What's covered under home insurance and what's not

Your home is more than just a place to live — it's probably your largest investment. Protecting it from financial disaster starts with the right insurance coverage. When unexpected damage occurs, a good home insurance policy can make all the difference.

However, a traditional homeowners policy will not cover everything. We spoke with insurance experts to find out what items it usually includes (and excludes) and how to ensure adequate home coverage. Below, we'll break down what to know.

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What's covered under home insurance and what's not

Homeowners insurance can help with sudden damage from incidents such as fires or storms, but it won't cover all problems that could affect your home. When you have a claim, you'll pay a deductible first — then your insurance covers the rest, up to your policy's limits. Here's what you can (and can't) expect from a typical homeowners policy:

What's covered under home insurance?

"When reading an insurance policy, [it's easy to get] overwhelmed," says Eric Bielinski, a State Farm insurance agent in Chicago, Illinois. "Every company has [unique policies that] vary [by] state." While specifics may differ, you can expect the following standard protections, according to Belen Tokarski, president and COO of insurtech leader Mylo, and Ashleigh Trent, co-founder of Tower Street Insurance:

• Dwelling coverage: This allows you to replace or repair your home if a fire, storm or other covered peril damages it.
• Personal property coverage: This covers your belongings such as furniture, clothing and electronics if they're damaged by fire, theft or vandalism.
• Other structures coverage: This protects detached buildings on your property, such as garages, sheds, fences and pools.
• Loss of use coverage: This pays for temporary housing and related expenses if you need to live elsewhere while your home is being repaired.
• Personal liability coverage: This covers legal and medical costs if someone gets hurt on your property or if you, your family members or pets cause damage to others.
• Medical payments coverage: This helps with minor injury claims that happen on your property, regardless of who was at fault.

Learn more about your home insurance coverage options here.

What's not covered under home insurance?

Several important gaps in standard home insurance policies often surprise homeowners. Knowing them now can help you decide if you need additional coverage. Tokarski, Trent and Bielinski highlight these key exclusions:

• Flood damage: A traditional home insurance policy only covers water damage from inside your home, such as burst pipes. For protection against external flooding, you'll need a different flood policy via the National Flood Insurance Program (NFIP) or a private insurer.
• Earthquakes: Earthquake protection requires a standalone policy or special addition to your existing coverage.
• Routine maintenance: General wear and tear, such as an aging furnace that stops working, isn't covered. You're responsible for regular upkeep, but a home warranty can help cover some maintenance costs.
• High-value items: Policies may limit coverage for expensive jewelry, art and collectibles. Look into a "Valuable Articles Endorsement" if you need more protection for these possessions.
• Equipment breakdown: Repairs for major appliances such as your AC or furnace aren't covered unless damage comes from a sudden electrical surge. Consider a home warranty to help with mechanical failures and routine repairs.
• Sump pump failure: Water damage from a backed-up sump pump usually isn't covered unless you add special protection to your policy.

How to ensure you have the right home insurance policy

Insurance experts recommend taking these steps to ensure you're properly protected:

• Work with a licensed agent: Find one who knows several carriers and understands risks specific to your area. They can tailor coverage to your needs.
• Understand your deductibles: Know how much you'll need to pay out of pocket before your insurance kicks in.
• Choose "full replacement cost" coverage: This pays to repair or replace damaged property without deducting for depreciation, unlike "actual cash value" policies that may leave you short.
• Review your policy yearly: Check that your coverage still matches your needs, especially after home improvements, new purchases or family changes.
• Watch for coverage reductions: At renewal time, look for any cuts to important protections such as water backup and roof coverage.
• Ask about coverage gaps: Discuss with your agent whether you need specialized protection for floods, earthquakes or high-value items.

The bottom line

Securing the right home insurance policy takes time and research, but the effort protects your biggest investment.

Instead of automatically renewing your current policy, work with an insurance broker to compare quotes and find the best coverage. While you're at it, ask about bundling your home and auto insurance to save money.

Once you have coverage, stay proactive about home maintenance and policy reviews. "[Address] issues before they become problems," advises Bielinski. Finally, schedule an annual coverage review with your agent to ensure your policy still fits your needs. If rates have gone up, don't hesitate to shop around.