What Does Homeowners Insurance Actually Cover? What’s In and What’s Not

Last reviewed: October 2026 · SmartCoverage Editorial Team · How we research

A standard homeowners policy covers your house, your other structures, your belongings, extra living costs if you have to move out, and your liability if someone is hurt or their property is damaged. It pays for damage that is sudden and accidental, like a fire, a windstorm, a burst pipe or a break-in.

What it leaves out matters just as much: floods, earthquakes, sewer backups, slow leaks, pests and general wear. Most disputes between homeowners and insurers come from that second list, so it gets as much space here as the first.

The six parts of a homeowners policy

Almost every homeowners policy in the US is built on the same structure, and your declarations page lists a limit for each part. The most common type is the HO-3, and the letters below are how it labels them.

The number that matters most is Coverage A. It should match what it would cost to rebuild your home at today’s labor and material prices, which can be very different from what the home would sell for. Land is not included, because land does not burn down. If your dwelling limit is too low, every other part of the policy shrinks with it, since B, C and D are usually set as a percentage of A.

Which kinds of damage are covered

An HO-3 treats the house and your belongings differently, and that difference explains a lot of claim surprises.

Your house (Coverage A and B) is covered on an open perils basis. Any cause of damage counts unless the policy specifically excludes it. That is the broadest protection a standard policy offers.

Your belongings (Coverage C) are usually covered only for named perils, a list of 16 causes in the standard form. It includes fire and lightning, windstorm and hail, explosion, smoke, theft, vandalism, falling objects, the weight of ice and snow, sudden water discharge from plumbing or appliances, freezing pipes and sudden electrical damage, among others. If what broke your television is not on the list, the claim fails. An HO-5 policy extends open-perils protection to belongings too, at a higher price.

Test what you think you know with the eight situations below. They are the claims people most often get wrong.

The big exclusions

Flood. Water that rises from outside, from heavy rain, overflowing rivers or storm surge, is excluded from standard policies. FEMA notes that just one inch of floodwater can cause more than $25,000 of damage. Flood insurance through the National Flood Insurance Program covers up to $250,000 for the building and $100,000 for contents, and a new policy usually takes 30 days to start, so buying one when a storm is on the forecast is too late. Private flood insurers can offer higher limits.

Earthquake and earth movement. Landslides, sinkholes in most states and earthquakes need a separate endorsement or policy. In California, most earthquake coverage is sold through the California Earthquake Authority via participating insurers. Fire caused by an earthquake is usually still covered.

Water backup. Water that comes up through a drain or sewer line is excluded unless you buy a backup endorsement. If you have a finished basement or a sump pump, this is one of the cheapest add-ons worth having.

Wear, maintenance and slow damage. Insurers do not pay for the predictable: an aging roof that leaks, rot from a drip that went on for months, mold that grew because a problem was ignored, cracks from settling. The test is whether the damage was sudden and accidental.

Pests. Termites, rodents and other vermin are excluded. So is damage from your own pets to your own home.

Business activity. If you run a business from home, business equipment is covered only up to a low limit and business liability usually not at all. A home business endorsement or a separate policy fills the gap.

Two more catch people after a large loss. Building codes change, and if your home must be rebuilt to the current code, the extra cost is covered only up to an ordinance or law limit, often 10% of Coverage A. And if your area sees a major disaster, local building costs can jump. Extended replacement cost cover, typically adding 25% to 50% above your dwelling limit, protects against both, and it is worth asking about in older homes. Our guide to insuring an older home goes into detail.

Limits inside the limits

Your personal property limit might be $200,000, but some items have much smaller caps of their own. In the standard HO-3 form, theft of jewelry, watches and furs is capped at $1,500 in total. Cash is capped at $200, stolen firearms at $2,500, stolen silverware at $2,500, and business property kept at home at $2,500. Insurers can change these amounts, so check your own policy.

If you own anything valuable in those categories, list it on a scheduled personal property endorsement. Scheduled items are usually covered for their appraised value, often with no deductible, and for more than theft, including simply losing a ring down a drain.

Also check how belongings are valued. Many policies pay actual cash value for personal property, which deducts depreciation: a five-year-old sofa pays out far less than a new one costs. Replacement cost coverage for contents usually adds only a modest amount to the premium.

Quick answers

Does homeowners insurance cover mold?

Only when it results from a covered event, such as a sudden pipe burst, and many policies cap mold cleanup at a small amount. Mold from humidity or a long-running leak is not covered.

Is my roof covered if it is old?

Storm damage to an old roof is still covered, but some insurers pay roofs over a certain age at actual cash value, which can leave you paying a large share of a replacement. Check your policy for a roof payment schedule, especially in hail-prone states.

Does it cover my car?

No. Damage to your car, even in your own garage, is a matter for your auto policy’s comprehensive coverage. Belongings stolen from the car are covered by homeowners, as the quiz above shows.

Am I covered if a guest is injured on my property?

Yes, through Coverage F for small medical bills and Coverage E if the guest makes a liability claim. If your assets are larger than your liability limit, an umbrella policy adds $1 million or more for a relatively low price.

Five minutes with your declarations page

Pull up your policy and find the declarations page, usually the first few pages. Confirm that Coverage A matches a recent rebuild estimate rather than your purchase price. Look for the words “replacement cost” next to both the dwelling and personal property. Check whether you have a separate wind, hail or hurricane deductible, and how much it is in dollars. Then look for three endorsements: water backup, scheduled personal property and extended replacement cost. If any are missing and would matter to you, ask your agent for the price of adding them at your next renewal.

If you are shopping, compare those details across quotes as well as the price. Our ranking of the best homeowners insurance companies covers service and claims handling, and our state price guide shows what a typical policy costs where you live. Renters need different coverage; see the best renters insurance companies.

This article explains how standard homeowners policies generally work. It is not legal or insurance advice. Policy wording, endorsements and state rules vary, and your own policy is what decides a claim. Talk to a licensed agent about your situation.

Sources

• FEMA: Flood insurance, an important resource (NFIP limits, waiting period, cost of one inch of water)
• South Carolina Department of Insurance: Understanding basic homeowners insurance
• NAIC: Hurricane deductibles
• California Earthquake Authority
• Insurance Services Office (ISO) Homeowners 3 Special Form, HO 00 03, standard policy wording used by many insurers