You’ve walked a client through a fire claim, a liability situation, maybe even a burst pipe. But the hardest conversations often begin with what a policy doesn’t cover and what could have been prevented. Clients tend to assume their homeowners policy protects them from anything unexpected, like fire, water, theft, and storm damage. They expect full protection without knowing where the boundaries lie. This is where brokers, supported by a personal lines MGA, provide lasting value.
By explaining what a standard policy includes and where it stops, brokers can help clients make informed decisions and avoid preventable gaps. Exclusions do not signal a deficit in the policy or an area of concern for objection. They open the door to better conversations and opportunities to strengthen protection, offer thoughtful recommendations, and earn long-term trust. Throughout this article, you’ll find practical language, real-world context, and ways to pair core policies with the support of a personal lines MGA that knows how to navigate the gaps.
What Homeowners Policies Typically Cover
Most clients recognize that homeowners insurance protects the home and what’s in it. Fewer understand the specific categories of coverage and the conditions that come with them. A standard homeowners policy (typically HO-3 form) includes the following.
Dwelling: Coverage A and B
Dwelling coverage A protects the home’s physical structure, including walls, roof, built-ins, and attached garages. It safeguards against events like fire, wind, hail, vandalism, and theft. Detached structures (Coverage B), such as sheds and fences, are also covered, usually up to 10% of the dwelling limit. For non-owner-occupied properties, dwelling fire coverage may be more appropriate, offering flexibility that a standard homeowners policy does not provide.
Personal Property: Coverage C
Personal property includes belongings such as furniture, clothing, appliances, and electronics. Certain items, such as jewelry or collectibles, have limited protection unless scheduled separately.
Loss of Use: Coverage D
Loss of use pays for housing and living expenses if the home becomes uninhabitable due to a covered loss.
Personal Liability: Coverage E
Personal liability responds if someone is injured on the property or if the policyholder accidentally damages another person’s property.
Medical Payments: Coverage F
Coverage F covers minor medical expenses for guests hurt on the property, regardless of fault.
Each section contains limits, exclusions, and gray areas that often go unnoticed until a claim arises. One of the most common sources of confusion is how claims are valued, particularly regarding replacement cost versus actual cash value. That’s when the difference between a good policy and a well-advised one becomes clear.
What Homeowners Policies Do Not Cover
What is usually not covered by homeowners insurance? That question often goes unasked until a claim is denied. Helping clients understand these limits before they experience a loss allows brokers to offer stronger protection from the start.
Here are seven categories where clients are most likely to misunderstand what’s actually protected:
- Flood and earth movement: Damage from rising water, including floods, storm surge, and flash floods, is not covered. Neither are earthquakes, landslides, or sinkholes. These events require separate policies or endorsements.
- Gradual damage and lack of maintenance: Insurance covers sudden, accidental loss, not long-term problems. A roof that leaks over time, mold from persistent humidity, or rot from poor drainage all fall outside the scope of coverage. Timing and cause matter more than clients realize.
- Mold, fungus, and infestations: Mold is often excluded unless it stems from a covered peril. Damage caused by termites, rodents, or other pests is generally not included. Even limited mold endorsements tend to cap out quickly.
- Water and sewer backup: Water entering through sewers, sump pumps, or drains isn’t covered unless a specific endorsement is in place. Even then, coverage may be limited and subject to a lower sublimit.
- Ordinance or law requirements: If local code enforcement requires demolition or rebuilding of undamaged parts of a home, standard coverage won’t pay for it. Without ordinance or law coverage, those upgrade costs fall on the homeowner.
- Intentional or illegal acts: Losses caused by intentional damage or criminal activity aren’t covered, even if someone else in the home is responsible.
- Business use of the home: Home-based business activity can void coverage for both liability and property. Clients hosting clients, storing inventory, or renting out rooms may need separate endorsements or commercial policies.
These exclusions don’t need to be dealbreakers. They represent decision points that allow brokers to offer clarity and build smarter coverage.
Endorsements and Supplemental Coverage Options
When standard coverage falls short, endorsements and supplemental P&C policies create the flexibility that brokers need to close gaps. These additions transform a base policy into a tailored plan that reflects how a household actually lives and where its risks exist.
Flood and Earthquake Coverage
Flood and earthquake losses remain two of the most commonly misunderstood exclusions. Clients often don’t realize that water entering from the ground or structural damage from earth movement require separate policies. Flood coverage is available through the National Flood Insurance Program or private carriers, while earthquake endorsements may be added depending on location and carrier appetite.
Ask: Have you ever experienced water seepage or tremors on your property? Are you located in a FEMA-designated flood zone or near a fault line?
Water Backup and Sump Overflow
A water backup endorsement helps cover damage from sewers, drains, or sump pumps that overflow into the home. Many clients assume water damage equals coverage, but without this specific protection, they’re on their own for cleanup, repair, and replacement costs.
Ask: Are you on city water? Do you have a basement with a sump pump or an older drainage system?
Scheduled Personal Property
Standard policies include sublimits for high-value items such as jewelry, art, instruments, or collectibles. A scheduled personal property endorsement allows for broader coverage at appraised value, with fewer restrictions on causes of loss.
Ask: Are you involved in any hobbies or sports? Do you own any items of significant value that you would want fully replaced if damaged or stolen?
Dwelling Fire Coverage
For rental properties, secondary homes, or vacant dwellings, a dwelling fire policy offers coverage that a homeowners policy cannot. Depending on the policy form, these policies can include the structure, liability, and loss of rents. Brokers working with investment properties or mixed-use scenarios often rely on these as part of a layered personal lines strategy.
Ask: Do you own any properties that are rented out, under renovation, or currently unoccupied?
Building Ordinance or Law Coverage
This endorsement steps in when local code requires upgrades or demolition beyond the scope of a covered loss. It can cover the cost of code-compliant materials, system upgrades, and even the teardown of undamaged portions of a structure when required by law.
Ask: Is your home more than 20 years old? Have you made updates to meet local codes?
These endorsements allow brokers to shape coverage intentionally by addressing the real exposures that standard forms leave out. Cochrane & Company supports brokers with access to personal lines markets that accommodate these options and the guidance to place them where they fit best.
Why Work With a Personal Lines MGA Like Cochrane?
Few clients fit neatly within a standard policy. Secondary homes, high-value belongings, evolving exposures, and underwriting limitations often call for more thoughtful solutions.
Cochrane & Company gives brokers access to a broad range of personal lines markets, including options for risks that fall outside conventional guidelines. From dwelling fire policies to scheduled property and flood protection, we help brokers assemble layered coverage that reflects the client’s real-world needs.
Beyond products and placement, we provide guidance on how to structure these policies effectively. Our team supports brokers in navigating form distinctions, valuation strategies, and eligibility requirements to ensure coverage fits both the client’s goals and the carrier’s criteria.
That kind of partnership builds more than policies. It reinforces trust, improves client retention, and positions brokers as long-term advisors in a personal lines landscape that rarely stays static.
Proactive Coverage Conversations Build Trust
Every uncovered gap is an open door. It’s a chance to offer smarter protection, earn deeper trust, and strengthen the relationships that keep clients coming back. Use annual reviews to bring these solutions into the conversation. Pay attention to life changes, property updates, and shifts in risk that create a reason to reconnect. The right question, asked at the right time, can lead to better coverage and stronger loyalty.
Cochrane & Company offers access to personal lines solutions that help you answer those questions with confidence. Whether you’re layering coverage across properties, scheduling high-value items, or placing niche risks, we help you match the right coverage with the right carrier, supported by experts who understand the market.
Contact Cochrane & Company to access personal lines MGA solutions designed to help you close coverage gaps, explain exclusions clearly, and build stronger client relationships.
About Cochrane & Company
For more than six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market, and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients across the nation, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by calling (855) 967-0069.
