Homeowners Insurance Coverage: What's Included and What's Not

The Average Homeowners Claim Is $15,000—And Most Homeowners Don't Know Their Policy

According to the Insurance Information Institute, the average homeowners insurance claim in 2023 was approximately $15,623. Wind and hail account for 45.5% of all claims; water damage and freezing account for 29.4%. Yet surveys consistently show that most homeowners can't identify their dwelling coverage limit, don't know whether they have replacement cost or actual cash value coverage, and assume their policy covers floods—which it almost never does.

Standard Policy Types: The HO Series

The Insurance Services Office (ISO) created standardized homeowners policy forms. Most Americans with a house purchase an HO-3 policy.

The Six Coverage Parts of an HO-3 Policy

Coverage A — Dwelling: Covers the physical structure of your home against all perils except those specifically excluded. Limits should reflect the replacement cost—what it would cost to rebuild at current construction prices—not the market value or purchase price. With construction costs up 40%+ since 2019, many homeowners are significantly underinsured.

Coverage B — Other Structures: Detached garage, fence, shed, pool house. Standard limit is 10% of dwelling coverage. A home with $400,000 in Coverage A gets $40,000 for other structures.

Coverage C — Personal Property: Furniture, electronics, clothing, appliances—items inside the home. Standard coverage is 50%–70% of dwelling value. Most policies cover personal property at actual cash value (ACV), which deducts depreciation. A three-year-old TV worth $600 when purchased may receive only $200 ACV. Replacement cost value (RCV) endorsements eliminate this gap.

Coverage D — Loss of Use: Pays for hotel, rental, and meals if a covered loss makes your home uninhabitable. Typically 20%–30% of dwelling coverage. A home with $350,000 dwelling coverage gets up to $70,000–$105,000 for additional living expenses.

Coverage E — Personal Liability: Protects against lawsuits from people injured on your property or by you. Standard limits are $100,000–$300,000. A visitor who slips and falls, or a dog bite claim, triggers this coverage.

Coverage F — Medical Payments to Others: Pays small medical bills for guests injured on your property regardless of fault. Typically $1,000–$5,000. Does not apply to residents of the household.

What Homeowners Insurance Does NOT Cover

• Flood damage: Zero coverage. Period. Requires a separate National Flood Insurance Program (NFIP) policy or private flood insurance. Average NFIP annual premium is around $1,000, but flood damage claims average $52,000.
• Earthquake damage: Excluded in nearly all standard policies. Separate earthquake endorsements or policies available.
• Maintenance and wear: A leaking roof from age is maintenance, not a covered loss. Sudden, accidental water damage from a burst pipe is covered.
• High-value items above sub-limits: Jewelry covered only up to $1,500–$2,500 under standard policies. Guns, silverware, and fine art face similar sub-limits. Scheduled personal property endorsements or floaters cover specific high-value items at full appraised value.
• Home business losses: Business equipment and liability from a home-based business typically excluded without an endorsement.

Average Annual Premiums by State

Replacement Cost vs. Actual Cash Value

This is the most impactful coverage decision most homeowners overlook. Actual cash value coverage pays what your items are worth today, after depreciation. Replacement cost coverage pays what it actually costs to replace them with new equivalents. The premium difference between ACV and RCV personal property coverage is often only $50–$150 per year—making the upgrade almost always worth it.

Disclaimer: Insurance coverage varies by policy, insurer, and state. This article is for informational purposes only. Consult a licensed insurance agent or broker for advice specific to your property and situation.