What Does Homeowners Insurance Cover in Pennsylvania?

Written by Bob Kelly, Agency Principal at PolicyVisor, with over 20 years of insurance experience

Most homeowners know they need homeowners insurance.

But if I ask someone what their policy actually covers, the answer is usually something like:

“The house?”

That is a good start.

But a homeowners policy usually does a lot more than that.

The easiest way I explain it is to break it into a few basic buckets:

• The house
• Separate structures
• Your stuff
• Somewhere else to live
• Liability protection

There are obviously details, exclusions and endorsements underneath all of that.

But if you understand those five pieces, you understand a pretty big part of your homeowners policy.

1. The House

This is usually called Coverage A — Dwelling Coverage.

I just call it:

The house.

It covers the home itself and generally anything permanently attached to it.

Think:

• The walls
• Roof
• Flooring
• Kitchen cabinets
• Plumbing
• Electrical systems
• Attached garage
• Other permanently attached parts of the home

If it is part of the house and you are not picking it up and carrying it away, it is probably part of the dwelling.

If you have a covered fire, wind loss or another covered event that damages the structure, this is generally the coverage that responds.

The important thing is making sure the home is insured for a reasonable reconstruction cost.

That does not necessarily have anything to do with what Zillow says the house is worth or what you paid for it.

I have written about that separately, but the short version is:

Retail value and replacement cost are two completely different things.

The carrier is trying to determine what it would cost to rebuild the house.

That is the number I care about.

2. Separate Structures

This is usually Coverage B — Other Structures.

I describe this as:

Anything on the property that is not attached to the house.

For example:

• A shed
• Gazebo
• Detached garage
• Fence
• Other detached structures

A lot of homeowners policies automatically provide a certain amount of other structures coverage based on the dwelling limit.

Ten percent of the dwelling coverage is common, although that can vary by carrier and policy.

So if your home is insured for $500,000, you might automatically have $50,000 of separate structures coverage.

But not everyone needs the same amount.

Maybe you have one small shed and a basic fence.

You probably do not need the same amount of coverage as someone with a large detached garage, workshop and gazebo.

Some carriers will let us manipulate that coverage downward if you do not need as much.

Some will not.

Most will let us increase it if you have a more significant need.

So if you have a $100,000 detached garage sitting behind the house, I want to know about it.

I do not want to find out after a claim that the automatic limit was not enough.

3. Personal Property

This is usually Coverage C — Personal Property.

Here is the easiest way I have found to explain it:

If you turned your house upside down and shook it, personal property is basically everything that falls out.

Furniture.

Clothing.

Televisions.

Computers.

Beds.

Dishes.

Tools.

Your kids’ stuff.

Everything you have accumulated over the years.

People tend to underestimate how much all of that adds up to.

Imagine having a major fire and needing to replace almost everything you own at once.

It gets expensive quickly.

Replacement Cost Matters

A good homeowners policy will generally provide replacement-cost coverage on your personal property.

This is important.

I do not care what your television is worth at a yard sale.

Let’s say you have a five-year-old television.

Maybe you could sell it tomorrow for $100.

That does not help you much if a covered fire destroys it and now you have to replace it.

What I want to know is:

What would it cost you to walk into Best Buy and buy a new, comparable TV?

That is the difference I want people to understand.

Actual cash value generally takes depreciation into account.

Replacement cost is designed to help you replace the item with a comparable new one, subject to the policy terms and limits.

For most homeowners, I strongly prefer replacement-cost coverage on personal property when it is available at a reasonable premium.

Some Things Have Special Limits

There is another wrinkle.

Having $300,000 in personal property coverage does not mean every single thing you own is automatically covered up to that amount.

Certain categories can have special limits.

Jewelry is an easy example.

You might have a very expensive engagement ring, but the homeowners policy may have a much smaller limit for certain jewelry losses, especially theft.

There can also be limitations involving other valuables.

If you have expensive jewelry, collectibles, artwork or other unusual items, tell your agent.

Sometimes those items should be scheduled separately.

4. Loss of Use

This is usually Coverage D — Loss of Use.

I explain this as:

Money to help you and your family live somewhere else if a covered loss makes your home unlivable.

Let’s say there is a serious fire.

Your family is okay, but you cannot live in the house for six months while repairs are being made.

You still need somewhere to live.

Loss of use coverage can help with things like temporary housing and certain additional living expenses, subject to the policy.

Meals are a good example.

Normally you have a kitchen.

You buy groceries and cook dinner.

Now you are staying in a hotel and do not have access to a kitchen.

You may be spending more money eating out than you normally would.

Loss of use can help with some of those additional expenses caused by the covered loss.

The important word is additional.

It is not necessarily paying every expense you have while you are out of the house.

It is there to help with qualifying expenses you are now incurring because you cannot live normally in your home.

If you have three kids, two dogs and need temporary housing for six months, this coverage can become pretty important.

 

5. Liability Coverage

This is usually Coverage E — Personal Liability.

I describe liability coverage pretty simply:

This is your lawsuit protection.

The house gets most of the attention because that is the obvious thing people think about insuring.

But liability can be just as important.

Let’s say someone comes to your house, falls down the stairs and is seriously injured.

Or your dog bites someone.

Or you accidentally cause covered property damage to somebody else.

If you are legally responsible for a covered incident, personal liability coverage may help pay damages and provide a legal defense, subject to the policy.

And it is not necessarily limited to things that happen at your house.

Depending on the situation and the policy, personal liability can follow you away from home too.

How Much Liability Coverage Should You Carry?

A lot of homeowners policies offer limits like:

• $100,000
• $300,000
• $500,000

I generally prefer $500,000 when it is available and the premium makes sense.

The difference in premium between lower and higher limits is often pretty small compared with the extra protection.

And once someone has meaningful assets, I also start talking about an umbrella policy.

If you have spent years building equity in your home, retirement accounts, savings and investments, I think it makes sense to protect that from a large liability claim.

 

6. Medical Payments to Others

There is usually another smaller coverage called Medical Payments to Others, commonly Coverage F.

I think of this as a smaller coverage designed to help with certain injuries to other people without necessarily turning everything into a major liability claim.

Let’s say someone visiting your home gets hurt and needs medical attention.

Depending on the circumstances and policy, this coverage may help with those medical expenses.

The limits are usually much smaller than your liability limit.

And this is not health insurance for you or your family.

It is coverage for certain injuries involving other people.

 

Homeowners Insurance Does Not Cover Everything

This is where people get into trouble.

A homeowners policy is not a maintenance contract.

It is not a home warranty.

And it does not cover every bad thing that can happen to a house.

There are some important gaps homeowners should understand.

Flood Is Generally Not Covered

A standard homeowners policy generally does not cover flood.

That is important because people hear the word “water” and assume homeowners insurance takes care of it.

Not necessarily.

Water coming into your house from rising surface water is very different from a pipe suddenly bursting inside your wall.

Flood insurance is generally purchased separately.

And you do not necessarily have to live right next to a river to have flood exposure.

Heavy rainfall can create flooding in places homeowners never expected.

Backup of Sewer and Drain Is Different

This is one I pay a lot of attention to.

If an insured calls me and says:

“I have water in the basement.”

one of the first things I want to know is:

Where did the water come from?

And one of the first coverages I check is backup of sewer and drain.

If a sewer or drain backs up into the home, or a sump pump fails under circumstances covered by the endorsement, this coverage may help respond, subject to the policy terms and limits.

That is very different from flood.

Water coming in from rising surface water is generally a separate issue and usually requires flood insurance.

But when the problem is a sewer backup, drain backup or certain sump-related losses, this endorsement can be extremely important.

The limit matters too.

A $5,000 or $10,000 limit may not go very far if you have a finished basement with drywall, flooring, furniture, electronics and other contents.

Depending on the carrier, higher limits may be available.

If you have a finished basement, this is one of the coverages I want to look at closely.

Wear and Tear Is Not Insurance

If your roof is 25 years old and simply wears out, homeowners insurance is not designed to buy you a new roof because it reached the end of its useful life.

That is maintenance.

If a covered windstorm damages the roof, that is different.

But even then, policies can settle roof claims differently.

Some provide replacement cost.

Some may apply depreciation.

Some carriers have special roof endorsements or settlement provisions based on age.

That is why simply asking:

“Does my policy cover the roof?”

is not always enough.

I want to know how it covers the roof.

What About a Burst Pipe?

Water losses are a good example of why the details matter.

If a pipe suddenly bursts inside your wall and damages your kitchen, the resulting water damage may be covered, depending on the circumstances and policy.

But if a pipe has been slowly leaking for six months and nobody did anything about it, that can be a very different situation.

Sudden damage and long-term deterioration are not treated the same way.

That is why I hesitate to tell someone:

“Yes, water damage is covered.”

Sometimes it is.

Sometimes it is not.

How the water got there matters.

 

Some Additional Coverages I Like

There are a few endorsements I think are worth talking about.

Backup of Sewer and Drain

I am mentioning this one again because I think it is that important.

If you call me and tell me there is water in your basement, this is one of the first things I am checking.

If you have a finished basement, I especially want to know what limit you are carrying.

Five or ten thousand dollars can disappear very quickly once you start replacing drywall, flooring, furniture and contents.

I would rather have that conversation before the claim than after it.

Service Line

Service line coverage can help with certain covered damage to underground utility lines serving your home.

If you need to dig up your front yard to repair a covered underground water or sewer line, the bill can get ugly pretty quickly.

Equipment Breakdown

Equipment breakdown can provide coverage for certain mechanical or electrical breakdowns involving covered home equipment.

It is not a maintenance contract and it does not cover everything that breaks.

But depending on the policy, it can fill some gaps that traditional homeowners coverage does not.

Ordinance or Law

This one becomes especially important with older homes.

If part of your home has to be rebuilt after a covered loss, current building codes may require upgrades that were not required when the house was originally constructed.

Around Springfield, Media, Havertown and the rest of Delaware County, we have plenty of older homes.

A house built decades ago may be perfectly fine today.

But rebuilding portions of it under today’s codes can create additional costs.

Ordinance or law coverage can help address certain qualifying costs associated with those code requirements, subject to the policy.

Not Every Homeowners Policy Is the Same

This is probably one of the biggest things I want people to understand.

Two insurance companies can quote the same house.

One is $1,800.

One is $2,100.

That does not automatically mean the $1,800 policy is the better deal.

Maybe it is.

I am always happy to save $300 if everything else is equal.

But everything else is not always equal.

One policy might have:

• Better dwelling replacement-cost protection
• Replacement cost on personal property
• Better roof coverage
• More backup of sewer and drain coverage
• Better ordinance or law coverage
• A lower deductible
• Broader endorsements

Another may not.

So when we shop homeowners insurance, I am not just looking at:

“Who is cheapest?”

I want to know:

“What am I getting for the premium?”

That is how I look at value.

Deductibles Matter Too

The deductible is what you are responsible for when you have a covered property claim.

And just like with auto insurance, I like to treat the deductible as a math problem.

If moving from a $1,000 deductible to $2,500 saves you $50 a year, I probably do not love that trade.

You are taking on another $1,500 of risk to save $50.

If it saves you $500 a year?

Okay.

Now we have something to discuss.

I do not think higher deductibles are automatically bad.

I just want to know:

How much are we saving, and how much additional risk are we taking?

Also make sure you understand whether your policy has separate wind or hail deductibles.

A percentage deductible can be much larger than people realize.

A 2% deductible on a home insured for $500,000 is $10,000.

That can be an unpleasant surprise after a claim.

 

What I Look At at PolicyVisor

When someone sends us their homeowners policy, I am not just looking at the number at the bottom of the page.

I am looking at:

The house.

Is the dwelling coverage reasonable? What kind of replacement-cost protection do we have?

The separate structures.

Do you actually have a meaningful detached structure that needs more coverage?

Your personal property.

Do you have replacement cost? Are there valuable items that need special attention?

Loss of use.

Would the coverage be reasonable if your family had to live somewhere else for an extended period?

Liability.

Are we carrying enough lawsuit protection for your situation?

Then I look at the endorsements.

Backup of sewer and drain.

If there is water in the basement, this is one of the first things I check.

Service line.

Equipment breakdown.

Ordinance or law.

Roof coverage.

And after I understand all of that:

Then I look at the premium.

Because I cannot tell you whether a homeowners policy is a good deal until I know what you are actually buying.

 

The Bottom Line

I think homeowners insurance becomes easier to understand when you stop looking at all the insurance terminology and break it down into plain English.

The house.

The house itself and anything permanently attached to it.

Separate structures.

The shed, gazebo, detached garage and other things that are not attached to the house.

Your personal property.

Turn the house upside down and shake it. It is basically everything that falls out.

Loss of use.

Money to help your family live somewhere else and deal with additional expenses if a covered loss makes the house unlivable.

Liability.

Your lawsuit protection.

That is the foundation.

Then we look at the things that are not automatically included or where limits matter.

Backup of sewer and drain.

Flood.

Service line.

Equipment breakdown.

Roof settlement.

Deductibles.

That is where the quality of the policy really starts to matter.

Want Us to Review Your Homeowners Insurance?

PolicyVisor is an independent insurance agency serving homeowners throughout Pennsylvania, including Springfield, Delaware County and the greater Philadelphia area.

If you have not looked closely at your homeowners insurance in a while, send us your current declarations page.

We will go through it in plain English.

What covers the house?

What covers the detached structures?

What covers your belongings?

What happens if you cannot live there?

How much liability protection do you have?

What happens if you get water in the basement?

What are the deductibles?

And what important endorsements are included or missing?

Then we look at what you are paying.

Sometimes we find a better policy.

Sometimes we find a better price.

Sometimes we find both.

And sometimes I tell someone their current homeowners policy is pretty good and I would not change it.

I am fine with that too.

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Disclaimer

This article is for general informational and educational purposes only and is not intended as individualized insurance, legal, financial, construction, real estate, or tax advice. Coverage descriptions in this article are general examples and may not apply to every homeowners policy or claim. Coverage availability, limits, deductibles, exclusions, endorsements, valuation methods, eligibility requirements, and claim settlement provisions vary by insurance company, policy form, property, and individual circumstances.

Insurance coverage is determined solely by the specific terms, conditions, definitions, exclusions, endorsements, and limits of the policy actually issued. Nothing in this article binds, modifies, extends, guarantees, or confirms insurance coverage, claim payment, policy eligibility, or premium savings. Please review your individual policy and speak with a licensed insurance professional regarding your specific insurance needs.