What does homeowners insurance cover?
By Colson · Updated June 13, 2026
A standard HO-3 homeowners policy covers four things: your dwelling, your personal property, personal liability, and loss of use (extra living costs if your home is uninhabitable). It excludes floods and earthquakes, which need separate policies.
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Dwelling (Coverage A) pays to rebuild your home's structure. Personal property (Coverage C) covers your belongings, usually at 50–70% of the dwelling amount. Personal liability (Coverage E) protects you if someone is injured on your property or you damage others' property. Loss of use (Coverage D) pays extra living expenses while your home is repaired.
What's not covered?
Standard policies exclude flood and earthquake damage — both require separate coverage (flood via the NFIP or private insurers). Routine wear and tear, neglect, and some high-value items (jewelry, art) beyond sub-limits are also excluded; valuables can be scheduled with an endorsement.
Replacement cost vs. actual cash value
Replacement-cost coverage pays to replace damaged property at today's prices; actual cash value subtracts depreciation, paying less. Replacement cost costs a bit more in premium but pays far better at claim time — usually worth it for the dwelling and contents.
Frequently asked questions
Does homeowners insurance cover flooding?
No. Standard homeowners policies exclude flood damage. You need a separate flood policy through the National Flood Insurance Program or a private insurer, especially in flood-prone areas.
How much dwelling coverage do I need?
Enough to rebuild your home at current construction costs — its rebuild cost, not its market value or purchase price. An insurer or contractor estimate helps set the right Coverage A amount.
Does homeowners insurance cover my belongings away from home?
Usually yes — personal property coverage typically follows your belongings off-premises (e.g., stolen luggage), subject to your limits and deductible.
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