clock menu more-arrow no yes

What Does Homeowners Insurance Cover?

Homeowners insurance policies have six types of standard coverage, including dwelling, other structures, personal property, additional living expenses, personal liability, and medical payments.

Stone house surrounded by large, blooming trees with green yard. Adobe

Homeowners insurance is a form of financial protection that can help you rest easy at night. Not only does it protect the physical structure of your home, but it also safeguards your personal belongings and helps cover other expenses after an accident.

However, homeowners insurance doesn’t protect you from all unfortunate incidents, and not all homeowners insurance companies offer the same quality of customer service, coverage, or affordability. To help you determine the best fit for your needs, the This Old House Reviews Team has rounded up our recommendations for the best homeowners insurance companies.

Key Takeaways

  • Homeowners insurance has six types of coverage, including dwelling, personal property, other structures, loss of use, liability, and medical payments coverage.
  • Each coverage type is insured up to the policy limit you select.
  • Homeowners insurance only covers you for specific incidents like fire and theft.
  • Companies determine policy rates by evaluating factors like the state you live in and the safety of your neighborhood.
  • States do not require homeowners insurance, but many mortgage lenders do.

What is Homeowners Insurance?

Homeowners insurance is a financial safety net that protects your most valuable asset when specific events, or perils, occur. Covered perils typically include:

  • Fire and smoke
  • Lightning
  • Wind
  • Hail
  • Theft
  • Vandalism
  • Weight of ice, sleet, or snow
  • Explosions
  • Motor vehicles or aircraft

What Does Homeowners Insurance Cover?

A homeowners insurance is split into six protections: dwelling, other structures, personal property, loss of use/additional living expenses, personal liability, and medical expenses. Here is a breakdown of each type, including their typical limits.

Dwelling Coverage

This form of coverage helps cover the cost of repairing or rebuilding your home after it is damaged or destroyed by a covered peril. It covers both the interior and exterior structure of your home as well as any built-in systems and appliances like an HVAC system or attached structures like a garage or deck. You can calculate the rebuilding cost of your home by talking to a local real estate agent, by multiplying your square footage by local building costs, or by using an online calculator from an insurance company.

Other Structures Coverage

This form of coverage helps cover the cost to repair or rebuild your home’s detached structures like a separate garage, shed, or fence. Coverage is usually 10% of your dwelling limit.

Personal Property Coverage

If your personal belongings like your clothing, furniture, electronics, or appliances are damaged, destroyed, or stolen, your home insurance company will reimburse you to replace them. Valuable possessions like jewelry, furs, firearms, and antiques aren’t usually covered with basic personal property coverage, but you can usually buy an add-on for them.

A good way to determine the amount of personal property coverage you need is by conducting a home inventory. You can create a spreadsheet of all the items in your home and estimate how much they’re worth.

Loss of Use/Additional Living Expenses Coverage

Loss of use coverage reimburses you for the additional costs incurred while living away from your home if it is damaged or destroyed by a covered peril. This includes bills from hotel stays, laundromats, restaurant meals, and pet boarding.

The homeowners insurance company will reimburse you for the additional amount you spend. For example, if you typically pay $200 a month for groceries but spend $400 on food when you’re living in a hotel and don’t have access to a kitchen, your insurer will write you a check for the difference of $200. Coverage is usually 10%-30% of your dwelling coverage.

Personal Liability Coverage

Liability coverage protects you when you or a family member causes property damage or personal injury to someone or something outside of the home. For example, if your trampoline hits your neighbor’s house during a windstorm, your insurance company will pay for the damage.

Personal liability coverage is usually $100,000-$500,000. It’s recommended that you purchase enough coverage to protect all of your assets. If your assets are worth more than the maximum amount of liability coverage your provider offers, you can purchase a personal umbrella policy in addition to the home insurance policy.

Medical Expenses Coverage

This coverage helps cover the cost of medical expenses when a guest is injured on your property. Most insurance companies offer between $1,000 and $5,000 per person.

Endorsements

Companies usually offer a few add-on coverages, called endorsements, that you can tack onto your policy for an additional cost. These will differ from company to company, but common ones include:

  • Water backup
  • Equipment breakdown
  • Identity theft
  • Earthquake
  • Service line

What Does Homeowners Insurance Not Cover?

If your home is damaged or destroyed by an event not outlined as a covered peril, your homeowners insurance company will not cover it. Natural disasters like floods, earthquakes, and hurricanes are not typically on the list of perils and neither is damage from neglect like mold and rust nor normal wear and tear.

Coverage Limits and Deductibles

Every form of coverage in your policy is subject to a limit, which is the maximum amount your insurer will pay toward a covered loss. For example, if you have $20,000 of other structures coverage, your provider won’t pay more than $20,000 for repairs.

Your deductible is the amount of money you pay out of pocket before your homeowners insurance protection will kick in. Standard policy deductibles range from $500-$2,500 and are paid directly to your provider.

How Are Home Insurance Rates Determined?

Your homeowners insurance company will evaluate a wide variety of factors to calculate your insurance rate, including:

  • Where you live
  • The square footage of your home
  • The age of your home
  • The condition of your home
  • Your past claims history
  • Your credit score

Our Top Recommendations for Homeowners Insurance

The This Old House Reviews Team has reviewed many home insurance companies, evaluating key factors like coverage, cost, and customer service to help you find the best company for you. Here are our top three recommendations for homeowners insurance.

Allstate: Best Overall

Allstate takes the top spot for its comprehensive coverage and high-quality customer service. Key benefits include:

  • 60% or 75% of dwelling coverage for personal property coverage
  • 24/7 customer service for all questions
  • Claim rate guard endorsement to prevent your premium from increasing when you file a claim

Amica: Best Liability Coverage

Amica provides comprehensive coverage and unique endorsements. Key benefits include:

  • Liability coverage between $25,000 and $1 million
  • Self-service with a mobile app, customer portal, and online chat
  • Natural disaster endorsement

Lemonade: Quickest Sign-Up

Lemonade is a newcomer to the industry that offers affordable rates and fast customer service. Key benefits include:

  • Approval of most claims instantly
  • Affordable premiums starting at $25/month
  • Giveback program that donates unused policy money to charities

Frequently Asked Questions

Does homeowners insurance cover plumbing issues?

This will depend on your policy. It will likely cover issues from a frozen pipe or a sudden and accidental discharge of water, but it won’t cover normal wear and tear. For that type of protection, consider a home warranty.

What is the best company for homeowners insurance?

We rank Allstate as the best homeowners insurance company because of its comprehensive coverage, 24/7 customer service center, and several endorsement options for policy customization.

Does homeowners insurance cover dog attacks?

Your personal liability coverage usually covers expenses associated with your dog biting someone. However, many homeowners insurance companies won’t cover certain breeds they deem as aggressive like pit bulls.

To share feedback or ask a question about this article, send a note to our Reviews Team at reviews@thisoldhousereviews.com.