Homeowners insurance protects your home, but not against every disaster out there

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

• Homeowners insurance covers damage to your home and belongings from covered events.
• Floods and earthquakes are excluded. There is also limited coverage for service lines.
• You can get add-on coverage or a separate policy for flood, earthquake, and service lines.
• See Insider’s picks for best homeowners insurance companies.

Table of Contents: Masthead Sticky

If the dog bites a guest, the mailman slips on your walkway, someone is injured using your swimming pool, or your home is damaged or possessions stolen – homeowners insurance protects you.

Homeowners insurance protects three main components: the dwelling, your personal belongings, and personal liability coverage for injuries that happen on your property.

However, there are some limits. Damage to your home or belongings must be caused by an insurance peril to be covered. Damage from improper maintenance or wear and tear is not covered.

What does homeowners insurance not cover?

To be covered by homeowners insurance, damage to your home and belongings must be from “insurance perils.” A peril refers to a specific event that caused damage to your home and belongings. Common insurance perils are fire, theft, and lightning.

Earthquakes, floods, government seizures, mudslides, ordinance updates, sewer backups, and sinkholes are all perils that will not be covered by homeowners insurance, according to Hippo Insurance. Those will require add-on coverage using a rider policy or a separate coverage. Additionally, homeowners insurance doesn’t cover damage from improper maintenance or wear and tear.

Earthquake insurance is required for California homeowners. “Earth movement” coverage refers to shifts in land resulting from an earthquake, according to Steve Wilson, senior underwriting manager at Hippo Insurance.

Homeowners insurance covers water damage, but not flooding. Flood insurance must be in addition to your homeowners insurance policy to cover flood-related damage, and specifically excludes water damage from sump pumps, sewer water, broken pipes, rain from an open window, and rain from windstorms.

Wilson said sometimes earthquake coverage will apply to mudslides, but a separate rider is best because mudslides can occur outside of an earthquake or wildfire.

Service and sewer lines have limited coverage. The lines from the street to the house are not included in basic homeowners insurance coverage, but you can add service line protection as a rider.

For example, in some cities the sidewalk is where the property line ends. So if the damage to your sewer line happened outside this area, it’s your utility company’s responsibility. But if the damage to the line occurred within your property lines, it must be related to a named peril for your homeowners insurance to cover it.

Perils covered by homeowners insurance

Homeowners policies fall within two categories: named peril policy and open peril policies.

A “named peril policy” covers you for listed events, like a fire, storm, or theft. Most homeowners policies are named peril only. Open peril coverage includes named perils and is more expansive, covering anything not specifically excluded in the policy. HO-5 is open peril. For HO-3 and HO-7 policies, open peril applies to dwelling coverage only.

If your home is damaged by perils below, you will be covered depending on your coverage type.

Named peril coverage

Open (all) peril coverage

Fire or lightning Windstorm or hail Explosion Riots Aircraft Vehicles Smoke Vandalism Theft Falling objects Weight of ice, snow, or sleet Accidental discharge or overflow of water or steam Sudden and accidental tearing, cracking, burning, or bulging Freezing Sudden and accidental damage due to short circuiting Volcanic eruption

Freezing pipes and systems in vacant dwellings Damage to foundations or pavements from ice and water weight Theft from a dwelling under construction Vandalism to vacant dwellings Latent defects, corrosion, industrial smoke, pollution Settling, wear, and tear Pets, other animals, and pests Weather conditions that aggravate other excluded causes of loss Government and association actions Defective construction, design, and maintenance

Source: Data from The Zebra and Lemonade

Types of homeowners insurance and peril coverage

The type of homeowners insurance you need depends on the type of home you purchased: condo, townhome, single family, rental, or mobile home. Your coverage will vary based on the type of policy you have.

Policy	Dwelling	Liability	Belongings	Peril Type
HO-1: Basic*	Yes	No	No	Named
HO-2: Broad*	Yes	No	Yes	Named
HO-3: Special	Yes	Yes	Yes	Open/Named**
HO-4: Renters	No	Yes	Yes	Named
HO-5: Comprehensive***	Yes	Yes	Yes	Open
HO-6:Condo/Co-op	Yes****	Yes	Yes	Named
HO-7: Mobile Homes	Yes	Yes	Yes	Open/Named**
HO-8: Older homes	Yes	Yes	Yes	Named

Townhomes can be HO-3 or HO-6
*Most lenders don’t consider this sufficient coverage
**Open peril for dwelling coverage only
***Typically for brand-new homes only
****Check with your condo association (HOA) master policy

Exclusions to dwelling coverage

Flood insurance is not a covered peril and requires separate coverage. Additionally, flood policies typically use actual cash value when replacing your belongings instead of “replacement cost.” Homeowners insurance policies typically use “replacement cost” when paying out for covered damage. Replacement cost is the cost to replace the item with a new or used product.

Actual cash value (ACV) takes into consideration depreciation of the item. For example, if a 5-year-old leather sofa is damaged by fire, the actual cash value considers the age of the sofa. Actual cash value is usually lower than the replacement cost value. You can pay extra to use replacement cost for flood insurance policies.

Earthquake coverage is also separate, but can be available as an add-on to your policy. It is required for California homeowners. For homeowners who live in areas where earthquakes are rare, Wilson said most homeowner policy language offers coverage for “resulting damage.” For example, in New York City, earthquakes aren’t covered but if the earthquake caused a fire, damage from the fire will be covered.

Exclusions to personal property coverage

Your possessions are covered from peril damage under personal property coverage. However, specialty items like high-end electronics, special jewelry, furs, fine arts, firearms, and cash may not be covered. According to Wilson from Hippo Insurance, these items may need a “personal article” endorsement or add-on rider.

You can ask your carrier to increase your coverage amount. Otherwise, you can get a personal article rider or endorsement to cover those items or get stand alone jewelry insurance.

Exclusions to personal liability coverage

Some things can be excluded depending on your homeowners insurance provider, like exotic pets, certain dog breeds, a pool, or a trampoline. These can increase your personal liability as a homeowner. Some homeowners insurance companies will not offer coverage based on the size and breed of the dog, especially large dogs and breeds considered to be aggressive.

Related Content Module: More on Homeowners Insurance