Homeowner's Insurance Overview
- Admin
- Apr 22
- 4 min read
Updated: Nov 2
What It Covers, What It Doesn’t, and Why It Still Matters — Even if You Own Your Home Outright
Homeowners insurance is more than just a requirement for mortgages — it’s your financial backup plan when something unexpected happens to your home. Fires, storms, theft, water leaks… things happen. Homeowners insurance helps cover those costs so you don’t have to pay everything out of pocket.
Here’s what you need to know.
What Does Homeowners Insurance Cover?
A typical homeowner's policy is made up of 6 standard parts (also called “coverages”). These are available with all homeowner policies and typically Coverage B, C, and D are a percentage of Coverage A.
Coverage A: Dwelling Coverage
Covers: Damage to the structure of your home (walls, roof, foundation).
Examples:
Fire or smoke damage
Hail or windstorm damage
Tree falling on your roof
This is the core of your policy — make sure it's enough to rebuild your home. Homeowner insurance does not assess for market value (the acreage, the location, the proximity to a good school, etc). It only assesses the characteristics of the home and what it costs to rebuild it based on materials and labor averages.
Some companies offer additional endorsements (add-ons) to increase the dwelling coverage by 25%, 50%, or 70%.
Coverage B: Other Structures
Covers: Structures not attached to your home. These include but are not limited to:
Detached garage
Shed
Fence
This is usually 10% of your dwelling coverage, but you can increase it if needed. In-ground pools and solar panels that are not attached to the roof are also included in this coverage with most policies, however each insurance company makes that final decision so be sure to ask if you have these on your property.
Coverage C: Personal Property
Covers: Your belongings — furniture, clothing, appliances, electronics.
Examples of what it is covered for:
Theft
Fire
Vandalism
Tip: High-value items (like jewelry or collectibles) may need separate coverage or an add-on.
These are called scheduled personal property policies, or blanket policies. With a blanket policy, specific of the items covered like jewelry are not needed, they are just insured up to a specific amount usually between $5,000 and $10,000.
With schedule personal property policies, these are assigned values to specific items and often require color photos, an appraisal, and information about the items in order for them to be replaced.
Coverage D: Loss of Use (Additional Living Expenses)
Covers: Extra costs if you can’t live in your home due to damage.
Examples:
Hotel stays
Temporary rental
Food expenses while displaced
This is especially important to have if you do not have back up locations like family or friends to stay with in the case of a loss. This is often set at 20% of your Coverage A.
Coverage E: Personal Liability
Covers: If someone is injured on your property and sues you. It is also in the case of you being liable for personal property damage to another person. This is often on a per occurrence basis, meaning that for each separate incident of liability there is a 100k, 300k, or 500k limit.
Examples:
Someone slips on your icy walkway
A tree from your yard falls on a neighbor’s home
If you have a large amount of assets, a higher liability may benefit you. This allows the insurance to be used rather than being sued directly for your assets. Often times you can also apply for an umbrella policy if you have more than 500k in assets.
Coverage F: Medical Payments to Others
Covers: Small medical bills for injuries to guests, without lawsuits.
Examples:
A neighbor trips on your steps
Your dog scratches a visitor
Usually capped at $1,000–$5,000.
What’s Not Usually Covered?
Homeowners insurance doesn’t cover everything. Common exclusions include:
Floods (you need a separate flood insurance policy)
Earthquakes (available as an add-on)
Wear and tear / maintenance issues
Pests (termites, mice, etc.)
Mold (unless caused by a covered event like a burst pipe)
Additional Optional Endorsements
Endorsements are coverages that can be added onto a policy, to increase coverage amounts. Some of the most common include:
Water Backup Coverage - This coverage is often for overflow of sump pump, septic, sewage, and other forms of back up into the house from drains.
Service Line Coverage - This is usually for the electric, plumbing, internet, and other lines from the house to the road to cover repairs and digging needed to fix the service line if damaged.
Equipment Breakdown - Large appliances like refrigerators, stoves, air conditioning units are often covered under this endorsement in the case of mechanical failure. Exclusions like deliberate damage, or failure to maintenance causing the breakdown may apply, but not with all companies.
Identity Fraud - Protection against the repercussions of identity theft such as legal representation are included.
Tip: Always ask for details about the endorsements, as they can vary from company to company.
Common Questions
“Do I still need insurance if my home is paid off?”
Yes! If something major happens, like a fire or storm damage, you’d otherwise have to pay to rebuild out of pocket. Even just losing power for a few days and needing a hotel adds up quickly.
“Can I lower my premium?”
Yes! Ask about:
Senior discounts or loyalty discounts
Higher deductibles (means lower monthly premium)
Bundling with auto or umbrella insurance
Installing smoke alarms or security systems
“Should I update my policy over time?”
Definitely. If you’ve added a porch, renovated a kitchen, or bought new furniture, your coverage should reflect your home’s new value.
Quick Homeowners Insurance Checklist
Do I have enough coverage to rebuild my home?
Do I have replacement value or actual cash value coverage for belongings?
Do I have a copy of my policy on paper or digitally?
Have I asked about discounts?
Do I have flood or earthquake coverage if needed?
Need Help Understanding Your Policy?
Whether you’re unsure what your homeowner's insurance covers or just want an explanation of your coverages, I can help you review your policy and explain the fine print. This review is 100% FREE and is solely for information purposes. To find out more, click the button below.
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