Homeowners Insurance Guide: Coverage, Policy Forms, Deductibles, Exclusions, Costs and Claims

Quick answer: a standard homeowners policy pays to repair or rebuild your house and other structures, replace your belongings, cover extra living costs while your home is unlivable, and defend you if someone sues over an injury or damage you caused. It does not cover everything. Flood and earthquake damage are excluded from standard policies, and wear and tear, poor maintenance and pests are not insured events. The most important choices you make are how much dwelling coverage to carry (enough to rebuild, not the market price), whether losses are paid at replacement cost or actual cash value, your deductibles (including any percentage wind or hurricane deductible) and your liability limit.

For most families, the house is the largest thing they will ever own, and the homeowners policy is the contract that decides what happens to it after a fire, a burst pipe, a falling tree or a lawsuit. Many people buy that contract at closing, under time pressure, and never read it again.

In this guide

What Homeowners Insurance Covers: Coverages A Through F
Homeowners Policy Forms: HO-3, HO-5, HO-6, HO-4 and Others
Replacement Cost vs. Actual Cash Value
Homeowners Insurance Deductibles, Including Wind, Hail and Hurricane
What Homeowners Insurance Does Not Cover
What Affects Your Homeowners Insurance Premium
How to File a Homeowners Insurance Claim, Step by Step
Renters, Condo and Other Homeowner Variations
Add-Ons Worth Pricing: Flood, Umbrella, Scheduled Items and More
Reviewing Your Homeowners Coverage Each Year
Frequently Asked Questions
Related Homeowners Insurance Guides

This guide explains how a homeowners policy is built, which policy forms exist, how claims are valued, how deductibles work, what is excluded, what affects the premium and how to handle a claim. Where this site has a deeper article on a topic, the section links to it.

This is general educational information, not legal or financial advice, and Pro Insurance Info is not an insurance company. Policy wording, available coverage and prices vary by state and insurer, so your own policy and declarations page control what is covered. Sources: National Association of Insurance Commissioners (NAIC) homeowners insurance consumer guides; Insurance Information Institute (III); Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP); California Earthquake Authority; Federal Trade Commission (FTC) guidance on consumer reports; state insurance departments. Checked October 2026. Questions: hello@proinsuranceinfo.com.

Table of Contents

What Homeowners Insurance Covers: Coverages A Through F

Most homeowners policies in the United States follow a common structure built on forms published by the Insurance Services Office (ISO). Insurers can change the wording, but the six lettered coverages below appear on almost every declarations page.

Coverage	What it pays for	How the limit is often set
A: Dwelling	The house itself and attached structures such as an attached garage or deck	Your estimated cost to rebuild
B: Other structures	Detached structures such as fences, sheds and detached garages	Often a percentage of Coverage A, commonly 10%
C: Personal property	Furniture, clothing, electronics and other belongings, at home or away	Often a percentage of Coverage A
D: Loss of use	Additional living expenses if a covered loss makes the home unlivable	A percentage of Coverage A or a time limit
E: Personal liability	Legal defense and damages if you are responsible for injury or property damage to others	A dollar limit you choose, such as $100,000 or $300,000
F: Medical payments to others	Small medical bills for guests hurt on your property, regardless of fault	A low limit, often a few thousand dollars

The first four coverages protect your property and your household budget. The last two protect you from claims made by other people. Our detailed explainer on homeowners insurance Coverages A through F goes line by line through each one.

The perils question

A coverage only pays when the cause of the damage is covered. Insurance contracts describe causes of loss as perils. Policies use one of two approaches:

Named perils. Only the causes listed in the policy are covered, such as fire, lightning, windstorm, hail, explosion, theft and vandalism. If a cause is not on the list, there is no coverage.
Open perils (sometimes called all risks). Every cause of direct physical loss is covered unless the policy specifically excludes it. The burden shifts: the insurer has to point to an exclusion to deny the claim.

Which approach applies to your house and to your belongings depends on the policy form, which is the next topic.

Homeowners Policy Forms: HO-3, HO-5, HO-6, HO-4 and Others

The “HO” numbers are shorthand for standard policy forms. The NAIC and the Insurance Information Institute describe them in similar terms:

HO-1 (basic form) and HO-2 (broad form) cover the home against a list of named perils. HO-1 is rarely sold today; HO-2 covers a longer list.
HO-3 (special form) is the most common homeowners policy. It covers the dwelling and other structures on an open-perils basis and personal property on a named-perils basis.
HO-5 (comprehensive form) covers both the dwelling and personal property on an open-perils basis. It is typically more expensive and may be offered only for newer or well-maintained homes.
HO-6 (unit-owners form) is for condominium and co-op owners. It covers your personal property, liability and the parts of the unit you own under your association’s rules, which often include interior walls, fixtures and improvements.
HO-4 (contents broad form) is renters insurance. It covers belongings, liability and loss of use, but not the building.
HO-7 is used in some markets for mobile and manufactured homes, and HO-8 is a modified form for older homes where rebuilding to original standards would cost far more than the home’s market value.

Why the form matters for your belongings

Few owners notice the gap between HO-3 and HO-5 until a claim involving personal property. Under an HO-3, if your laptop is damaged by a cause that is not on the named-perils list, such as an accidental spill, the claim is not covered. Under an HO-5, that same spill may be covered unless an exclusion applies. Neither form covers ordinary wear and tear.

To find your form, look at the declarations page or the first page of the policy jacket. Many insurers print the form number in the corner, such as “HO 00 03” for the standard ISO special form.

Replacement Cost vs. Actual Cash Value

How a claim is valued matters as much as whether it is covered. Policies settle losses in one of two main ways:

Replacement cost pays what it costs to repair or replace damaged property with new material or items of like kind and quality, without a deduction for depreciation.
Actual cash value (ACV) pays replacement cost minus depreciation. In practice, an older roof, sofa or television is worth much less than a new one, so ACV payouts can be far smaller.

Many homeowners policies insure the dwelling at replacement cost and personal property at actual cash value unless you add a replacement cost endorsement for contents. Some insurers now apply ACV or a roof payment schedule to older roofs, which can leave a large gap after a hail or wind loss. Check the roof section of your declarations or endorsements.

Holdback and the “two-check” pattern

Under many replacement cost policies, the insurer first pays the actual cash value and holds back the depreciation. You receive the rest after the repair or replacement is completed and documented, usually within a deadline stated in the policy. Keep receipts and contractor invoices so you can claim the holdback.

Extended and guaranteed replacement cost

Construction costs can rise sharply after a regional disaster, when materials and labor are in short supply. An extended replacement cost endorsement raises the amount available above your Coverage A limit, typically by a set percentage. A guaranteed replacement cost endorsement, where available, pays the full cost to rebuild even above the limit, subject to conditions. Both usually require you to insure the home to the value the insurer calculates and to report major renovations.

Homeowners Insurance Deductibles, Including Wind, Hail and Hurricane

A deductible is the part of a covered loss you pay before the insurer pays. Our guide to the difference between a deductible and a premium explains the trade-off between the two in general terms. Homeowners policies have a few twists.

Flat-dollar deductibles

Most policies have an all-other-perils deductible stated in dollars, such as $1,000 or $2,500. Choosing a higher deductible usually lowers the premium. The right level is one you could pay from savings the day after a loss without borrowing.

Percentage deductibles

In areas exposed to hurricanes, windstorms or hail, insurers often use a separate deductible expressed as a percentage of your dwelling coverage, not of the claim. The Insurance Information Institute reports that hurricane deductibles commonly range from 1% to 5% of the insured value of the home and can be higher in the most exposed coastal areas.

The math surprises many owners. With $400,000 of dwelling coverage and a 2% wind deductible, you pay the first $8,000 of a covered wind loss. A 5% deductible on the same home means $20,000. If your policy has a percentage deductible, write the dollar figure next to it on your declarations page so you know it before storm season.

What triggers a hurricane deductible

States set rules for when a hurricane deductible applies, often tied to a named storm or a hurricane watch or warning issued by the National Weather Service. These triggers differ by state and are explained in the policy and on your state insurance department’s website.

What Homeowners Insurance Does Not Cover

Exclusions are where most claim disputes start. These are the gaps the NAIC and III highlight most often.

Flood

Standard homeowners policies exclude damage from flooding, including storm surge and overflowing rivers. Flood coverage is sold separately through the National Flood Insurance Program, run by FEMA, and by private flood insurers. FEMA states that NFIP policies usually take 30 days to take effect, with limited exceptions, so buying coverage when a storm is already forecast is often too late. NFIP residential limits top out at $250,000 for the building and $100,000 for contents. If you have a federally backed mortgage on a home in a high-risk flood zone, your lender will require flood insurance. Our guide to flood insurance through the NFIP and private carriers covers the details.

Earthquake and earth movement

Earthquakes, landslides and sinkholes (outside states that require sinkhole coverage) are excluded from standard policies. Earthquake coverage is available as an endorsement or a separate policy. In California, the California Earthquake Authority sells residential earthquake policies through participating insurers.

Wear and tear, maintenance and pests

Insurance covers sudden and accidental damage, not slow deterioration. A roof that leaks because it is old, a pipe that has dripped inside a wall for months, rot, rust, and damage from termites, rodents or other vermin are generally excluded. Mold is usually excluded or tightly limited unless it results from a covered sudden water loss.

Sewer and drain backup

Water that backs up through drains or sewer lines is excluded from many standard forms. Insurers commonly offer a water backup endorsement for an added premium. In a home with a finished basement, it is one of the most useful add-ons to price.

Other common exclusions

Ordinance or law costs, meaning the extra expense of bringing a damaged home up to current building codes, unless you buy that coverage.
Intentional damage and losses from neglect.
Business property and business liability above small limits, which matters if you run a business from home.
Power failure that starts away from your property.
War and nuclear hazard.

What Affects Your Homeowners Insurance Premium

Insurers set prices from expected claim costs. The factors below are the ones regulators and the III describe most often.

Rebuilding cost. Square footage, construction type, roof material and finishes drive what it costs to rebuild and therefore the premium.
Location. Exposure to wind, hail, wildfire and other weather, distance to a fire station and fire hydrant, and local construction costs.
Age and condition of the home. Older roofs, plumbing, wiring and heating systems can raise rates or limit eligibility.
Claims history. Your past claims and the property’s past claims, drawn from loss history databases.
Credit-based insurance score. Used in most states. A few states, including California, Maryland and Massachusetts, bar or restrict its use for homeowners insurance.
Deductibles and limits. Higher deductibles lower the premium; higher limits and added endorsements raise it.
Protective devices and features. Monitored alarms, fire sprinklers, impact-resistant roofs and storm shutters can earn discounts. Some coastal states require insurers to offer discounts for specific wind mitigation features.
Liability exposures. Pools, trampolines and some dog breeds can affect pricing or eligibility, depending on the insurer.

Your claims history report

Many insurers check the Comprehensive Loss Underwriting Exchange (CLUE) database, maintained by LexisNexis, which records claims tied to you and to a property. Under the Fair Credit Reporting Act, the FTC explains that you can request a free copy of specialty consumer reports such as this once every 12 months. Reviewing it before shopping lets you correct errors. For more on how past claims follow you, read our article on whether your home insurance premium increases after a claim.

Ways to lower the premium without cutting key protection

Raise the all-other-perils deductible to a level you can afford.
Bundle home and auto with one insurer if the combined price is lower.
Ask about discounts for alarms, new roofs, updated wiring and claim-free years.
Compare quotes from several insurers using identical limits and deductibles.
Review your Coverage A limit so you are not paying for land value, which does not burn.

Our article on whether you can negotiate home insurance rates covers what you can and cannot change.

How to File a Homeowners Insurance Claim, Step by Step

The NAIC’s consumer guidance on property claims follows the same basic sequence, and your policy’s “duties after loss” section spells out what you must do.

Make the home safe. Leave if there is danger. Call emergency services for fire, gas leaks or structural damage.
Prevent further damage. Shut off water, cover openings with tarps or boards and move undamaged items. Policies require reasonable steps to protect property, and the cost of temporary repairs is often reimbursable. Keep receipts.
Document everything. Take photos and video of damage before cleanup. Do not throw away damaged items until the adjuster has seen them or approved disposal.
Report the claim promptly. Contact your insurer or agent, give the policy number and describe what happened. Write down the claim number and your adjuster’s name.
Track additional living expenses. If you cannot live at home, keep receipts for hotel, meals above your normal food costs and other extra expenses under Coverage D.
Prepare a proof of loss. Many insurers require a sworn statement of the amount claimed within a set period. A home inventory makes this far easier.
Meet the adjuster. Walk through the damage, share your documentation and ask how the estimate was built.
Review the settlement. Compare the estimate with contractor bids. If you disagree, ask for a written explanation, provide more evidence, consider the policy’s appraisal clause and contact your state insurance department if needed.

Water losses are the most common source of frustration. Our article on getting insurance to pay for water damage explains which water losses are usually covered and which are not.

Renters, Condo and Other Homeowner Variations

Not everyone who lives in a home needs the same policy.

Renters (HO-4)

A landlord’s policy covers the building, not the tenant’s belongings or liability. Renters insurance fills that gap with personal property, liability and loss-of-use coverage. Some landlords require it in the lease. Our explainer on what renters insurance covers walks through a typical policy.

Condo owners (HO-6)

A condominium association carries a master policy for the building and common areas. Master policies differ in how much of each unit they cover. A “bare walls” policy leaves interior fixtures to the owner, while an “all-in” policy covers more of the original interior. Read the association’s governing documents and master policy summary, then buy HO-6 dwelling coverage for what the association does not insure. Loss assessment coverage helps if the association bills owners for a large deductible or an uninsured loss.

Landlords and short-term rentals

If you rent out a home you own, a standard homeowners policy may not respond. Landlord or dwelling fire policies (such as DP-3 forms) cover rental buildings, and short-term rentals may need a specific endorsement. Ask your insurer before you list the property.

Add-Ons Worth Pricing: Flood, Umbrella, Scheduled Items and More

Endorsements tailor a standard form to your home. Consider these:

Flood insurance. A separate policy, as described above. Federal flood maps do not capture every flood risk, and FEMA notes that a significant share of flood claims come from outside high-risk zones.
Personal umbrella policy. Extra liability coverage above your home and auto limits, often sold in $1 million increments. Our umbrella insurance basics article explains how it sits on top of your other policies.
Scheduled personal property. Standard policies apply low special limits to theft of jewelry, watches, furs, firearms and similar items. Scheduling an item with an appraisal gives it its own limit and often broader coverage.
Water backup. Covers water that backs up through sewers or drains.
Equipment breakdown and service line coverage. Pays for sudden breakdown of home systems or damage to underground utility lines you own.
Ordinance or law. Pays the added cost of meeting current building codes when you rebuild.
Replacement cost on contents. Converts personal property settlements from ACV to replacement cost.
Home business endorsement. Extends limited business property and liability coverage for small home-based businesses.

Reviewing Your Homeowners Coverage Each Year

Renewal is the best moment to check whether the policy still fits. Use this checklist:

Rebuild cost. Has Coverage A kept pace with construction costs and any renovations? An undersized limit can leave you short after a total loss.
Deductibles. Do you know your all-other-perils deductible and the dollar amount of any wind, hail or hurricane deductible?
Roof terms. Is your roof covered at replacement cost or on an ACV or payment schedule basis?
Belongings. Have you bought valuables that need scheduling? Is contents coverage at replacement cost?
Liability limit. Does your limit reflect your assets and future earnings? Would an umbrella policy be sensible?
Exclusions. Do you need flood, earthquake or water backup coverage?
Household changes. New pets, a pool, a home business, roommates or a rental unit can all affect coverage.
Discounts. Have you added alarms or completed upgrades that qualify for a discount?
Home inventory. Is your inventory current and stored somewhere other than the house, such as cloud storage?

Keep your documents reachable

Store a digital copy of your declarations page, policy and inventory outside the home. After a disaster, you may need them before you can get back inside.

Frequently Asked Questions

Is homeowners insurance required by law?

No state law requires homeowners insurance, but nearly every mortgage lender requires it as a loan condition, and lenders can buy expensive force-placed coverage if you let it lapse. Once a mortgage is paid off, insurance is optional, but going without it puts the full cost of a fire or lawsuit on you.

How much dwelling coverage do I need?

Insure the house for what it would cost to rebuild it at current construction prices, not its market value or purchase price. Land does not need to be insured. Many insurers use replacement cost estimating tools; review the estimate and update it after renovations.

Does homeowners insurance cover a roof leak?

A sudden leak caused by a covered peril, such as wind or hail damage or a falling tree, is generally covered, minus your deductible. A leak caused by an old, worn roof or poor maintenance is usually not covered. Some policies pay older roofs on an actual cash value basis.

Does homeowners insurance cover water damage?

Sudden and accidental water damage from inside the home, such as a burst pipe, is commonly covered. Flooding from outside, long-term leaks and sewer backup are usually excluded unless you have separate flood insurance or a water backup endorsement.

Will filing a claim raise my homeowners premium?

It can. Insurers consider claims history, which is recorded in databases such as LexisNexis CLUE. Small claims close to your deductible may not be worth filing, but always report losses that are large or involve injuries.

What is the difference between HO-3 and HO-5?

Both cover the dwelling on an open-perils basis. HO-5 also covers personal property on an open-perils basis, while HO-3 covers personal property only for listed perils. HO-5 usually costs more.

Related Homeowners Insurance Guides - section banner for Homeowners Insurance Guide

These articles go deeper on parts of a homeowners policy:

More guides in this series, covering HO-3 vs. HO-5, replacement cost vs. actual cash value, filing a claim, wind and hail deductibles, building a home inventory, dwelling coverage limits and condo insurance, are being added and will be linked here as they go live.

Sources: NAIC homeowners and renters insurance consumer guides; Insurance Information Institute homeowners, hurricane deductible and credit-based insurance score resources; FEMA and FloodSmart.gov (National Flood Insurance Program); California Earthquake Authority; Federal Trade Commission guidance on free specialty consumer reports; LexisNexis CLUE consumer disclosure information; state insurance department consumer guides.