Homeowners Insurance: What's Actually Covered

Policies vary enormously between companies, states, and even between two policies from the same insurer. Everything below describes what is typical, not what is true of yours. Your policy documents are the authority, and your agent is paid to explain them — use both.

Start with the declarations page

The declarations page — "dec page" — is the summary sheet at the front, usually one or two pages, listing your coverages and limits. It is the only part most people ever need to read. Four numbers matter most:

• Dwelling (often Coverage A). The structure itself. This is what rebuilds the house if it burns down.
• Personal property (often Coverage C). Your belongings. Frequently set as a percentage of the dwelling amount rather than an amount you chose. High-value items — jewelry, firearms, collections, some tools — commonly have low internal sub-limits unless you have specifically scheduled them.
• Loss of use (often Coverage D). What pays for somewhere to live while the house is uninhabitable. Genuinely important and routinely ignored until a family is sitting in a hotel.
• Personal liability (often Coverage E). If someone is hurt on your property or you damage someone else's, this is the coverage that answers. It's usually the cheapest coverage per dollar in the whole policy.

The deductible people don't know they have

Most homeowners can tell you their deductible is a flat number — say $1,000 — and stop there. But many policies carry a separate percentage deductible for certain perils, most often wind and hail, and that one is calculated as a percentage of your dwelling coverage, not of the claim.

The difference is not small. On a house insured for $300,000, a 2% wind and hail deductible is $6,000 — six times the flat deductible the homeowner had in mind. People discover this after a storm takes half a roof, which is the worst possible moment. Look at your dec page today and find out whether you have one, and what it is. If the number alarms you, that is a conversation to have with your agent now.

What standard policies typically exclude

Again — yours is the authority. But the following are excluded or limited on most standard homeowners policies, and each one surprises someone every year:

• Flood. Not covered, full stop, on a standard policy. Flood insurance is a separate policy entirely. "Flood" also has a specific meaning — broadly, water arriving from outside and rising up — which is why some water damage is covered and some isn't, in ways that feel arbitrary until you see the definition.
• Sewer and drain backup. Usually excluded by default, and usually available as an inexpensive add-on endorsement. This one deserves attention in Pittsburgh specifically: much of the region runs on combined sewers that surcharge in heavy cloudbursts, and a backup through a basement floor drain is a common, filthy, expensive loss. Our guide on keeping water out of your basement covers the physical side; the endorsement covers the financial side. Ask what it costs — the answer is often surprisingly little.
• Earth movement. Earthquake, landslide, sinkhole, and settling are typically excluded. Hillside neighborhoods here have real slope and real slides.
• Gradual leaks and long-term seepage. This is the big one. Insurance is built to cover sudden and accidental events, not deferred maintenance. A pipe that bursts is a claim. A pipe that has been weeping behind a wall for two years and rotted the framing is usually not — the position being that you had time to notice and fix it.
• Mold beyond a limited amount, and often only when it results from a covered loss in the first place.
• Wear, rot, and pests. A 25-year-old roof at the end of its life is a maintenance expense, not a claim. See our roof guide for the difference between storm damage and age.

Replacement cost vs. actual cash value

If you read only one line of your policy, read this one. It is the single most consequential distinction in homeowners insurance and it rarely appears in the conversation when the policy is sold.

• Replacement cost pays what it costs to replace the damaged thing with a new equivalent today, subject to your limits and deductible.
• Actual cash value (ACV) pays replacement cost minus depreciation — the used value of what you actually lost.

On a 15-year-old roof, that gap is brutal. An ACV settlement may pay a fraction of what a new roof costs, because the roof you lost was two-thirds of the way through its life. The homeowner covers the rest. Some policies apply replacement cost to the dwelling but ACV to the roof specifically, or to personal property. Find out which you have — it's a one-question call or email to your agent, and the answer changes how much cash you need on hand after a bad storm.

Are you insured for enough?

Rebuild cost is not market value and it is not what you paid. It's what a contractor would charge to build your house again, on your lot, today — demolition, debris removal, materials, labor, permits, and whatever the current code requires even if your house predates it.

Construction costs have moved a great deal in recent years, and dwelling limits set some years ago and never revisited can be well behind. Ask your agent to re-run the replacement cost estimate, and ask specifically whether you have any extended or guaranteed replacement cost provision that pays above the stated limit if the rebuild comes in high. In older Pittsburgh housing stock, also ask about ordinance or law coverage, which addresses the cost of bringing an old house up to current code during a rebuild — old wiring, old stairs, and old framing details are rarely permitted to be replaced exactly as they were.

When to file, and when not to

Insurance is for losses you can't absorb. Filing for losses you can absorb often costs more than it pays.

• Small claims below or barely above the deductible rarely make sense. A $1,800 claim on a $1,000 deductible nets $800 — and can raise your premium for years.
• Claims history follows the property and the person. Insurers share loss history through industry databases. A pattern of small claims can affect pricing and, in some cases, whether you're offered a renewal at all.
• Big losses, file without hesitation. Fire, structural damage, major water intrusion, liability — that is what the policy is for and what you have been paying for.
• Asking a hypothetical is not filing a claim — but be aware that some insurers log inquiries. If you want a general answer about how a coverage works, you can ask about the coverage without reporting a specific incident.

After a storm, the order of operations matters. Our first 24 hours after storm damage guide walks through it.

If the house sits empty

This one catches inherited properties, houses between tenants, and second homes. Standard policies commonly restrict or void coverage once a house has been unoccupied past a set number of days — often somewhere in the range of 30 to 60, but it varies by policy and yours is the authority. Vacancy is one of the most reliable ways to have a large claim denied.

If you own a house nobody sleeps in, tell your insurer before anything happens, not after. Our guide to caring for a house nobody lives in covers the maintenance side and the endorsement that exists for exactly this situation.

The annual fifteen-minute review

Put it on the calendar next to the smoke detector batteries. Once a year:

• Re-shoot the photo inventory. Walk every room with your phone, open the closets, get the serial numbers on the expensive things, and store it somewhere that isn't the house. This is part of the house file, and it is worth thousands at claim time when someone asks you to prove what you owned.
• Verify the escrow is paying the right policy. If your mortgage escrows insurance, confirm the policy it's paying is the one you think you have. Lapses and duplicate policies both happen, and force-placed coverage is expensive and thin.
• Re-check the dwelling limit against current construction costs, especially after any renovation. A finished basement or an addition that the insurer doesn't know about isn't fully insured.
• Ask about bundling and about raising the deductible. Auto and home together is often meaningfully cheaper. And if you keep a real cash reserve, a higher deductible lowers the premium every year — but only take that trade if the reserve genuinely exists.
• Ask what discounts you're not getting. Alarm systems, water shut-off devices, a new roof, and claims-free history all commonly earn credits that nobody applies unless asked.

None of this is exciting, and all of it is cheaper than the alternative. The homeowners who come out of a bad year in decent shape are almost never the ones who got lucky. They're the ones who read the dec page while the sun was out.