Know what your home policy covers, and what it doesn’t.

Your home may be the biggest thing you own, and homeowners insurance is one of the main ways to protect it. But no policy covers everything that can go wrong, and the gaps can be easy to miss.

The good news is that most homeowners policies follow a familiar pattern. Once you know the main parts and the common gaps, you can read your own policy with more confidence.

What homeowners insurance usually covers

A typical policy has several parts, each with its own limit, which you’ll find on your declarations page, the summary page of your policy.

• Dwelling. The home itself, including attached structures and built-in systems like plumbing, heating and electrical.
• Other structures. Detached buildings and features, such as a garage, shed or fence.
• Personal property. Your furniture, clothing and other belongings. Valuables like jewelry, art and electronics often have lower limits unless you add coverage.
• Loss of use. Extra living expenses if you can’t stay in your home after a covered loss.
• Liability. Protection if you’re responsible for injuring someone or damaging their property. Many policies also include medical payments for guests hurt on your property.

Coverage applies to perils, or causes of loss. A named-perils policy covers only the perils it lists. An all-risk policy covers everything except what it excludes.

Replacement cost or actual cash value

How your policy values a loss can make a big difference in what you receive.

• Replacement cost pays to repair or replace damaged property with similar materials, without subtracting for depreciation.
• Actual cash value subtracts depreciation, which reflects age and wear. It usually pays less.

Check which method your policy uses for your home and for your belongings. It’s also a good idea to review your limits every year, and after major purchases or improvements, so they keep up with what it would cost to rebuild and replace.

What it usually doesn’t cover

Flood

Most homeowners and renters policies don’t cover flood damage. Flood insurance is a separate policy. Much of it comes through the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA). NFIP policies are sold through insurance companies and agents in participating communities. Some private insurers also offer flood coverage, including policies that cover amounts above the NFIP’s limits.

Timing matters. An NFIP policy usually takes effect 30 days after you buy it, with some exceptions, such as buying it along with a new mortgage. It’s best not to wait for a storm forecast.

Earthquake

Standard home policies don’t cover earthquake damage either. Earthquake coverage is usually a separate policy or an add-on, and your agent can explain your options.

Wear and tear, and pests

Homeowners insurance isn’t a maintenance plan. Damage that builds up over time, like rotted boards, cracking window seals or a worn roof, generally isn’t covered. Neither is damage from rodents or insects. Your insurer may even inspect your home when you buy or renew a policy, and a home in poor condition could cost more to insure or be turned down.

Other exclusions are common too, and in some coastal areas windstorm coverage may need a separate policy. Ask your insurer or agent for the full list of what your policy excludes.

Make a home inventory

A home inventory is a list of what you own. It can help you choose the right personal property limit and make it easier to document a claim.

• Walk through each room and take photos or video.
• Note the brand, model, serial number, purchase date and price for bigger items.
• Save receipts when you have them.
• Store a copy outside your home, such as with a family member or in online storage.

Update it after big purchases. It doesn’t have to be finished in one day. One room at a time still counts.

If you rent

Renters insurance covers your belongings and your personal liability, not the building itself. Make sure your personal property limit is high enough to replace what you own, and ask about extra coverage for valuables. Flood is usually excluded from renters policies too, but renters can buy flood coverage for their belongings.

Your next step

Open your declarations page and find two things: your personal property limit and whether your belongings are covered at replacement cost or actual cash value. Then record a short video of one room to start your home inventory.