As a homeowner, you know that the main building on your property is insured. But what about other structures on your property, like a shed or freestanding garage? And what about the stuff inside your home, like TVs, furniture, and jewelry? We wrote this article to answer these and many other questions about what your homeowners insurance likely covers. To do that, we’ll walk you through the four main categories of property coverage usually found in a homeowners policy: primary dwelling, other structures, personal property, and loss of use. We’ll also explain why these different categories of property coverages matter — especially if you ever need to file an insurance claim.
Property Coverage vs. Liability Coverage
Before we dive into property coverages, let’s zoom out and look at the big picture of what your homeowners policy likely covers. A typical homeowners insurance policy packages two very different types of coverage in the same policy: property coverage and liability coverage.
Let’s start with liability coverage. If someone gets injured on your property and sues or threatens to sue you for those injuries, the liability insurance in your homeowners policy covers part of your legal liability to that person. The amount and extent of the liability coverage depend on your policy, but in general, liability insurance will pay for an injured parties’ damages (think medical expenses and lost wages), as well as your legal fees in defending against the actual or potential lawsuit. In this sense, liability coverage is a type of third-party insurance because the party making the claim against your insurance company isn’t you (the policyholder), it’s a third party who happened to be harmed on your property.
The other type of coverage in a standard homeowners policy is property coverage. If your stuff is damaged, destroyed, or stole, the property insurance in your homeowners policy may reimburse you for those losses. We’ll take a closer look below at what “stuff” is typically covered, but in general it’s your home, other structures on your property, and your belongings in your home. Property coverage is a type of first-party insurance because the party making the claim against your insurance company is you.
Homeowners’ property coverage is typically limited based on what caused the damage or loss and which property was damaged or lost. The first limitation — the cause of the damage/loss — is critical because virtually all policies limit or exclude coverage for certain causes. In insurance lingo, the cause of a loss is referred to as a peril, and examples include fire, windstorm, flood, and hail. You should carefully review your policy to understand the specific perils that your policy covers. In general, however, most homeowners policies will insure against the following covered perils:
- Fire damage
- Wind damage
- Hail damage
- Damage from falling objects
On the flip side, most homeowners policies exclude coverage for:
There are many more perils that your policy may cover or exclude, such as mold, freeze, or sewage backups. Some policies may also cover a peril but specify a higher deductible for it. The classic example of this is a hurricane or named storm, which often is covered but with a separate, higher deductible than other perils. Insurance policies are notoriously difficult to interpret, so it’s a good idea to consult a professional like an attorney, agent, or insurance counselor (a unique profession in some states, like Georgia).
For the second limitation to homeowners property coverage — which property was damaged or lost — we’ll need to look at the A, B, C, Ds of coverage.
The A, B, C, Ds of Property Coverage, and Why They Matter
Okay, so now you know a little bit about the property and liability insurance in your homeowners policy. But what does that property insurance actually cover? In most homeowners policies, your property insurance covers four broad categories: your dwelling (known as “Coverage A”), your accessory structures (Coverage B), your personal property (Coverage C), and the out-of-pocket expenses you incur because you can’t use your home (Coverage D). Your property coverage may also extend to other miscellaneous losses, like debris on your property or even cyber attacks.
Why do these different categories matter? Because each category of property coverage has its own insurance payout sub-limit. Somewhere in your declaration page for your homeowners insurance, you should find the total amount of insurance coverage. That’s good to know — it’s the total amount your insurance company is obligated to pay you (minus any deductibles) in the event of a total covered loss to your entire property. But that total doesn’t tell you your payment limits if your roof (Coverage A) is damaged, but your personal belongings underneath that roof (Coverage C) are not damaged. For those limits, you’ll need to look for the coverage limit for each of the Coverages A, B, C, and D.
With that, let’s take a look at each category of property coverage.
Coverage A: Protecting Your Dwelling
Coverage A, also known as dwelling coverage, insures the primary building on your property. Coverage A usually protects:
- The physical structures of your primary dwelling
- Think roof, walls, windows, floors, stairs, ceilings, etc.
- The fixtures permanently incorporated in your primary dwelling
- Think showers, sinks, kitchen cabinets and countertops, fireplaces, mounted shelving, etc.
- Other structures “attached” to your primary dwelling
- We’ll explore what this means in a section below, but for one example think garage connected by a roof or gazebo connected by a covered walkway.
Depending on your policy, your dwelling coverage may also insure materials and supplies located on or next to your primary dwelling if they’re used to construct or repair the dwelling.
As you would expect, the coverage limit for Coverage A is usually significantly larger than the limits for any other type of property coverage. Pro tip: When you’re buying insurance and setting sub-limits on Coverage A, remember that the limit can’t be less than 80% of what it would cost to rebuild your primary dwelling (the so-called 80% Rule).
Coverage B: Protecting Ancillary Structures on Your Property
Coverage B protects structures on your property that aren’t attached to your primary dwelling. Examples of these separate structures might include:
- Fences (usually)
- Detached garages
- In-Ground Pools
- Standalone Gazebos
- Standalone Barns
- Guest Cottages
Although it can be higher, the sub-limits for Coverage B are often much, much less than your Coverage A sub-limits — usually only about 10% of your primary dwelling coverage.
Does the Garage Fall under Coverage A or Coverage B?
Because the sub-limits for Coverage A are so much higher than those for Coverage B, it’s critical to determine whether an ancillary structure falls under Coverage A or B. Although your policy (including endorsements) will always provide the definitive answer, in many cases the answer depends on whether the ancillary structure is “attached” to the primary dwelling. What does it mean for something to be “attached” to your primary dwelling? Unfortunately, it could mean a lot of things depending on your specific home and your specific policy. But with that caveat, there are a few generalizations that are worth sharing:
- If there’s a continuous roof that connects the ancillary structure to your primary dwelling, then the ancillary structure likely falls under Coverage A.
- If there’s a covered walkway that connects the ancillary structure and your primary dwelling and it’s clearly fixed to both the structure and the primary dwelling, then the ancillary structure also likely falls under Coverage A.
- If there’s anything else connecting the ancillary structure to your primary dwelling, such as a fence, patio, or walkway, then the structure probably falls under Coverage B. There are two main reasons for this.
- First, many policies specifically state that if a fence “or similar connection” exists between the dwelling and structure, then the structure falls under Coverage B.
- Second, most courts have concluded that ancillary structures connected to the primary dwelling by patios, uncovered walkways, and decks aren’t “attached” to the primary dwelling and therefore fall under Coverage B. A garage connected to the house by a patio? The Supreme Court of North Dakota held the garage fell under Coverage B, not Coverage A. An in-ground pool connected to the house by an uncovered concrete patio? Coverage B, not Coverage A, according to a federal court in New York and a Missouri court.
Coverage C: Protecting Your Personal Belongings
Coverage C, also known as personal property coverage, reimburses you for loss or damage to your personal belongings. The coverage doesn’t extend to cars and boats — that’s what car insurance and boat insurance are for. But it covers almost all other personal belongings, often even if the item was stolen or damaged away from your home.
Although Coverage C is generous in what it covers, it can be stingy in how much it pays. That’s because many standard policies put sub-sub-limits on individual categories of belongings, like jewelry, art, tools, and silverware. So for example even if your total sub-limit on Coverage C of $50,000, your limit for jewelry could be as low as $2,500. One way to address this issue is to buy enhancements to your policy that expand these special limits.
If you’re making a claim on damaged or stolen personal items, you’ll need to create an inventory describing the item, how much it cost to buy it, and how much it costs to buy a replacement, among other things. For more details on contents inventories, including best practices in putting one together, check out our guide to inventorying personal belongings.
Coverage D: Protecting You When You Can’t Use Your Home
Coverage D, also known as loss-of-use coverage, reimburses you for living expenses if a covered loss makes your home inaccessible or unfit to live in. The most common example of this is known as Additional Living Expenses (ALE), which takes care of lodging, food, and related expenses you incur because a covered peril renders your home unfit for habitation. These reimbursements are meant to be temporary, but the good news is that insurers generally cut checks quickly for ALE — so if you have a claim, submit your qualifying expenses early and often.
In addition ALE, Coverage D may reimburse you for lost rental income from the covered property that you would have received but for the covered damage or loss to your property.
Outside of the typical A, B, C, Ds of property coverage, your homeowners policy may provide a variety of property coverages. Common examples for additional coverages include reimbursements for debris removal, emergency repairs, financial fraud and theft, and spoiled refrigerated food.
Hopefully all of this information has given you a clearer picture of what exactly your homeowners insurance actually covers. It’s helpful when you’re shopping for new insurance, and when you suffered a loss and want to file a claim. If you want to learn how much you’re owed for covered losses, take a look at our article on How to Calculate your Insurance Reimbursement.