What Does Homeowners Insurance Cover?

What Does Homeowners Insurance Cover?
What Does Homeowners Insurance Cover?

 In this guide, we delve into the intricate details of what is included and what is excluded in a standard homeowners insurance policy. We aim to address any concerns you may have regarding the coverage offered by a typical policy, such as questions about the extent of coverage for damage caused by mold, termites, roof leaks, or even a dog bite. Furthermore, we shed light on the aspects that are not typically covered. Additionally, we differentiate between a cash value policy and a replacement cost policy, provide insights on what to expect during the claims process, and the estimated time frame for receiving compensation from your homeowners insurance company.

Standard Homeowners Insurance Coverage

A standard homeowners insurance policy provides financial aid to repair or rebuild your home and its contents in the event of damage. This coverage typically includes incidents like fire, smoke, theft or vandalism, or natural disasters like lightning, wind, or hail. Other forms of damage resulting from external forces, such as a falling tree, are also covered.

This coverage extends to your HVAC systems, kitchen appliances, furniture, clothing, and other personal belongings. Outbuildings like garages, barns, sheds, outdoor grills, fireplaces, swing sets, walls, and fences are also protected under this policy. Certain high-risk items like swimming pools or recreational equipment may require additional liability coverage for protection.

You are also usually covered for the cost of alternative accommodation in case you need to relocate temporarily while your home is being restored. Liability coverage is typically included, meaning that you will be reimbursed for medical expenses and legal fees if someone not residing in your home is injured on your property.

It is essential to comprehend the details of your policy and the extent of coverage offered in case of a claim. Although some mortgage lenders only mandate sufficient coverage to pay off your mortgage, this is often inadequate to rebuild your home and replace its contents.

Additionally, it is crucial to keep in mind that rebuilding costs may rise, and factors such as home improvements or additions, increased labor or material costs, or changes to zoning requirements may necessitate increased coverage.

Considering these factors, opting for a replacement cost homeowners insurance policy, as opposed to an actual cash value policy, may be a wise choice. A replacement cost policy provides coverage for repairing or rebuilding your home and its contents at current costs, while a cash value policy takes into account depreciation due to age, wear and tear, and other factors.

As an illustration, consider the scenario where a tree damages your roof. If the roof was last replaced ten years ago, a replacement cost policy would pay to replace the roof at the present cost of labor and materials. An actual cash value policy would deduct ten years of depreciation. The same logic applies to your appliances and other possessions. While a replacement cost policy is more expensive, industry experts contend that it is worth the added cost.

Lynne McChristian of the Insurance Information Institute (III) advises, "It is crucial to know the difference between an actual cash value policy and a replacement cost policy. The former pays only the depreciated cost, resulting in a lower payout at claim time. On the other hand, a replacement cost policy may cost 10 to 15% more for coverage, but the compensation offered during a claim is much higher."

To estimate the required coverage, multiply the square footage of your home by the local building costs per square foot in your area. For instance, if your home is 2,200 square feet and the local building costs average $80 per square foot, the cost to rebuild your home would be approximately $176,000. A local insurance agent can assist you in determining the costs in your area. You can calculate costs similarly for your outbuildings.

It's important to understand the limits of your Homeowners Insurance Coverage in order to properly protect your home and belongings.
It's important to understand the limits of your Homeowners Insurance Coverage in order to properly protect your home and belongings.

Does Homeowners Insurance Cover Mold Damage?

Homeowners insurance typically doesn't cover mold damage. However, some insurance providers offer coverage with restrictions, such as if the mold growth was caused by a covered event like a broken water pipe. When mold growth is a result of poor maintenance practices, it is generally not covered.

Does Homeowners Insurance Cover Roof Leaks?

The standard homeowners insurance policy typically covers roof leaks that are brought about by a covered event like a storm or hail. In this case, the policy will also provide compensation for repairs. If the leak is a result of inadequate maintenance, the cost to repair the damage may not be included.

Does Homeowners Insurance Cover Water Damage?

Water damage from a burst pipe or a failed washing machine hose is generally covered by a standard homeowners insurance policy, with the exception that damage caused by poor maintenance is usually not covered. Flood insurance and backups from a clogged drain or a failed sump pump are not included in a standard policy and may be available for an additional cost.

Does Homeowners Insurance Cover Termite Damage?

Damage caused by termites is often considered preventable and, therefore, due to the homeowner's lack of care and proper maintenance. In exceptional cases such as a fire caused by termites chewing through wiring, some insurance providers may offer coverage.

Does Homeowners Insurance Cover Theft?

The majority of standard homeowners insurance policies provide coverage for losses resulting from theft and vandalism, but all policies have a limit on the amount the insurance company will pay. High-value items like jewelry, artwork, or collectibles may exceed the limits of a standard policy and require additional coverage.

Does Homeowners Insurance Cover Plumbing Issues?

A burst pipe or a failed water heater is usually covered by a standard homeowners insurance policy, as long as the damage was not caused by insufficient or improper maintenance. Damage caused by a slow leak over time, for example, may not be included.

Does Homeowners Insurance Cover Fires?

All standard homeowners insurance policies offer coverage for damage from fires and smoke. This coverage typically includes the costs of demolition, cleaning, and rebuilding of the main structure and outbuildings, as well as the replacement of furniture and possessions in the home. Most policies also include loss of use coverage, which compensates for alternate lodging while the home is being rebuilt.

Does Homeowners Insurance Cover Dog Bites?

If your dog bites someone who visits your property, you may have coverage under the liability section of your homeowners insurance policy. Depending on your level of concern, the dog's behavior, and your risk tolerance, you may want to consider additional liability coverage. Some insurance companies do not insure certain dog breeds.

Does Homeowners Insurance Cover Tree Removal?

If a tree falls on your house, garage, or other structure covered by your homeowners insurance policy during a storm, most insurance companies will pay for its removal, up to the limits of your policy. If the tree falls to the ground without causing damage, the cost of removal is generally not covered. If the damage is caused by a poorly maintained tree, it may not be covered.

What Standard Homeowner Insurance Policies Don't Cover?

Typically, standard homeowners insurance policies don't offer protection for items like jewelry, artwork, collectibles, identity theft, or damages caused by earthquakes or floods. To secure coverage for these items, one may have to pay extra or purchase additional coverage beyond the limits of a standard policy. Most standard policies have a limit of $1,000 to $2,000 for jewelry, however, extra policies can be procured to protect costlier items.

Flood coverage is usually not a part of standard homeowners insurance policies. Nevertheless, depending on where you live, flood insurance may be a necessity. Major insurance companies offer optional flood insurance, and if you reside in a high-risk area, you can secure a policy directly from the National Flood Insurance Program, administered by FEMA. Note that if you obtain flood insurance through your home insurance carrier, it is still backed by the NFIP. The cost and requirements of the policy may vary based on the risk factors in your area and are set by the NFIP, not the insurance company.

The Federal Emergency Management Agency has an interactive map that can help you determine flood risk in your area by entering your address or ZIP code. Also, keep in mind that there is a 30-day waiting period before flood insurance takes effect, so it's best to shop for a policy well before you think you might need it.

Like flood insurance, earthquake coverage can be procured as an option or as a separate policy from many insurers. Unlike flood insurance, earthquake coverage rates are set by the insurer and not the federal government. This means that the cost of the policy will depend on factors like your location, the type of home you own, and the insurance company you choose.

To determine the type of coverage you should buy, start by considering the most obvious factors. If you live or are considering homes in an area prone to floods, earthquakes, wildfires, or other extreme weather, look for a policy that provides coverage for those types of events. Keep in mind that these types of coverage are usually not included in standard policies, and some insurers may not provide coverage at all.

Next, calculate the cost of replacing major items such as your furnace, water heater, roof, or entire home. Consult with an independent insurance agent, call insurance companies directly, or check company websites for guidelines. Take an inventory of your possessions, including vehicles, artwork, and other valuables. Consider the cost of living with relatives, in a hotel, or in a rental unit while your home is being repaired or rebuilt.

A general rule of thumb is to make sure that you buy enough coverage to replace your home and its contents. Be honest in your assessments and ensure that the policy you choose is sufficient.

Homeowners Insurance Replacement Cost

Insurance providers frequently offer homeowners two policy choices – a replacement cost policy or a cash value policy. In the majority of cases, a replacement cost policy proves to be the superior choice.

The reason behind this is that replacement cost coverage policies compensate you for the actual cost of repairing or restoring your property and belongings, taking into account current prices, within the confines of your policy limits. On the other hand, cash value policies have a cap on the reimbursement you'll receive, factoring in depreciation.

Therefore, if you can afford it, a replacement cost policy is typically a more sound investment. While it might be more expensive than a similar cash value policy, the difference is likely to be made up quickly in the event of a claim.

As Amy Bach of United Policyholders, a consumer advocacy organization, stated: "Depreciation is a significant factor. It's wise to opt for replacement coverage because that's what you need to rebuild your home. You need to weigh price against value."

Rebuilding costs can increase due to various reasons, such as changes in housing demand, material and labor expenses, updates to building codes and zoning regulations, and inflation. With a replacement cost policy, you'll be protected against these increases, especially as time goes on. The coverage you purchase for $250,000 today might not be enough to cover the cost of rebuilding 10 years down the road.

The same logic holds for your household goods, like furniture, appliances, clothing, and other personal possessions. Inflation means that the cost of most things will rise over time. A replacement cost policy helps ensure that your home insurance will keep up with these rising costs.

When Does Homeowners Insurance Pay Out?

The length of time it takes for a homeowners insurance claim to be settled and payment to be made can vary widely, depending on the complexity of the claim and the extent of the damage.

In simple cases, such as wind damage to a roof, reimbursement may come in a matter of weeks if you have filed a claim promptly with the necessary documentation, and are satisfied with the settlement. However, complex claims can take much longer.

According to Janet Ruiz of the III, most insurance companies pay out within several weeks to six months in the case of a catastrophe. However, rebuilding a home after a total loss can take anywhere from 18 to 24 months, according to the consumer advocacy group United Policyholders.

Disputes between you and the insurer can also prolong the claim process, whether it be due to the insurer denying the claim or if you feel their initial offer is inadequate. The presence of multiple insurers can also add to the delays, as in the case of a hurricane that causes both wind and water damage, which are often insured by different companies.

While you may not be able to avoid certain types of delays, there are steps you can take to ensure a smooth claim process. Ask your insurance agent or company any questions you have and make sure you understand and provide all necessary information and documentation. Provide detailed documentation to support your claim, including photos or videos of the damage, a list of lost items and their estimated value, police and fire reports, names of people you have talked to, and relevant notes from conversations. Make sure to file the claim within the required timeframe and keep copies of all records for your own reference.

Homeowners Insurance Companies: 


American Family


Auto-Owners Insurance

Chubb Insurance

Erie Insurance

Farmers Insurance

The Hartford


Liberty Mutual



State Farm


The information about insurance providers included here is intended for informational purposes only and does not imply endorsement of any particular company or product. The writers of this content and the website itself are not authorized to sell or provide insurance advice. Not all coverage options, discounts, and features may be available in every state. To learn more about any of the companies mentioned or to get a quote, please reach out to an insurance company, agent, or financial advisor directly. The content is not a general recommendation for homeowners insurance products or a specific endorsement of a particular insurer or product. Any rates listed are provided as examples only. You should reach out to the insurance provider or agent directly to get applicable quotes.