Host Kevin O’Connor meets with an insurance expert to better understand what coverages are included in a standard homeowner’s insurance policy, what should be added, and what questions to ask your agent when choosing or updating the right policy for your home.
Most homeowners have insurance, as it’s required by almost all mortgage lenders, but surprisingly few truly understand what their policy covers. Many treat it as a “set it and forget it” safety net, only discovering gaps in coverage when disaster strikes, and it’s too late to adjust.
Many homeowners buy a property, feel overwhelmed by the homebuying process, and might agree to whatever policy they’re given at the time, no questions asked. Before they know it, they’re years in to owning and are now too afraid to ask questions.
The good news? There’s nothing to be embarrassed about. Home insurance is genuinely complicated. Understanding the basics can help you make informed decisions about protecting what’s likely your largest investment.
Kevin O’Connor talks with Angela Glentadakis-Turpin, owner of Zellik Insurance Agency and licensed property and casualty insurance specialist, to get a basic breakdown of what you should know about homeowners’ insurance policies.
The Two Main Sections of Homeowners Insurance
A standard homeowners insurance policy is what the industry calls a “package policy”—it combines two types of coverage, Property and Casualty insurance (P&C), into one document:
Section I: PROPERTY COVERAGES: protects your physical assets
Section II: LIABILITY COVERAGES: protects you financially if someone is injured on your property or you damage someone else’s property
Let’s break down each section:
Section I: PROPERTY COVERAGES
Property coverage has four components that protect different aspects of your home and belongings:
Coverage A: Dwelling
The first coverage section covers the main home structure (walls, roof, foundation) and any attached structures (such as a garage or deck).
This coverage should reflect the cost of rebuilding your home from the ground up, not its market value or the amount you paid for it. Know what kind of disasters are covered in this section and what is excluded. Events like floods and earthquakes are often not covered and will require a separate policy or an endorsement.
Coverage B: Other Structures
This covers detached structures on your property: detached garages, sheds, fences, gazebos, driveways, and similar features. These are typically covered at 10% of your dwelling coverage amount, though you can usually increase this if needed.
Coverage C: Personal Property
This protects your belongings—furniture, clothing, electronics, appliances, and more. Angela offers a simple way to think about it: “If you take the house and flip it upside down, everything that falls out” is personal property. The built-in bookcase stays with the house, but the books inside it fall into this category.
Important Note: Standard policies typically cap coverage for high-value items like jewelry, firearms, and collectibles at around $1,000-$2,000. We’ll discuss how to properly insure valuables later.
Coverage D: Loss of Use
If your home becomes uninhabitable due to a covered claim, for example, a fire damages your kitchen, and you can’t safely live there during repairs, this coverage pays for temporary housing, meals, and other additional living expenses.
Most policies include time limits and payment caps, so review these carefully with your agent.
Section II: LIABILITY COVERAGES
Liability protection is the second pillar of your homeowner’s insurance, and it’s just as important as property coverage.
Coverage E: Personal Liability
This section will provide coverage if you or someone else in the household is found legally responsible for injury to another person or damage to another person’s property.
You’ll see much larger coverage amounts here—typically $500,000 to $1 million. This is to cover damages and legal expenses. Not all situations will be covered, like intentional acts. Look at your policy to find all exclusions and limits.
Coverage F: Medical Payments
This covers medical expenses for people who were injured on your property, regardless of fault. This will cover expenses such as medical appointments and emergency transport costs. Medical payment coverage is used for minor injuries that aren’t likely to lead to a lawsuit or large medical bills. Therefore, this section has a lower coverage limit, usually around $5,000.
What’s NOT Covered: Understanding the Gaps
Here’s where many homeowners get caught off guard. Standard policies have significant exclusions and understanding them is critical.
Flood Damage
This is perhaps the most common and costly misconception. For weather-related water coming into your house from outside, it’s not going to be covered under a standard homeowner’s insurance policy.
What IS typically covered: A burst pipe inside your home, flooding your kitchen (as long as it was sudden and accidental, not due to neglect).
What is NOT covered: Rising water from a storm, river overflow, or storm surge entering your home.
Flood insurance must be purchased as a separate policy, often through the National Flood Insurance Program (NFIP). If your home is in a high-risk flood zone and you have a mortgage from a government-backed lender, you’re required to carry flood insurance.
Critical timing: Most flood policies have a 30-day waiting period. You cannot purchase coverage the week before a predicted storm and expect to be protected.
Water Backup
Even if water enters from inside your home, it may not be covered without additional protection. “If you have water backup in the basement, maybe from a sewer pipe that’s clogged and that backs up in the basement, you might not have coverage for it without an endorsement—a water backup endorsement,” Angela warns.
Endorsements: Customizing Your Coverage
Endorsements (also called riders) are additions or amendments to your existing policy that fill specific coverage gaps. Think of them as à la carte options that let you customize your policy to your home’s unique needs.
Regional Endorsements
Insurance needs vary by geography. “Here in New England, we have many homes that are heated by oil,” Angela notes. If that basement oil tank leaks and oil seeps onto the basement floor, “that would be a huge cleanup, a huge environmental problem. An escaped fuel remediation endorsement covers this specific scenario.
In California, homeowners might need earthquake coverage instead. In coastal areas, windstorm coverage may require a separate policy or endorsement.
The Separate Policy Strategy: Jewelry and Valuables
When Kevin mentions adding his wife’s engagement ring to their homeowners’ policy, Angela offers important advice: “You can do that. You can add jewelry to the homeowner’s insurance policy through an endorsement, but we don’t recommend that.”
Here’s why: If you file a claim for that jewelry, it counts against your homeowner’s insurance policy and can trigger a rate increase. Keeping it off your homeowner’s insurance policy and on its own separate policy means that if you have to file a claim on it, it won’t affect your homeowner’s insurance rates.
A separate jewelry policy also typically offers:
- Lower deductible
- Broader coverage, including accidental loss
- Worldwide protection
- Coverage for the full appraised value
The same strategy applies to other high-value items, such as musical instruments, cameras, firearms, or art collections. Anything that is susceptible to loss and could benefit from specialized coverage.
How Claims Affect Your Policy
This is one of the most misunderstood aspects of homeowners’ insurance. Unlike the clear cause-and-effect of car insurance (speeding ticket = rate increase), many homeowners don’t realize that all claims can impact their policy, regardless of fault.
“With a home, when you put in a claim, the thought process is ‘well, it wasn’t my fault that the water backed up’ or that ‘a tree branch fell on my house,’ so I’m going to put the claim in,” Angela explains. “But it’s not like car insurance. In homeowners insurance, all claims count against you and can increase your premium.”
Even minor claims, claim denials, and sometimes backing out of a claim after changing your mind go on your record through a database called the Comprehensive Loss Underwriting Exchange (CLUE). Insurance companies use this database to assess risk and determine premiums. Claims typically stay on your CLUE report for 5-7 years.
Filing two or more claims within 3-5 years can label you as high-risk, potentially resulting in non-renewal or difficulty finding coverage with another insurer.
The bottom line: Only file claims for significant losses you truly cannot afford to pay out of pocket. For smaller repairs, it often makes financial sense to pay yourself rather than file a claim that could increase your premiums for years.
Reviewing Your Coverage
“Start with your agent, get your policy, go over it with them, and then have it checked by somebody else as well,” Angela advises. Regular policy reviews are essential, especially after major life changes:
- Home renovations or additions
- Acquiring expensive items
- Changes in your home’s replacement cost due to rising construction prices
- Marriage, divorce, or children leaving home
Don’t assume your coverage automatically adjusts. Angela recently worked with a client who completed a major renovation that added hundreds of square feet to their home. Their dwelling coverage needed to be increased significantly to reflect the expanded footprint and higher rebuild cost.
A review might also reveal you’re over-insured in some areas, which means you’re paying for coverage you don’t need.
Questions to Ask Your Insurance Agent
When reviewing your policy or shopping for new coverage, come prepared with questions:
What is my dwelling coverage based on, and does it reflect current construction costs in my area?
What specific perils and situations are excluded from my policy?
What endorsements are available, and which ones make sense for my home and location?
How will filing a claim affect my premium and insurability?
What is my deductible? And am I comfortable paying that amount out of pocket if needed?
Do I have adequate liability coverage given my assets and risk exposure?
Are there any discounts I qualify for (security systems, bundling policies, claim-free history)?
The Bottom Line
Homeowners insurance should be tailored to your specific property and circumstances, not treated as a one-size-fits-all product. While the terminology can be confusing and the options overwhelming, taking time to understand your policy protects you from unpleasant surprises when you need coverage most.
“Don’t be afraid to ask questions. It’s never too late,” Angela emphasizes. “Everyone should be able to have a basic understanding of their insurance policies.”
Your home is likely your largest financial asset. Make sure you truly understand what’s protecting it.
For more information about customizing your homeowners’ insurance policy, consult with a licensed insurance agent who can review your specific needs and help you build comprehensive coverage.
Resources
Guest Expert: Angela Glentadakis-Turpin, Agency Principal, P&C
Angela specializes in property and casualty and is the owner of Zellik Insurance Agency, an independent insurance agency located in Salem, MA. Licensed in Massachusetts, New Hampshire, and Maine.
