What Does Homeowners Insurance Cover? Complete HO-3 Breakdown (2026)

Most homeowners buy insurance when they close on a house and never look at the policy again — until they file a claim. That's when the surprises show up: things they assumed were covered weren't, and coverages they never knew about turn out to be there. This is a clear-eyed breakdown of what a standard HO-3 policy does and does not pay for, so you're not caught off guard.

The 6 coverages in a standard HO-3 policy

The HO-3 is by far the most common home insurance form in the United States. According to the Insurance Information Institute, a standard policy bundles six distinct coverage parts, each labeled with a letter on your declarations page.

Coverage	What it protects	Typical limit	Example claim
A — Dwelling	The house structure: walls, roof, floors, built-in systems	Replacement cost of home	Fire destroys the kitchen and roof
B — Other structures	Detached garage, fence, shed, gazebo	~10% of Coverage A	A storm flattens your detached garage
C — Personal property	Belongings inside and away from home	50–70% of Coverage A	Theft of electronics and clothing
D — Loss of use	Hotel, meals, added costs while displaced	20–30% of Coverage A	Smoke damage forces a 3-month move-out
E — Personal liability	Lawsuits for injuries or damage you cause	$100k–$500k	A guest slips and sues you
F — Medical payments	No-fault payments for minor guest injuries	$1,000–$5,000	A neighbor's child is hurt in your yard

1. Dwelling coverage (Coverage A)

This pays to repair or rebuild your home's physical structure after a covered loss — the walls, roof, floors, built-in appliances and attached structures like an attached garage. In an HO-3, the dwelling is insured on an open-perils (also called all-risk) basis, meaning it's covered against any cause of loss except those the policy specifically excludes.

Set this limit to the replacement cost of your home — what it would cost to rebuild from the ground up — not its market value or your purchase price. Those are different numbers, and underinsuring the dwelling is the single most common home-insurance mistake. Our guide on how much home insurance you need walks through the math, and dwelling coverage covers it in depth.

2. Other structures (Coverage B)

Covers structures not attached to the house: a detached garage, fence, shed, gazebo or in-ground pool. The III notes this is usually set automatically at about 10 percent of your dwelling limit. If you have a large detached workshop or guest house, that default may fall short.

3. Personal property (Coverage C)

Covers your belongings — furniture, electronics, clothing, appliances. A key feature most people don't realize: personal property follows you, so items are generally covered anywhere in the world, not just inside the house. Coverage C is typically set at 50 to 70 percent of your dwelling limit.

Two valuation methods matter here:

• Actual cash value (ACV): pays the depreciated value. A five-year-old TV that cost $800 new might pay out $200.
• Replacement cost value (RCV): pays what a new equivalent costs today. It usually adds 10–15% to your premium but can double or triple a payout.

Always choose replacement cost coverage if it's offered — the premium difference is small relative to the payout difference. Documenting what you own with a home inventory makes any claim faster and larger.

Sub-limits on high-value items. Even with strong overall coverage, policies cap specific categories of valuables:

• Jewelry and watches (theft): often $1,500–$2,500
• Cash and bank notes: $200–$500
• Firearms (theft): around $2,500
• Silverware and goldware (theft): around $2,500

If you own items above these caps, "schedule" them individually on a floater or rider for an extra premium. That also typically removes the deductible and broadens covered causes of loss for those items.

4. Personal liability (Coverage E)

Pays if someone is injured on your property and sues you, or if you, a family member, or even your pet accidentally damages someone else's property. It covers legal defense costs and judgments. Most policies start at $100,000, but increasing to $300,000 or $500,000 usually costs only modestly more. For assets beyond that, umbrella insurance adds $1 million or more of liability protection.

5. Loss of use / additional living expenses (Coverage D)

If a covered loss makes your home uninhabitable, this pays the added costs of living elsewhere — hotel bills, restaurant meals, pet boarding, extra commuting — while repairs are underway. It's commonly set at 20–30% of your dwelling limit.

6. Medical payments to others (Coverage F)

A small, no-fault benefit (typically $1,000–$5,000) that pays for minor injuries to guests regardless of who was at fault. It's designed to settle small incidents quickly and head off larger liability claims. It does not cover injuries to you or members of your own household.

Named perils vs. open perils: the distinction that catches people

This is the trap most homeowners miss. In an HO-3:

• Your dwelling (Coverage A and B) is "open perils" — covered against everything except listed exclusions.
• Your personal property (Coverage C) is usually "named perils" — covered only if the loss is caused by one of a specific list of perils (fire, lightning, windstorm, hail, theft, vandalism, falling objects, weight of ice and snow, certain water discharge, and similar).

The practical result: a cause of loss that isn't on the named-perils list can damage your belongings without triggering a payout, even though that same event would be covered if it damaged the structure. If you want belongings covered on the same broad basis as the structure, ask about an HO-5 form or an open-perils endorsement on Coverage C.

What homeowners insurance does NOT cover

The Insurance Information Institute is blunt about it: standard homeowners policies do not cover flooding, earthquakes, or losses from poor maintenance. Here are the big exclusions and how to close each gap.

Excluded peril	Why it's excluded	How to cover it
Flooding (external water)	Always excluded by standard policies	Separate NFIP or private flood policy
Earthquake / earth movement	Excluded as "earth movement"	Earthquake endorsement or standalone policy
Sewer / drain backup	Not in standard policy or flood policy	Water/sewer backup endorsement (~$50–$100/yr)
Normal wear and tear	Maintenance, not a sudden accident	Not insurable — upkeep is on you
Mold from slow leaks	Tied to neglected maintenance	Limited; some policies offer a capped mold rider
Pest damage (termites, rodents)	Preventable and gradual	Pest control contract
Home business equipment / inventory	Beyond personal-use scope	Business owner's policy or endorsement
Intentional damage	Excluded by design	Not insurable

Closing the flood gap

Flood is the exclusion that causes the most financial pain because so few homeowners carry it. Per FEMA's FloodSmart program, just one inch of water can cause about $25,000 in damage, and flooding is not limited to coastal or high-risk zones. Coverage comes through the National Flood Insurance Program (NFIP) or private insurers and is separate from your homeowners policy. Note the typical 30-day waiting period before a new flood policy takes effect — you can't buy it as a storm approaches. Our flood insurance guide explains how the coverage and pricing work.

Closing the earthquake gap

Earthquake damage is excluded from virtually all standard policies as "earth movement," which also sweeps in landslides and mudflows. The III notes you can add coverage as an endorsement or a separate policy through most insurers (or, in California, the California Earthquake Authority). Earthquake policies carry their own, often percentage-based, deductible.

Closing the sewer-backup gap

Water that backs up through drains or a failed sump pump is covered by neither a standard homeowners policy nor a flood policy. A water/sewer backup endorsement is inexpensive — often $50–$100 a year — and well worth it for any finished basement. For a fuller picture of which water losses are and aren't covered, see does home insurance cover water damage.

Common mistakes that lead to denied or shorted claims

• Insuring to market value instead of replacement cost. Land doesn't burn down; rebuild costs can exceed market price, especially in older or rural areas.
• Assuming flood is included. It never is. The most expensive claims are often uninsured flood losses.
• Skipping the sewer-backup endorsement. A single basement backup can run into five figures.
• Leaving valuables unscheduled. Sub-limits quietly cap jewelry, firearms and collectibles far below their real value.
• Not keeping a home inventory. Without proof of what you owned, payouts shrink. A simple home inventory fixes this.
• Carrying minimum liability. Bumping Coverage E to $300k+ is cheap insurance against a catastrophic lawsuit.

Frequently asked questions

What are the six standard coverages in a homeowners insurance policy? A standard HO-3 homeowners policy includes: (1) Coverage A, dwelling, for the home's structure; (2) Coverage B, other structures, for detached garages, fences and sheds; (3) Coverage C, personal property, for your belongings; (4) Coverage D, loss of use, for added living costs if your home is uninhabitable; (5) Coverage E, personal liability, if someone is injured on your property or you damage someone else's; and (6) Coverage F, medical payments to others, for minor guest injuries regardless of fault.

Does homeowners insurance cover water damage? It depends on the source. Sudden, accidental water damage — like a burst pipe or an appliance overflow — is typically covered. Gradual leaks and maintenance-related water damage are not. Flooding from outside the home (heavy rain, storm surge, an overflowing river) is never covered by homeowners insurance and requires a separate flood policy, usually through the National Flood Insurance Program.

Does homeowners insurance cover theft? Yes. Homeowners insurance covers theft of personal property from your home and, because personal property coverage follows you off-premises, often your belongings anywhere in the world. High-value items such as jewelry, firearms and electronics carry sub-limits, so you may need a scheduled rider (a "floater") to insure them for full value.

Sources & further reading

• Insurance Information Institute — What is covered by standard homeowners insurance?
• Insurance Information Institute — Are there any disasters my property insurance won't cover?
• Insurance Information Institute — Earthquake insurance for homeowners
• FEMA / FloodSmart — The National Flood Insurance Program
• FEMA — Flood Insurance

This article is general information, not insurance advice. Coverage terms, limits, sub-limits and exclusions vary by insurer, policy form and state. Read your own policy's declarations page and exclusions, and confirm details with a licensed agent before relying on any coverage described here.