Standard home insurance (called HO-3) covers the structure of your home and personal items that get damaged by a covered peril, like a fire or windstorm. It also covers your liability if a guest gets injured at your house, and pays for additional living expenses if your home is destroyed in a covered loss.
A comprehensive home insurance policy includes multiple coverages, broken down into different categories. While HO-3 home insurance covers many of the most common risks that homeowners might face, it doesn’t cover everything.
For current homeowners and first-time homebuyers, you need to understand the standard protections and exclusions under HO-3 homeowners insurance coverage. Depending on your situation, you might need to supplement your coverage for additional protection.
HO-3 home insurance policies include six categories of coverage. Here’s a breakdown of each one, and how it works.
Dwelling insurance, also called Coverage A, pays to repair or rebuild the physical structure of your home if it gets damaged by a covered peril. It typically covers the following components:
It’s generally recommended to choose a dwelling insurance limit that’s at least 80% of your home’s replacement cost, or how much it would cost to rebuild your home after a total loss.
To estimate this number, you can multiply the square footage of your home by the local building costs per square foot in your area.
Detached structures insurance is also known as Coverage B. It covers damage to structures on your property that are detached from your main house. Examples include:
Most home insurance policies cover detached structures at 10% of your dwelling coverage limit. So, for example, if your dwelling insurance limit is $350,000, your policy might include $35,000 in detached structures coverage.
Coverage C is the section of an HO-3 home insurance policy that covers your personal items. If your belongings get damaged or destroyed in a covered peril, contents coverage will pay to replace them.
Under an HO-3 policy, personal items are usually covered at their actual cash value (ACV), which covers items at their depreciated value. Coverage C typically covers:
The default policy limit for Coverage C is usually between 50% and 70% of your dwelling insurance limit. That means if your dwelling limit is $350,000, your personal property coverage limit could be anywhere from $175,000 to $245,000. However, you can change your coverage limit depending on the value of the items you own.
Additional living expenses (ALE), also called Coverage D, kicks in when your home gets damaged or destroyed in a covered event, and you have to relocate while it’s repaired or rebuilt. ALE can cover temporary living costs, such as:
The ALE coverage limit under an HO-3 insurance policy is typically around 20% of your dwelling insurance limit, which would be roughly $70,000 on a policy with $350,000 in dwelling coverage. However, the exact limit can vary depending on your insurance company and policy.
Coverage E is the part of your policy that covers liability. If you’re responsible for a guest’s injuries while visiting your home, or if you accidentally damage someone else's property, liability insurance can cover your financial responsibility. It also covers injuries and property damage caused by other people in your household, including pets. Liability insurance can pay for:
It’s common for HO-3 homeowners insurance policies to include at least $100,000 in liability insurance. Depending on your financial situation, however, you might need more coverage. Your liability limit should match or exceed your total personal assets, like real estate, cars, investments, and money in retirement accounts.
If your liability coverage needs exceed what a standard home insurance policy can provide, you might consider adding umbrella insurance.
HO-3 home insurance includes Coverage F, also called medical payments insurance. This section of your policy provides a small amount of coverage for a guest’s medical expenses if they get hurt while visiting your home, whether or not you’re liable. Medical payments insurance can help cover:
The coverage limit for medical payments insurance is typically between $1,000 and $5,000, but some insurance companies may offer higher policy limits.
Standard home insurance pays out when your home or personal belongings get damaged by a covered peril. While different home insurance policies may cover different perils, standard HO-3 policies typically cover 16 named perils:
Comprehensive home insurance policies cover a wide variety of perils, but not everything is covered. The table below includes some examples of what home insurance covers and doesn’t cover.
Covered | Not Covered |
Hurricanes | Flooding |
Hailstorms | Earthquakes |
Fires (including wildfires) | War |
Theft and burglary | Negligence |
Explosions | Business property |
Damage from the weight or ice or snow | Pests and infestations |
Vandalism | Normal wear and tear |
Falling objects | Intentional damage |
Damage from planes and cars | Valuable items (limited coverage) |
Smoke damage | Water backup |
Some homeowners can benefit from adding extra coverage to fill the gaps in their standard HO-3 home insurance policy. Most home insurance companies offer optional riders and endorsements that can cover perils that are normally excluded.
Here are some common riders and endorsements that you might consider adding for more protection:
Does home insurance cover roof leaks?
Yes, home insurance can cover roof leaks that are caused by a covered loss, like a tree that falls on the roof during a windstorm. However, most policies exclude roof leaks due to normal wear and tear, and lack of maintenance.
Does home insurance cover mold?
Home insurance typically only covers mold that’s directly caused by a covered peril, like a burst pipe or accidental water discharge. Most policies don’t cover mold that forms due to issues like long-term humidity or a slow roof leak.
Is my laptop covered if I take it on vacation?
Yes, personal property coverage (Coverage C) can cover laptops and other electronics that get damaged or stolen on vacation. Most policies cover your belongings anywhere in the world, but typically at a reduced coverage limit.
Standard HO-3 home insurance policies provide robust coverage for some of the most common losses that homeowners can face, but every policy is different.
It’s important to understand exactly what your home insurance policy does and doesn’t cover, and identify coverage gaps that might require endorsements.
If you’re shopping for home insurance, check out BestMoney’s home insurance comparison tools to find the best coverage and the most affordable rate from top providers.
Elizabeth Rivelli is a business finance and insurance expert at BestMoney.com with over five years of experience covering car, home, life, and health insurance. She has contributed to major outlets such as Investopedia, Forbes, CNN Underscored, U.S. News & World Report, and Bankrate. Elizabeth also partners with insurance companies to provide readers with practical insights into industry trends.
