Whether you are shopping for home insurance for a house you are in the process of buying, or you are looking to compare rates with your current coverage, understanding what a standard home insurance policy covers is the first step toward making an informed decision. Every detail matters when it comes to protecting your most valuable asset.
Standard home insurance policies address multiple aspects of homeownership risk. This includes the structure itself, personal belongings, liability concerns, and property features. Insurance policies also come with limitations, and they do not cover everything. Understanding how your home insurance coverage works will prevent you from being caught off guard when you need to file a claim.
The Core Components of Standard Home Insurance
The most common home insurance policy is called HO3, which covers all the risks that are not specifically excluded. HO3 policies are written for all types of houses, including detached singles, twins, and townhouses. When you contact your local insurance agent, this is the policy that they will most likely describe before preparing your quote.
There are six standard types of coverage in a homeowners insurance policy, listed as Coverage A-F:
A – Dwelling Coverage – The largest segment of your policy is coverage for the physical structure of your house and everything attached to it, including the roof, walls, built-in appliances, and an attached deck or garage. When your home is damaged in a covered event, home insurance will pay to repair and rebuild it at current construction prices.
B – Other Structures – Detached structures like your standalone garage, shed, fence, gazebo, or permanently installed swimming pool are listed as other structures on your home insurance policy. The coverage is listed as a percentage of the dwelling coverage amount. The standard is 10%, but it can be increased if your detached structures are expensive.
C – Personal Property – Your belongings that are not physically attached to the home’s structure are covered as personal property. This includes appliances, furniture, electronics, clothing, decor, and accessories. Policies typically cover one-half to two-thirds of your dwelling coverage amount for personal property. If you have valuable possessions like jewelry, art, antiques, or collectibles, the policy can be enhanced to provide specific coverage for those items.
D – Loss of Use – When you cannot live in your home because of a loss, home insurance pays for your additional living expenses elsewhere. This includes the temporary housing or hotel you stay at, plus additional costs like meals and extended commutes. This coverage is usually 20% to 30% of your dwelling coverage, and the time period is limited to one to two years.
E – Personal Liability – If someone is injured on your property, or you cause damage to their property, your home insurance provides coverage for their claim or lawsuit against you. While a standard policy usually covers up to $300,000 in costs, higher limits are available.
F – Medical Payments – If someone’s injury incurs medical expenses, home insurance policies cover this separately from personal liability. Whether or not you are at fault for the injury, your homeowners policy will pay the costs of minor injuries, usually up to $5,000.
These standards exist to cover all the basics, and that will be sufficient for many homeowners. Before purchasing a standard policy, however, homeowners should review their specific circumstances with an experienced local agent. Everyone has unique priorities, property features, and risk tolerances that should be discussed. An independent agent will explore policies, coverages, and limits that are best aligned with the individual client’s needs.
Perils That Are Covered by Standard Home Insurance
Every homeowner hopes that they will never have to use their home insurance. But when things do go wrong, what they need most is to know that their loss is covered. The standard HO3 home insurance policy provides special form coverages, meaning any event that is not specifically excluded (which means it covers more than a named peril coverage). It’s important to note that this special form coverage only applies to specific parts of the policy – Coverage A (Dwelling) and Coverage B (Other Structures).
The main point of peril coverage is that the damaging event is sudden and unexpected. But most standard policies cover direct losses from perils, not indirect, or those things that happen as a consequence of the peril.
With that in mind, insurance covers a wide range of things that can happen to a house:
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Fire and lighting damage coverage is usually the most comprehensive peril segment in a home insurance policy. Check with your agent to find out if wildfires are included in your standard policy, or if additional coverage is needed.
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Wind and hail damage is needed when severe weather takes its toll on your home. Coastal areas in New Jersey may have higher deductibles for wind damage due to their location.
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Weight of ice, snow, and sleet comes in handy when cold Pennsylvania and New Jersey winters wreak havoc after a snow or ice storm. Keep in mind that the damage is sudden and unexpected, so homeowners are typically responsible for preventing or removing potentially damaging snow and ice.
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Water damage from burst pipes or appliance malfunctions covers sudden and accidental water damage if you have a pipe burst, broken water heater, washing machine or dishwasher overflow, or similar incidents. This is not coverage for floods from outside the house or long-term leaks.
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Theft and vandalism protection helps you replace what is lost or damaged after a break-in or or attack on your home. File a police report to collect evidence of what happened, and review your policy for limitations regarding vacant properties.
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Falling objects and damage from vehicles or aircraft includes coverage for a foreign object falling onto or crashing into your home. Most often, this applies to trees and branches falling after a storm. But there are cases when a car crashes into a house, or debris from an aircraft falls onto your property.
If you have any questions about what is or is not covered, especially when you walk around your property to see the specific risks, talk to your insurance agent. They better understand the intricacies of your policy and will recommend additional coverage or limits if you have unique concerns.
Understanding the Exclusions and Limitations in Standard Homeowner Insurance
Standard home insurance policies do not cover every single possibility. While coverage is generally thorough, there are some limits and exclusions that carriers set for various reasons.
In some circumstances, home insurance is not the right solution at all for a homeowner’s needs:
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Maintenance issues and general wear and tear is your responsibility as a homeowner. Insurance is for sudden and unexpected problems, not growing problems that can be stopped or fixed with the right maintenance. If you know about a leak, crack, or structural problem in your home, do not wait until it becomes a catastrophe. Insurance companies investigate claims and will deny or reduce the payout for issues that could have been fixed with proper maintenance.
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Business property and liability is completely separate from standard home insurance. If you run your business out of your home or store business equipment on your property, you will need commercial insurance coverage as well as home insurance.
Many home insurance exclusions are available as add-ons, or endorsements, to a homeowner policy. Others are available as standalone insurance products.
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High-value personal property such as jewelry, art, collectibles, or antiques can be added to your home insurance policy with an endorsement. This allows for higher claim amounts in the case of a loss.
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Sewer and drain backup coverage should be added as an endorsement to home insurance policies on older homes built near aging sewer systems. This coverage is worth considering for older homes in Southeastern PA and New Jersey.
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Earthquake damage is not covered under a standard home insurance policy, and it is not typically recommended for Pennsylvania and New Jersey homes. It can be added as an endorsement if a homeowner is serious about earthquake risks.
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Flood insurance for water damage that affects a home from external sources must be purchased as an entirely separate policy. Work with your insurance agent to understand the flood risk for where your home is situated in order to determine if this type of policy is necessary.
When homeowners do not understand the coverage limits and exclusions on their homeowner insurance policy, they risk finding out the hard way that they will have to pay for some problems out of pocket. Knowing upfront what is not covered is how informed homeowners prepare for difficult moments.
Finding the Right Home Insurance Coverage in Pennsylvania and New Jersey
Standard home insurance policies are crucial for any homeowner. They provide solid baseline coverage that is often tailored to the property’s features, structures, age, and location. Homeowners in Pennsylvania and New Jersey have additional considerations when it comes to insuring their home. The standard policy might not meet their unique needs, but it’s difficult to see where a policy comes up short if it is only based on basic information collected through an online form.
Our team at Freedom Insurance Group takes time to interview homeowners so that we can explore potential risks for their property. We discover each client’s personal concerns and make recommendations based on the location or age of the home. Our goal is to provide a home insurance quote that is comprehensive and practical for their budget. If you are not sure exactly what is covered under your home insurance policy, or you are exploring your options, reach out to us. As an independent agency serving the Bucks, Montgomery, Philadelphia, Mercer, Camden, and Burlington County regions, we work with many different carriers in order to find the right solutions for our clients. Contact us to start your home insurance quote today.
