What Does Homeowners Insurance Cover? (And What It Doesn’t)
By Raimundo Oliveira ·
· 5 min readQuick summary: A standard HO-3 homeowners policy covers your dwelling, other structures, personal property, loss of use and liability, but excludes floods, earthquakes and sewer backup. It averaged about $2,490 a year in 2026 for $400,000 of dwelling coverage.
Homeowners insurance is often the largest insurance bill a family pays, and one of the least understood. Most people learn what their policy excludes only after a claim is denied. This guide explains the six standard coverages, the most common exclusions, what it costs in 2026 and how to choose the right amount.
The six parts of a standard homeowners policy (HO-3)
The most common policy form in the U.S. is the HO-3. Its coverages are labeled A through F:
| Coverage | What it protects | How it’s usually set |
|---|---|---|
| A – Dwelling | The house structure: roof, walls, floors, built-in appliances | Estimated cost to rebuild, not market value |
| B – Other structures | Detached garage, fence, shed | Often 10% of Coverage A |
| C – Personal property | Furniture, clothing, electronics | Often 50%–70% of Coverage A |
| D – Loss of use | Hotel, rent and extra costs while repairs are made | Often 20%–30% of Coverage A |
| E – Personal liability | Injuries or damage you cause to others, legal defense | $100,000–$500,000 |
| F – Medical payments | Minor injuries to guests regardless of fault | $1,000–$5,000 |
What homeowners insurance typically covers
An HO-3 covers the dwelling against all risks except those excluded (“open perils”), and personal property against named perils, which usually include:
- Fire, smoke and lightning
- Windstorm and hail (in some coastal areas, wind is excluded or has a separate deductible)
- Theft and vandalism
- Sudden and accidental water damage, such as a burst pipe
- Weight of ice, snow or sleet
- Falling objects, vehicles or aircraft hitting the home
- Explosion and riot
What it does not cover
| Excluded risk | How to cover it |
|---|---|
| Flood (surface water, storm surge, rising rivers) | NFIP or private flood policy — see do I need flood insurance? |
| Earthquake and earth movement | Earthquake endorsement or separate policy (e.g., CEA in California) |
| Sewer or drain backup | Water backup endorsement (inexpensive and recommended) |
| Gradual leaks, mold from neglect, wear and tear | Not insurable; requires maintenance |
| Termites, rodents and pests | Not covered |
| Home business equipment and liability | Home business endorsement or business policy |
| Short-term rentals (e.g., Airbnb) | Home-sharing endorsement or specialized policy |
| High-value jewelry, art, collectibles above sub-limits | Scheduled personal property rider |
How much does homeowners insurance cost?
A 2026 national analysis found an average of about $2,490 per year (~$208/month) for $400,000 of dwelling coverage, $300,000 of liability and a $1,000 deductible.
| Dwelling coverage | Average annual premium |
|---|---|
| $200,000 | About $1,480 |
| $400,000 | About $2,490 |
| $800,000 | About $4,445 |
Location matters enormously. Average premiums for the same coverage ranged from about $900 a year in Hawaii to more than $7,000 in Oklahoma, where hail and tornado risk is high.
How to choose the right coverage
- Insure the rebuild cost, not the market value or purchase price. Ask your insurer for a replacement cost estimate and update it after renovations.
- Add extended or guaranteed replacement cost (often 25%–50% above Coverage A) to protect against construction cost spikes after disasters.
- Choose replacement cost for personal property, not actual cash value.
- Set liability to at least $300,000, and add an umbrella policy if your net worth is higher.
- Check special deductibles: hurricane, wind/hail and named-storm deductibles are often a percentage (1%–5%) of Coverage A, not a flat amount.
- Add water backup coverage if you have a basement.
Ways to lower your premium
- Bundle home and auto with one insurer.
- Raise your all-perils deductible to $1,000–$2,500 if you have savings.
- Install monitored alarms, water leak sensors and smart shutoff valves.
- Upgrade the roof; impact-resistant shingles can earn discounts in hail states.
- Keep a good claims history — use insurance for big losses, not small repairs.
- Compare quotes every one to two years — see how to compare insurance quotes.
What to do after damage
- Stop further damage (shut off water, cover the roof with a tarp) — policies require it.
- Photograph and video everything before cleanup.
- Call your insurer to open a claim; ask about advance payments for living expenses.
- Keep damaged items until the adjuster sees them.
- Get your own contractor estimates and review the adjuster’s report line by line.
Bottom line: an HO-3 policy covers your house, belongings, liability and living costs, but not floods, earthquakes or sewer backups without add-ons. Insure the rebuild cost, choose replacement cost for belongings and review special deductibles carefully. Renting instead? See renters insurance cost and coverage.
General information, not personalized insurance advice. Policy forms and exclusions vary by insurer and state.
Frequently asked questions
What does homeowners insurance cover?
A standard HO-3 policy covers the house structure, other structures, personal belongings, additional living expenses after a covered loss, personal liability and medical payments to guests.
Does homeowners insurance cover flooding?
No. Flooding from surface water requires a separate NFIP or private flood policy. Sudden water damage from a burst pipe is usually covered.
How much does homeowners insurance cost in 2026?
About $2,490 per year on average for $400,000 of dwelling coverage, with large differences by state.
How much dwelling coverage do I need?
Enough to rebuild your home at current construction costs, which can be higher or lower than its market value. Ask for a replacement cost estimate.
Does homeowners insurance cover mold?
Only if it results from a covered sudden event and limits often apply. Mold from long-term leaks or poor maintenance is typically excluded.
Written by
Raimundo Oliveira
Founder & Editor, AllCover Quotes
Raimundo Oliveira is the founder and editor of AllCover Quotes and the Redevix network of websites. He is a digital publisher and SEO specialist who researches insurance topics using official sources — state insurance departments, government consumer resources and insurers’ own policy documents — and turns them into clear, practical guides. Raimundo is not a licensed insurance agent: his guides are educational and do not replace advice from a licensed professional.
Some links on AllCover Quotes may be partner links. If you request a quote or buy a policy through them we may earn a commission at no extra cost to you. This article is general information, not personalized insurance advice. Learn more.
