The six parts of a standard policy
- Dwelling — the structure of your home, including built-in systems like plumbing and heating.
- Other structures — detached garages, sheds and fences.
- Personal property — your belongings, at home and often while traveling.
- Loss of use — extra living costs if you can’t live at home after a covered loss.
- Personal liability — if you’re responsible for someone’s injury or damage to their property.
- Medical payments — small medical bills for guests hurt on your property, regardless of fault.
Covered causes of damage
The most common policy type (often called HO-3) covers the home against all causes of damage except those it lists as excluded, and covers belongings against a named list of perils such as fire, windstorm, hail, theft and certain water damage.
Common exclusions
- Flood — needs a separate flood policy.
- Earthquake and earth movement — usually a separate policy or endorsement.
- Wear, maintenance and pests — gradual damage isn’t covered.
- Sewer or drain backup — often available as an add-on.
Replacement cost vs. actual cash value
Replacement cost pays to repair or replace at today’s prices; actual cash value subtracts depreciation. Replacement cost costs more but pays much more after a loss.
Frequently asked questions
Does homeowners insurance cover flooding?
No. Flood damage from rising water needs a separate flood policy, available through the National Flood Insurance Program or private insurers.
Is homeowners insurance required?
Not by law, but mortgage lenders require it for as long as you have a loan.
This guide is general information, not insurance or legal advice. Coverage and requirements vary by insurer and state.