Your homeowners policy is a collection of separate coverages, each with its own limits and rules.
Coverage A: Dwelling Coverage
What it covers: The physical structure of your home — walls, roof, foundation, built-in appliances.
The critical choice: Replacement Cost vs. Actual Cash Value
- Replacement Cost: Pays to rebuild at today's prices (recommended)
- Actual Cash Value: Pays replacement cost minus depreciation
How much do you need? Enough to completely rebuild your home.
Coverage B: Other Structures
What it covers: Detached garages, fences, sheds, guest houses, pools.
Limit: Typically 10% of your dwelling coverage.
Coverage C: Personal Property
What it covers: Your belongings — furniture, clothing, electronics.
- Jewelry: $1,500–$2,500
- Firearms: $2,500
- Silverware: $2,500
For expensive items, you need a scheduled personal property endorsement.
Coverage D: Loss of Use
What it covers: Extra costs of living away from home during repairs — hotel, meals, storage.
Limit: Typically 20-30% of dwelling coverage.
Coverage E: Personal Liability
What it covers: Legal costs and damages if someone is injured on your property.
Recommended minimum: $300,000. Consider$500,000 or umbrella policy for significant assets.
Coverage F: Medical Payments to Others
What it covers: Small medical bills for guests injured on your property, regardless of fault.
Limit: Usually $1,000–$5,000 per person.
What's NOT Covered
- Flood damage (need separate flood insurance)
- Earthquake damage (need separate coverage)
- Sewer and drain backup (available as endorsement)
- Termite/pest damage
- Wear and tear
- Mold (limited coverage)
FAQ
Q: Does my policy cover my roof replacement?
A: Only if damaged by a covered peril (storm, fallen tree). Normal wear isn't covered.
Q: Are home offices covered?
A: Limited coverage (typically $2,500). For full business coverage, need endorsement.
Action checklist
Dwelling vs other structures
Dwelling coverage (Coverage A) pays the house structure; other structures (Coverage B) pays detached garage, fence, shed—often 10% of dwelling by default. Increase B if you added a large detached shop.
Scenario: pipe burst in winter
Frozen pipe bursts while homeowners are traveling. Dwelling coverage pays drywall and flooring; personal property pays furniture; ALE pays hotel during repairs. Mitigation within 24 hours is required—document everything before cleanup.
Scenario: liability from dog bite
A guest is bitten on your property. Liability (Coverage E) may defend and pay settlements—some carriers exclude certain breeds. Umbrella policies add excess limits if you own significant assets.
FAQ
Q: Is mold covered? A: Usually only if caused by a covered sudden water event and remediation is prompt.
Q: What is loss of use? A: Additional living expenses while your home is uninhabitable after a covered loss.
Q: Replacement cost vs ACV? A: Replacement cost pays to rebuild/replace new; ACV subtracts depreciation—verify both dwelling and contents.
Request your HO-3 declarations page annually and verify Coverage A/B/C/D/E limits match your current rebuild estimate and inventory. Inflation guard increases dwelling limits automatically but may lag local construction cost spikes after catastrophes.
Schedule jewelry, bikes, and home business equipment explicitly—default sub-limits are the most common partial-denial surprise on otherwise well-insured homes.
