​What is covered by standard homeowners insurance?

Homeowners’ coverage provides financial protection against loss due to disasters, theft and accidents. Most standard policies include four essential types of coverage: Coverage for the structure of your home; Coverage for your personal belongings; Liability protection; Coverage for Additional Living Expenses.

Coverage for the structure of your home  

Your homeowners’ policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disasters listed in your policy.

Most policies also cover detached structures such as a garage, tool shed or gazebo—generally for about 10 percent of the amount of insurance you have on the structure of the house (check your policy).

A standard policy will not pay for damage caused by a flood, earthquake or routine wear and tear.

When purchasing coverage for the structure of your home, remember this simple guideline: Purchase enough coverage to rebuild your home.

Liability protection

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. So, if your son, daughter (or even your dog) accidentally ruin a neighbor’s expensive rug, you are covered. (However, if they destroy your rug, you’re out of luck.)

It’s a good idea to discuss whether you should purchase a higher level of protection with your insurance professional. If you have significant assets and want more coverage than is available under your homeowners’ policy, consider purchasing an umbrella or excess liability policy, which provides broader coverage and higher liability limits.

Additional living expenses (ALE)

ALE pays the additional costs of living away from home if you cannot live there due to damage from an insured disaster. It covers hotel bills, restaurant meals and other costs, over and above your usual living expenses, incurred while your home is being rebuilt.

Keep in mind that the ALE coverage in your homeowners’ policy has limits—and some policies include a time limitation. However, these limits are separate from the amount available to rebuild or repair your home. Even if you use up your ALE your insurance company will still pay the full cost of rebuilding your home up to the policy limit.

 Source: Insurance Information Institute,iii

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