What does homeowners insurance cover?

When you're purchasing homeowners insurance, it's important to know what you're paying for. Though no two policies are alike, most consist of four standard coverages.

Dwelling coverage provides financial compensation if the structure of your home is damaged by a covered event. This can include:

Roofing

Walls

Floors

Foundation

Built-in appliances

Dwelling coverage usually extends to other structures such as garages and sheds, so you'll be protected if a major catastrophe affects your whole property. We recommend shoppers purchase policies with limits high enough to cover the full cost of rebuilding the structure if it were completely destroyed — a coverage known as replacement cost value.

Personal property coverage protects the contents of your home from any damage caused by a covered peril. A standard HO-3 will likely include coverage for:

Furniture

Clothing

Electronics

Jewelry

However, policies typically come with sub limits on the coverage in individual high-value categories, such as jewelry and firearms. If you have a lot of money invested in collectibles, you may need to review your homeowners policy to determine whether you need additional insurance.

Liability coverage deals with your legal liability for property damage or bodily injury to others. For example, if your dog bites a guest and you are sued for medical expenses, your homeowners insurance will cover the cost of your legal exposure up to policy limits. It also covers unintentional damage or destruction of other people's property, such as breaking your neighbor's window while playing ball.

Loss of use coverage covers the expenses of living away from your home when it's made uninhabitable by a covered peril. However, not all expenses will be covered. You'll only be reimbursed for those expenses above and beyond your normal expenses. For instance, the cost of staying in a hotel while your house undergoes repairs—an unusual expense—will be covered.