Many homeowners assume their insurance covers everything—until they file a claim and discover the gaps. Understanding what's actually covered (and what isn't) can save you from expensive surprises.
The 6 Parts of a Standard Homeowners Policy
A standard HO-3 policy (the most common type) includes:
Dwelling Coverage
Covers the structure of your home—walls, roof, built-in appliances, attached structures like a garage.
Other Structures
Detached garages, sheds, fences, and other structures on your property. Typically 10% of dwelling coverage.
Personal Property
Your belongings—furniture, electronics, clothing, appliances. Usually 50-70% of dwelling coverage.
Loss of Use
If you can't live in your home during repairs, this covers temporary housing and additional living expenses.
Personal Liability
Protects you if someone is injured on your property and sues. Typically $100,000-$300,000.
Medical Payments
Covers minor medical expenses for guests injured on your property, regardless of fault. Usually $1,000-$5,000.
What IS Covered (Common Perils)
Standard policies cover damage from these "named perils":
What is NOT Covered (Common Exclusions)
These are the gaps that catch people off guard:
Standard policies NEVER cover flood damage. You need separate flood insurance (FEMA or private).
Not covered. Requires a separate policy or endorsement.
Slow leaks that cause damage over time aren't covered—only sudden events.
Usually excluded or has very low limits. May be covered if caused by a covered peril.
Termites, rodents, and other pest damage is not covered.
Normal aging and deterioration isn't covered. Insurance is for sudden, unexpected events.
Settling, shifting, and most foundation problems are excluded.
Usually requires additional coverage. Very important if you have a basement.
Coverage Limits to Watch Out For
Even for covered items, there are often sublimits:
Replacement Cost vs. Actual Cash Value
Replacement Cost
Pays to replace items with new ones of similar quality, without depreciation.
Your 5-year-old TV breaks: You get enough to buy a comparable new TV.
Actual Cash Value (ACV)
Pays replacement cost minus depreciation. Less expensive premiums, but lower payouts.
Your 5-year-old TV breaks: You get its current "used" value—maybe 30% of a new one.
How to Check Your Coverage
This summary shows your coverage limits for each section (A through F).
Know exactly what's not covered so you can add endorsements if needed.
Look for limits on categories like jewelry, electronics, and cash.
You may have different deductibles for different types of claims.
Store Your Insurance Details in NestorAI
NestorAI helps you understand and track your coverage:
- Store policy documents and declarations pages
- Track coverage limits and deductibles
- Maintain a home inventory for claims
- Get reminders for policy renewal and review