The 6 Coverage Types (Coverages A–F)
Dwelling Coverage
CriticalCovers the physical structure of your home — walls, roof, floors, built-in appliances — if damaged by a covered peril.
Insure for replacement cost, not market value. Rebuilding costs more than the home's sale price in many markets.
Other Structures
Covers detached structures like garages, fences, sheds. Typically 10% of your dwelling coverage automatically.
If you have an expensive detached garage or workshop, you may need to increase this.
Personal Property
CriticalCovers your belongings — furniture, electronics, clothing — if stolen or damaged by a covered peril. Typically 50–70% of dwelling coverage.
Upgrade to "replacement cost value" instead of "actual cash value." ACV pays depreciated value — much less than replacing your stuff.
Loss of Use / Additional Living Expenses
Pays for hotel, meals, and temporary housing if your home is uninhabitable due to a covered loss.
Typically 20–30% of dwelling. Often overlooked — but critical if a fire or major damage displaces you for months.
Personal Liability
CriticalCovers legal and medical costs if someone is injured on your property and sues you.
Default is often $100K — not enough. Bump to $300K–$500K. If you have significant assets, add an umbrella policy.
Medical Payments
Pays small medical bills for guests injured on your property, regardless of fault. Typically $1,000–$5,000.
Low cost add-on. Prevents minor incidents from becoming liability claims.
What's Covered vs. What's Not
Typically Covered
- ✓ Fire and smoke damage
- ✓ Wind and hail damage
- ✓ Lightning strikes
- ✓ Theft and vandalism
- ✓ Frozen pipes (sudden/accidental)
- ✓ Falling objects (e.g., tree limb)
- ✓ Weight of ice, snow, or sleet
- ✓ Damage from vehicles or aircraft
NOT Covered (Gaps to Know)
- ✗ Flooding
Separate NFIP or private flood insurance policy required
- ✗ Earthquakes
Separate earthquake endorsement or policy (critical in CA, PNW)
- ✗ Sewer backup
Water/sewer backup rider — often only $50–$100/year
- ✗ Mold (pre-existing)
Some policies add mold coverage — ask specifically
- ✗ Normal wear & tear
Not insurable — belongs in your maintenance budget
- ✗ Home business
Business policy or endorsement if you run a business from home
- ✗ Pest damage
Not insurable — prevention is the only protection
- ✗ Government seizure
Not covered by any standard policy
Flood & Earthquake — The Two Biggest Gaps
Flooding is the #1 natural disaster in the U.S. and is excluded from every standard homeowners policy. If you're in a FEMA flood zone, your lender will require National Flood Insurance Program (NFIP) coverage. Even if you're not in a designated zone, consider it — 25% of flood claims come from low-to-moderate risk areas.
Earthquakes are excluded everywhere. If you're in California, the Pacific Northwest, or any seismically active region, a separate earthquake policy is essential. California's CEA offers state-backed coverage.
Riders Worth Adding
These endorsements are inexpensive add-ons that fill common gaps most standard policies leave.
Scheduled Personal Property
~$100–$300/yearFor high-value items — jewelry, art, instruments, firearms — standard policy limits are often $1,000–$2,500. Schedule them separately.
Water/Sewer Backup
~$50–$100/yearCovers damage from backed-up drains, sewers, or sump pump failure. One of the most common claims not covered by standard policies.
Home Business Endorsement
~$25–$100/yearIf you run any business from home — even freelance or e-commerce — standard policies exclude business property and liability.
Identity Theft Protection
~$25–$50/yearCovers costs to restore your identity if stolen. Niche but inexpensive.
Extended Replacement Cost
~$50–$150/yearPays above your policy limit (10–50% extra) if rebuilding costs exceed your coverage. Smart protection against inflation in construction costs.
How to Shop for the Best Policy
Get at least 3 quotes
Rates vary enormously by insurer — sometimes 30–50% for identical coverage. Use an independent broker or sites like Policygenius.
Bundle with auto insurance
Most insurers offer 5–15% discount for bundling home and auto. Start with your current auto insurer's quote.
Raise your deductible
Going from a $500 to $1,000 deductible can lower premiums 10–15%. Only do this if your emergency fund can cover the higher deductible.
Insure the structure, not the land
Your coverage should reflect what it costs to rebuild the home — not the purchase price, which includes land value. Overinsuring raises premiums unnecessarily.
Ask about discounts
New roof, security system, smoke detectors, deadbolts, no claims history, new construction — all can unlock discounts. Ask explicitly.
Key Takeaways
Insure your home for replacement cost — what it costs to rebuild — not market value. These are very different numbers.
Standard policies do NOT cover floods or earthquakes. If you're in a risk area, get separate coverage — your lender may require flood insurance anyway.
Upgrade personal property coverage to "replacement cost value" not "actual cash value." The difference is thousands when you file a claim.
Liability coverage of $100K is rarely enough. Set it to $300K–$500K and consider an umbrella policy if you have significant assets.