Homeowners insurance is a packaged property and liability policy. It bundles six core coverages plus a long list of conditions, sublimits, and exclusions. Understanding what each coverage letter does — and what it does not — is the difference between a paid claim and a denial.
The six standard coverages (HO-3)
| Coverage | What It Pays For | Typical Limit | Common Sizing Rule |
|---|---|---|---|
| A — Dwelling | House structure, attached garage, built-ins | 100% replacement cost | Cost to rebuild, not market value |
| B — Other Structures | Detached garage, fence, shed, driveway | 10% of A | Increase for barns/large fencing |
| C — Personal Property | Contents, including off-premises | 50–70% of A | RCV endorsement strongly advised |
| D — Loss of Use / ALE | Temporary housing, extra costs | 20–30% of A | Higher in HCOL or rural markets |
| E — Personal Liability | Bodily injury, property damage to others | $100k–$500k | $300k minimum; $500k preferred |
| F — Medical Payments | Minor guest injuries, no fault | $1k–$5k | Goodwill coverage, not lawsuits |
What homeowners insurance does not cover
| Exclusion | How to Cover It |
|---|---|
| Flood | NFIP or private flood policy |
| Earthquake / earth movement | Earthquake endorsement or DIC |
| Sewer / drain backup | Water backup endorsement |
| Ordinance or law upgrades | Ordinance & law endorsement (raise to 25–50%) |
| Wear, tear, maintenance | Not insurable |
| Service line failure (yard to house) | Service line endorsement |
| Business activity in the home | Home business endorsement / BOP |
| High-value jewelry, art, firearms above sublimit | Scheduled personal property |
Standard markets get tougher every year on roofs over 15 years, prior claims, and brush/coastal exposure. When standard carriers decline, Agents can place coverage through surplus lines, FAIR Plans, or specialty wind/fire pools.