A homeowners policy is really several coverages in one package: the house itself, other structures, your belongings, extra living costs after a loss, and personal liability. Knowing how each part works, and where the standard policy stops, helps you buy the right limits and avoid the most common surprises at claim time.
Policy forms: HO-3, HO-6 and the rest
US homeowners policies are usually written on standardized forms. The Insurance Information Institute (Triple-I) describes them this way:
| Form | Who it is for | How perils are covered |
|---|---|---|
| HO-3 (special) | Most owner-occupied houses | Dwelling covered for all perils except those excluded; belongings for named perils |
| HO-2 (broad) | Owners wanting a cheaper, narrower form | Named perils only |
| HO-4 (renters) | Tenants | Belongings and improvements, named perils |
| HO-6 (condo/co-op) | Unit owners | Belongings and the parts of the building the owner is responsible for |
| HO-8 (older homes) | Homes where rebuild cost exceeds market value | Pays actual cash value |
Some insurers also sell broader forms, often labeled HO-5, that extend all-perils treatment to personal property. If you are offered one, ask the insurer to confirm in writing how belongings are covered. Renters should see our renters insurance page.
The six parts of a standard policy
Dwelling
Pays to repair or rebuild the house. Insure it for the cost to rebuild, not the market price or the mortgage balance: land does not burn, but construction costs rise.
Other structures
Detached garages, sheds and fences. Triple-I says this is generally about 10 percent of the dwelling amount.
Personal property
Furniture, clothing and electronics, generally 50 to 70 percent of the dwelling amount according to Triple-I, and covered even when away from home, although some insurers cap off-premises coverage. Jewelry, art and collectibles have dollar limits for theft unless you add an endorsement or floater.
Loss of use (additional living expenses)
Pays hotel bills, meals and similar extra costs while your home is uninhabitable after a covered loss. It has its own dollar and sometimes time limits, separate from the rebuild amount.
Personal liability
Covers lawsuits for injuries or property damage you or family members cause, at home or elsewhere. Triple-I notes limits generally start at about $100,000; many owners buy more or add an umbrella policy.
Medical payments to others
No-fault coverage for guests injured on your property, regardless of whether you are legally liable. It does not cover your own household.
Replacement cost or actual cash value
Replacement cost pays to replace damaged property with new items of similar kind and quality. Actual cash value deducts depreciation, so a ten-year-old roof or sofa pays much less. Some policies offer extended or guaranteed replacement cost for the dwelling, which pays above the limit if rebuilding costs spike after a disaster. Check which basis applies to the house, the roof and your belongings separately.
What standard policies do not cover
- Flood. FEMA states that most homeowners insurance does not cover flood damage. The National Flood Insurance Program (NFIP) offers up to $250,000 for a one-to-four family building and $100,000 for contents, and there is typically a 30-day waiting period before a new policy takes effect. Private flood and excess flood policies are available in many areas.
- Earthquake. Excluded from standard policies; available as an endorsement or a separate policy, with its own deductible.
- Wear and tear, maintenance problems, pests. Insurance covers sudden, accidental losses, not gradual deterioration.
In coastal and wildfire-prone states, wind, hail or wildfire may carry separate, often percentage-based deductibles, and some homes are insured through state FAIR plans or the surplus lines market.
What drives the premium
Rebuild cost, location and exposure to wind, hail, wildfire and crime, age and condition of the roof and systems, construction type, distance to a fire station, claims history and, in most states, a credit-based insurance score. Protective devices, a newer roof and bundling with auto insurance often reduce the price.
How to choose limits
- Get a rebuild-cost estimate and set the dwelling limit to match.
- Make a home inventory with photos to size personal property coverage.
- Pick liability limits that reflect your net worth.
- Check flood risk on FEMA maps and buy flood coverage even outside high-risk zones if water is a real threat.
- Review the policy after renovations, large purchases or a change in local building codes.
Estimate your needs with the home insurance calculator, read more on our homeowners insurance page, or request quotes from licensed insurers in your state.