Last Updated May 2026
- Homeowners insurance typically provides coverage for your home’s structure, for your personal belongings and for certain costs if you accidentally injure someone or damage their property.
- It may help pay for temporary housing and expenses if your home is damaged by a covered event.
- Coverage usually applies to sudden, accidental damage, not wear and tear.
- Some risks, like floods or earthquakes, are typically excluded and may require separate coverage.
Homeowners insurance can help you repair or rebuild your home’s structure, replace personal belongings, provide liability protection and pay for additional living expenses after a covered loss. What’s covered depends on the coverage you choose and how the damage happens.
What homeowners insurance typically covers
A homeowners insurance policy typically includes dwelling and other structures coverage, personal property coverage, personal liability protection and loss-of-use coverage. Each can help you protect your house, belongings and finances in different ways. Coverage depends on the actual risks your policy includes — sometimes called covered perils. Learn more about named and open peril policies. The different kinds of coverage in your policy may have separate limits and, sometimes, deductibles.
Dwelling coverage can help pay to repair or rebuild the physical structure of your home, including walls, roof and built-in features, when damage is caused by a covered event, such as a fire or storm.
Example: A kitchen fire damages built-in cabinets, walls and the refrigerator. The structural damage falls under dwelling coverage, while appliances may fall under personal property.
Other structures coverage can apply to structures on your property that aren’t attached to your home, like a detached garage, shed or fence.
Example: A tree falls on your house and shed. The shed likely is covered under a different limit than the home, even though the damage happened at the same time or because of the same event.
Personal property coverage can help replace or repair your possessions, things like furniture, clothing and electronics, if they’re damaged or stolen in a covered event.
Example: A fire burns your home and destroys your couch and TV. Damage to the house itself would likely come under dwelling coverage, but your belongings under personal property coverage.
Loss of use/additional living expenses (ALE) coverage can help pay for temporary housing, meals and the other added costs of maintaining your normal standard of living elsewhere if your home becomes unlivable due to a covered loss.
Example: While your home is being repaired after a fire, you need to rent a temporary, furnished apartment. If your usual housing costs are $1,500 a month but the rental costs $2,200, ALE may cover the $700 difference.
Personal liability protection can help you protect yourself financially if you’re found legally responsible for someone else’s injury or property damage, whether it happens at your home or elsewhere.
Example (at home): A guest trips on your icy walkway and breaks an arm, and you’re found legally responsible. Liability coverage may help with medical bills or legal costs.
Example (away from home): While bike riding in your neighborhood, you accidentally collide with and injure a pedestrian. Liability coverage may help with their medical bills or legal costs if you’re found at fault.
Medical payments coverage can help pay for smaller, immediate medical expenses if someone is injured on your property, without needing to establish fault or involve a liability claim.
Example: A guest twists an ankle on your front steps and goes to urgent care. This coverage may handle the initial medical bill without a claim about who was responsible.
Home insurance coverage at a glance
Dwelling
(Coverage A)
Other Structures
(Coverage B)
Personal Property
(Coverage C)
Loss of Use
(Coverage D)
Liability
(Coverage E)
Medical Payments
(Coverage F)
What is not covered by homeowners insurance?
Homeowners insurance policies generally do not cover issues related to maintenance or wear and tear, and certain high-risk events.
Natural events
- Flood damage: Rising water from storms, rivers or storm surge is typically not covered.
- Earthquake damage: Ground movement is usually excluded.
For more details, see: Does home insurance cover natural disasters?
Some water issues
- Sewer or drain backup: Often requires optional coverage, even though it happens inside the home
Maintenance-related damage
- Wear and tear: Gradual deterioration, like an aging roof
- Pest damage: Termites, rodents and insects
- Mold: Caused by ongoing moisture or poor maintenance; may be covered if caused by a sudden event (like a burst pipe)
Examples of situations where coverage doesn’t apply
- Intentional damage: Damage caused on purpose is not covered.
- Business use at home: Running a business may require separate coverage for equipment or liability.
What’s covered vs. not covered
Examples of what may or may not be covered in a policy:
| Covered | Not covered |
|---|---|
| Fire damage | Flood damage |
| Theft | Pest infestation |
| Windstorm | Earthquake |
| Frozen, burst pipe | Damage caused by lack of maintenance, neglect |
| Falling tree | Sewer backup |
Additional homeowners insurance coverage options
Homeowners insurance may not cover every type of risk. In some cases, additional coverage can be added to address specific situations.
- Flood insurance: Damage from flooding is not included and requires a separate policy, often through the National Flood Insurance Program (NFIP).
- Earthquake insurance: Damage caused by earthquakes or ground movement is usually excluded but may be available as an add-on or separate policy.
- Water backup coverage: This optional coverage can help with damage caused by water backing up through drains or sewer lines.
- High-value personal property: Items like jewelry, art or collectibles can be listed individually to provide higher coverage limits.
What are typical homeowners insurance coverage limits?
Coverage limits are the maximum amounts your insurance policy may pay for a covered loss. Coverage limits vary by policy, but many follow common patterns across the industry. These examples show how different types of coverage are often calculated.
| Coverage type | Typical coverage terms | Example coverage limit |
|---|---|---|
| Dwelling | Based on replacement cost* | $300,000 to rebuild home |
| Other structures | About 10% of dwelling coverage | $30,000 |
| Personal property | About 50%–70% of dwelling coverage | $150,000–$210,000** |
| Additional living expenses | About 20% of dwelling coverage | $60,000 |
| Liability | Selected coverage amount, typically equal to or exceeding homeowner’s net worth (e.g., $100,000 to $500,000) | $300,000 |
| Medical payments | No-fault coverage with a per-person limit | $1,000-$5,000 for minor injuries |
*Dwelling coverage is often based on your home’s replacement cost — the estimated cost to rebuild your home with similar materials and quality, not its market value. Learn more about how replacement cost works.
**Sublimits may apply to certain high-value items, including jewelry, electronics and collectibles.
FAQs
How does homeowners insurance work?
From choosing coverage to filing a claim, this is how homeowners insurance works in a few simple steps.
1. Share details about your home
Insurers collect information like size, age and features to estimate your home’s replacement cost, which is the amount it may cost to rebuild it with similar materials.
2. Choose your coverage
Using that estimate, you select coverage limits, deductibles and options that fit your needs.
3. Verify the property
Your insurer may review photos or arrange an inspection to confirm details about your home.
4. Activate your policy
Once everything is finalized and you pay the premium, your coverage becomes active.
5. File a claim if needed
If a covered event causes damage, you can file a claim, document the loss and work with an adjuster to assess damage and move forward with repairs.
What affects your premium and deductible?
Your premium (what you pay for coverage) and deductible (what you pay out of pocket before coverage applies) can vary based on factors like:
- Location of your home (e.g., weather and flood risks, building costs/labor rates)
- Home characteristics (age, size, construction type)
- Coverage limits and options you choose
- Claims history
How much home insurance coverage do you need?
The type and amount of coverage you choose depends on your home, belongings and financial situation. Consider these factors:
- Rebuilding/replacement cost of your home (not market value)
- Value of your personal belongings
- Potential liability risks and net worth
- Your comfort level with out-of-pocket costs
Reviewing your policy with an agent can help you choose coverage that fits your needs today and adjust it as those needs change. Learn more about choosing the right type and amount of coverage for your home.
The information contained in this page is provided for general informational purposes only. Read our editorial standards for Insurance Questions and other content. We make no representations or warranties of any kind, express or implied. This does not refer to any specific insurance policy and nothing herein is intended to replace or modify any terms in your actual policy.
Farmers may also provide information on topics that are not directly about insurance policies or coverage that we believe could be helpful to you. Information in such articles is not meant as professional advice, and any reliance you place on such information is therefore strictly at your own risk.
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