The 6 Coverage Types (Coverages A–F)
Coverage A — Dwelling Coverage (Critical)
Covers 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.
Coverage B — 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.
Coverage C — Personal Property (Critical)
Covers 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.
Coverage D — 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.
Coverage E — Personal Liability (Critical)
Covers 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.
Coverage F — 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/year) — For high-value items — jewelry, art, instruments, firearms — standard policy limits are often $1,000–$2,500. Schedule them separately.
- Water/Sewer Backup (~$50–$100/year) — Covers 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/year) — If you run any business from home — even freelance or e-commerce — standard policies exclude business property and liability.
- Identity Theft Protection (~$25–$50/year) — Covers costs to restore your identity if stolen. Niche but inexpensive.
- Extended Replacement Cost (~$50–$150/year) — Pays 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.