What Does Homeowners Insurance Cover?

When you think “homeowners insurance,” easy-to-read probably doesn’t come to mind. Most policies are puzzling with words like hovercraft and pewterware.

So, if you’re asking, “what does homeowners insurance cover, exactly?” You’ve come to the right place. We’ll answer the most common questions about homeowners insurance in plain English.

What Does Homeowners Insurance Protect Against?

In most standard policies, you will be covered for damage to your home and its contents as well as liability for accidents that occur on your property. As a homeowner, it’s important to carry insurance not only against damage to the house itself but also the contents of the house if something should happen, such as fire or flood.

You will also generally carry liability insurance to protect yourself in the event that someone else or their property is hurt or damaged in an accident on your property. Without insurance, you could end up with a lawsuit filed against you personally.

Like the types of auto insurance, homeowners insurance is actually a bundle of different categories of coverage, which apply in various situations.

You aren’t able to pick and choose what categories you want; there are six different components to homeowners insurance, all of which are required, which we’ll discuss below. However, depending on your possessions, type of home, and your financial cushion, you can choose a coverage level for each category to get a plan that works best for you, while keeping your costs down.

Types of Homeowners Insurance Coverage

Let’s start with a quick summary. Homeowners insurance includes six types of coverage:

• Dwelling Coverage (your home’s structure) – “open perils”
• Other structures protection (your driveway, fence, tool shed,etc) – “open perils”
• Personal property protection (your stuff) – “named perils”
• Loss of Use – helps with additional living expenses (like hotel bills) if your place becomes uninhabitable due to fire, windstorm, etc.
• Liability coverage or personal liability protection – refers to bodily injury or property damage to other people (or their property) as a result of your actions, at your home and anywhere else
• Medical payments – can pay for medical bills (under $5,000 in most cases) that accrue as a result of accidents that happen to guests while at your place

So what are “open perils” and “named perils,” you ask? Let’s start from square one. A peril is something that’s covered under your policy. “Open perils” means your insurance company will cover you for anything that happens unless it’s specifically excluded. “Named Perils” means your insurer will cover you for a specific list of 16 bad things (or 15, depending on what state you live in) which are usually these:

• Fire and lightning
• Vandalism
• Explosions
• Falling objects
• Freezing
• Theft
• Smoke
• Volcanic Eruption
• Windstorm and hail
• Damage by aircraft
• Damage by vehicle
• Riots and civil unrest
• Sudden, accidental tearing or cracking
• Sudden, accidental water overflow
• Damages by short circuit
• Weight of ice, snow and sleets

So on your standard homeowners insurance policy, your structures (aka, your home, fence, shed, etc.) are covered under “open perils,” and your stuff (aka, your phone, laptop, TV, etc.) are covered under “named perils.”

But of course, there are some perplexing intricacies and exceptions in most insurance policies. So we’re going to get to the bottom of some common questions about homeowners insurance to set them straight in your mind.

Does homeowners insurance cover water damage?

Sometimes. It covers some types of water damage but not others

When is water damage covered?

Generally, if the water damage is sudden and accidental, it’s covered by homeowners insurance. For example, if your dishwasher goes on the fritz, your pipes burst, or your washing machine hose breaks, you’re covered.

Your homeowners policy will cover both the structure of your home and your personal belongings in your home if they’re damaged by water. But take note that the thing that causes the damage isn’t covered. What does that mean? Let’s say your hot water tank bursts, and leaks all over your finished basement. Your homeowners insurance would cover the replacement of your basement but not the hot water tank.

When is water damage not covered?

Homeowners insurance doesn’t cover water damage when it stems from:

• Water issues (like a continuous leak)
• Water backup from an outstanding sewage or drain
• Mold, rot, corrosion
• A flood

If you’d like flood protection, you can go ahead and purchase a separate flood policy through the National Flood Insurance Program.

Does homeowners insurance cover mold?

Sometimes.

When is mold covered? 

Mold is covered only if it’s caused by a covered loss, such as fire, lightning, ice, frozen pipes, etc. The mold has to be hidden in the walls, ceilings, or beneath floors to be covered. Some policies offer mold coverage endorsements, which can extend the coverage. For example, if your pipe bursts, and that water causes mold, you’re covered. The same applies if an ice dam forms on your roof, causing water to drip into your attic and mold to form.

Take note that these situations are covered if they’re sudden and accidental. So if your pipes burst, and you didn’t do anything about it for a few weeks, that mold won’t be covered due to negligence.

When is mold not covered?

Cases where mold creeps up over time aren’t covered. So what about that gross thing growing in your shower or underneath your sink? You should address it asap because it isn’t covered under your policy. That’d be considered negligence, something your insurance company won’t cover. Why? Insurance companies expect homeowners to proactively take care of these issues before they need to file a claim.

Does homeowners insurance cover roof leaks?

It depends on the cause of the leaks.

When are roof leaks covered?

Here’s the general rule: roof leaks are covered when they’re caused by sudden, accidental events (sound familiar?). If your roof leaks because of falling trees, windstorm, hail, vandalism, or weight of ice, sleet, or snow you’re covered.

Let’s say a windstorm blows through, and lifts the roofing shingles on your house, causing rain to leak into your home. Your homeowners policy would cover you since this is a sudden unexpected occurrence.

By “covered” we mean your homeowners insurance will help reimburse you for damages to your home itself, as well as any damages to furniture, appliances, systems, etc. that were caused as a result of the roof leak.

When are roof leaks not covered?

Generally, roof leaks aren’t covered when they happen because of gradual events, such as 

• Age
• Mold, fungus, or wet rot
• Wear and tear/deterioration
• Neglect
• Inadequate maintenance
• Birds, vermin, rodents, insects

Why aren’t these events covered? Well, insurance companies believe people can take steps to prevent these types of roof leaks. It’s common knowledge that your roof needs regular maintenance.

So if you’re trying to figure out if your roof leak is covered by homeowners insurance, ask yourself, “Could I have prevented the roof leak?”

Also, take note: Homeowners insurance doesn’t cover roof leaks that result from flooding or earthquake damage. To protect your home during these events, you’ll need separate flood insurance and earthquake insurance.

Does homeowners insurance cover tree damage?

It depends on what caused the tree to fall.

When is tree damage covered?

Like other things, tree damage (to your home) is covered if the cause is sudden and accidental. So, if a windstorm causes a healthy tree in your backyard to topple and damage your house your homeowners insurance will cover costs to get you out of this jam.

When is tree damage not covered?

Let’s say a tree in your backyard wasn’t looking good. You knew it was rotting but didn’t do anything about it. Then a windstorm came about and totally knocked the tree over, damaging your home. In this scenario, homeowners insurance may not have your back.

Why? Even though a windstorm is a covered peril, this situation could have been prevented since the tree’s been rotting for quite a while.

And if the tree falls due to an earthquake (not a named peril), you’re not covered. Reminder: You can purchase separate earthquake insurance to be covered during situations like these.

Does homeowners insurance cover theft?

It sure does!

Homeowners insurance covers theft both inside and outside your home. So if your phone is stolen in a coffee shop, or someone snatches your bike from your garage, your homeowners insurance policy will cover you.

Take note, that homeowners insurance covers both stolen items and structural damage to your home caused by theft. So if a burglar damages your doors or windows, you’re covered.

When is theft not covered?

A few types of items require special attention when it comes to theft: cash and valuable items.

First off, there’s generally a limit on how much your insurance company will reimburse you for stolen cash; it’s usually around $200. Therefore, not all stolen cash may be covered. And if you have valuable items worth over $1,500 such as jewelry, furs, fine arts, etc., they aren’t covered under your base homeowners insurance policy.

But no worries – you can still insure them. You’ll need Extra Coverage for these items, so they’re covered in case of theft (or other named perils). Bonus: items with Extra Coverage are usually covered for accidental loss and mysterious disappearance as well.

Does homeowners insurance cover dog bites?

Most of the time

When are dog bites covered?

Homeowners insurance covers you if your dog bites someone inside your home. So if Fido bites, you’re covered. Bonus: Homeowners insurance also has your back if your dog causes damage to other people or property.

When are dog bites not covered?

There are three exceptions to dog bite coverage:

• If Buddy bites someone covered under your policy (b/c you can’t make a claim against yourself)
• If your dog has a history of biting
• If your dog is categorized as “high risk.” Dogs in this category include: Pit Bulls, Staffordshire Terriers, Doberman Pinschers, Rottweilers, German Shepherds, Chows, Great Danes, Akitas, Siberian Huskies, Alaskan Malamutes, and wolf hybrids.

Does homeowners insurance cover termite damage?

Generally, no.

When is termite damage covered?

If something sudden and accidental happens as a result of termites! So if your building abruptly collapses due to insect or vermin damage completely hidden from view, you are covered

When is termite damage not covered?

In all other cases, termite damage isn’t covered. Why not? Because termites are usually considered preventable. They don’t arise out of nowhere; homeowners are generally aware of a termite problem before they cause serious damage. Tip: To prevent any unwanted pests, bring in a termite inspector to sift through your home. It could save you serious $$ down the line. And many pest control companies offer treatments, plans, and annual inspections to give you peace of mind.

Does homeowners insurance cover roof repair?

Sometimes.

When is roof repair covered?

Roof repair is typically under your policy’s hazard insurance. This also includes roof damage to your garage and other structures on your property.

Specifically, your roof is covered for all perils that cause damage, like fire, wind, and hail damage. So if your roof is damaged by a hailstorm, or a tree that topples onto it during a windstorm, your policy will come to the rescue.

When is roof repair not covered?

This may seem a bit familiar. Roof repair isn’t covered if these things cause damage to your roof:

• Age
• Mold, fungus, or wet rot
• Wear and tear/deterioration
• Neglect
• Birds, vermin, rodents, insects

And just like everything else, roof repair isn’t covered if the damage is caused by flooding or earthquake. For these scenarios you’ll want to purchase a separate policy

Tip: Get your roof inspected every 2 years, and if something happens, wait until your insurance company inspects it so they can assess the damage. Temporary repairs are covered if you’re trying to prevent further damage from happening, so save your receipts

How do homeowners insurance deductibles work?

An insurance deductible is an amount of money that will be subtracted from any future claim payouts. You choose this amount when purchasing a policy.

Think of a deductible as your participation in the damage or loss. You’re saying, “I commit X dollars to any claim on future losses or damages and my insurance company will cover the rest.”

When signing up for a home insurance policy, you’ll be asked to choose a deductible. For a homeowners policy, these typically range from $1,000 to $2,500. What you’re choosing here is your participation (the amount subtracted from a claim) in the event that something happens to your property.

Here’s how it works if you file a claim:

• You chose a deductible of $1,000 when you bought your policy.
• Later on, you file a claim for a stolen couch valued at $4,000.
• If the claim is approved, your insurer will pay you $3,000 ($4,000 minus your $1,000 deductible).
• Keep in mind, this isn’t an annual deductible that you meet, it applies to each claim you file.

The natural follow up question to this deductible business is: If you’re already paying a monthly premium, why do you still have to participate in the claim? Well, deductibles exist to make you a bit more careful with your stuff and keep the policies low for everyone.

So, when your claim is approved but you notice there’s $1,000 “missing,” remember, that’s your contribution. You cover the deductible, and the insurance company covers the rest.

How much does homeowners insurance cost?

The average homeowners insurance policy is $1,083 annually, but this number can vary pretty widely. How much you pay for homeowners insurance will depend on a number of factors, including where you live, the condition of your home, your deductible, and the amount of coverage you choose.

Final Thoughts

Have you checked your homeowners policy amounts recently to make sure your coverage amounts keep up with the value of your home and possessions? What special coverage do you carry for jewelry or other valuable property? Should you have additional flood or earthquake insurance in your area? If you have any questions contact your insurance company.