Home Insurance · Types of coverage
Home insurance coverage types, explained
A homeowners policy bundles six distinct coverages. Each does something specific. Here's what each one pays for — and the ones most homeowners get wrong.
Coverage A — Dwelling
The core coverage. Pays to rebuild your home if it's destroyed or damaged by a covered peril (fire, wind, hail, vandalism, etc.).
Should be set at the replacement cost of your home, not market value. This is where most homeowners are underinsured — replacement costs have risen sharply post-2020 and many policies haven't been updated.
Coverage B — Other structures
Detached structures on your property: garage (if detached), shed, fence, gazebo, in-ground pool, detached workshop.
Default is typically 10% of Coverage A. If you have significant outbuildings or a detached garage that's been finished as a workspace, you may need to raise this.
Coverage C — Personal property
Your belongings — furniture, electronics, clothing, tools, kitchenware.
Default is typically 50-70% of Coverage A. Two critical sub-decisions:
- Replacement cost vs. actual cash value: always pick replacement cost. ACV depreciates older items and pays out a fraction of new-equivalent cost.
- Sublimits on specific items: jewelry, firearms, fine art, electronics, collectibles often have per-item or category caps ($1,500-$5,000 typical). Items above the sublimit need a scheduled rider.
Coverage D — Loss of use (ALE)
Pays for temporary housing, food, and necessary expenses while your home is being repaired after a covered loss.
Default is 20-30% of Coverage A. Most homeowners underestimate this — after a major loss, you could need 6-18 months of temporary housing.
Important sublimit: many policies cap loss of use by both time (12-24 months) and amount. Read both.
Coverage E — Personal liability
Protects you if someone is injured at your home or you cause damage off your property (e.g., your dog bites a neighbor on a walk).
Default is $100,000-$300,000. Smart baseline is $300,000-$500,000. Higher-net-worth households should pair with an umbrella policy.
Especially important if you have a pool, trampoline, dog (some breeds raise rates), or entertain frequently.
Coverage F — Medical payments
Pays minor medical expenses for non-residents injured at your home, regardless of fault. Default is $1,000-$5,000.
Functionally a small "no-questions-asked" pool for neighbor injuries — pays the urgent care bill so it doesn't become a liability claim. Worth carrying.
Common endorsements (added coverages)
Sewer/water backup: covers damage from sewer or sump pump backup. Essential in older urban areas. $50-$150/year.
Service line: covers underground pipes (water, sewer, power, gas) running from the street to your house. Frequent claim on older homes. $30-$80/year.
Scheduled personal property: covers specific high-value items above policy sublimits (engagement ring, fine art, instruments). Each item requires an appraisal.
Earthquake: separate endorsement or stand-alone policy. Required in earthquake-prone areas (especially California).
Equipment breakdown: covers HVAC, water heater, and major appliance failures. $25-$50/year. Worth it for older systems.
Identity theft restoration: covers expenses to restore your identity after theft. Limited value if you already have monitoring services.
Critical exclusions
Standard policies do NOT cover:
- Flood — separate NFIP or private flood policy
- Earthquake — separate endorsement or stand-alone
- Wear and tear, maintenance, mold (mostly)
- Insects, rodents, termites
- Government action (war, nuclear, etc.)
- Wind in coastal hurricane zones — often excluded or has a separate hurricane deductible
See live rates