Business equipment used at home has limited coverage under standard policies. If you work from home with expensive equipment, a business property endorsement or separate business insurance covers the gap.
How Much Coverage You Need
Dwelling coverage should equal the replacement cost of rebuilding your home — not its market value. In many markets, replacement cost (the cost to rebuild) is higher or lower than market value (what you could sell for). Your insurer’s replacement cost estimator helps calculate this. Underinsuring is common after years of home price appreciation — review your coverage limit annually.
Personal property coverage: take a home inventory. Video walk through your home and document your belongings. Most people discover they own significantly more than they estimated. Store the video in cloud storage — accessible even if your home burns down.
Sources: Insurance Information Institute homeowners insurance guide; FEMA National Flood Insurance Program; NAIC homeowners insurance report 2026. This article is for informational purposes only. Review your specific policy for coverage details.
