Homeowners insurance coverage can vary tremendously between policies. In general, whether or not damage is covered depends on the cause of the damage. There are a few exceptions to this rule, but understanding the perils listed on your policy is the first step to ensuring you know what's actually covered.
11 Perils Often Excluded From Homeowners Coverage
Flood damage is not covered by standard homeowners insurance. For insurance purposes, a flood is defined as water that enters the home from outside at ground level. In other words, water damage from a broken pipe or leaky roof is not considered a flood, even if it fills your home. However, water from an overflowing river, tidal wave or flash flood all qualify as flood damage. Water that backs up into your basement may also be considered a flood depending on the exact circumstances surrounding it.
Fortunately, it's possible to avoid claim denials by purchasing a companion policy from the National Flood Insurance Program (NFIP). These policies, offered by FEMA, are available to people in flood-prone areas and are usually fairly inexpensive to obtain.
Like floods, earthquakes are a natural disaster excluded from most insurance policies. Earthquake-specific policies are available in California through the California Earthquake Authority. Unlike flood insurance, however, earthquake policies are generally fairly pricey and have high deductibles.
The primary purpose of earthquake coverage is replacing a home that's fully destroyed rather than paying for more minor damages. If you live in an area where earthquakes might occur, it's a good idea to speak with your insurance company to see what options are available to you.
3. Wind Damage
Wind damage is a covered peril on some homeowners policies, but not all. If you live in an area with a high risk of hurricanes or tornadoes, you may need to purchase additional protection to get coverage for wind damage. Even if your policy does cover wind damage, this type of peril may have a higher deductible than other perils. It pays to ask your insurer for clarification about wind coverage on your policy, as the homeowners with the greatest need for wind insurance are often those who are not protected. If your home policy will not cover damage from a hurricane, tornado or other windstorm, you may qualify for coverage through another provider, such as the Texas Windstorm Association.
4. Expensive Personal Property
Homeowners insurance is generally divided into three components: dwellings, other structures, and contents. Dwelling coverage pays for your home itself and structure coverage pays for sheds, fences and similar structures. Contents coverage pays for all of your personal belongings, even if they're not inside your home at the time of the loss. For example, an iPod stolen from your gym bag or luggage lost while traveling may be covered under your homeowners insurance.
This coverage does have a monetary limit, however, and that limit may be lower than the value of your most expensive personal items. Additionally, certain items like expensive jewelry or original artwork might be excluded entirely from your standard contents coverage.
To cover your most expensive belongings, you'll need to add scheduled personal property (SPP) coverage to your policy. An SPP policy will insure items at their appraisal value. You'll need a separate SPP policy for each valuable you insure, but all of these policies will be bundled under your primary homeowners policy.
5. Wear and Tear
Insurance is designed to protect your home against sudden, accidental damage, like a fire or natural disaster. Damage that occurs slowly over time is not generally covered by insurance. Some examples might include cracks in the foundation from the home settling over time, or a roof that needs to be replaced due to age.
If your home sustains damage in a covered loss, the adjuster may adjust the amount of your settlement for depreciation. For example, you will probably get less money to repair a 15-year-old roof damaged by a hailstorm than if the roof were brand new.
6. Pest Infestations
Termites, mice, rats and other pests can be amazingly destructive. Unfortunately, most insurance policies do not cover damage caused by these pests. Additionally, insurance will not cover the cost of an exterminator. This can be problematic, as pest damage is sometimes not immediately apparent, and the cause might not be obvious unless an investigation is completed. If you do suspect an infestation, it's in your best interests to call an exterminator right away to deal with it before the damage becomes extensive.
If your home is particularly termite-prone, you might be interested in obtaining a termite bond, which is essentially a retainer fee for your exterminator. That way, if something does happen, the cost of treatment will be lower.
7. Family Pets
Although animals are considered personal property by the law, they're not covered by homeowners policies. This means that you won't be financially compensated if your pet dies in a house fire or is injured in a household accident. Some policies do, however, include liability coverage that will protect you from a lawsuit if your dog bites someone. This coverage may fail to protect you if you own a prohibited breed such as a pit bull, though, so you'll want to double-check with your insurer if you own a so-called dangerous breed.
Some pet insurance companies sell policies that can cover vet costs for your furry friends.
Your homeowners insurance does not extend to your car, RV, boat or any other vehicle. These vehicles require their own insurance policies. This means that if your garage collapses, crushing your car, you would need to file two separate claims: one on your homeowners insurance for the garage, and one on your vehicle's policy for the car. The same is true for any other peril, including trees falling on your car during a storm.
9. Home Businesses
If you run a business out of your home, you need to alert your insurance company about it. The reason is that standard homeowners insurance will not provide ample protection for businesses, and business activity may even be excluded from some policies.
Incidentally, this is also true of business-related property that you bring home from an outside job; if you lose your boss's laptop, your homeowners insurance likely won't cover it since you are not the owner of the property.
10. Injuries to Family Members
In addition to dwelling, structure and contents coverage, some policies also include umbrella coverage. This is a form of personal liability coverage and it's usually bundled with homeowners insurance. The liability insurance on your homeowners policy is designed to protect you from a lawsuit in the event that someone is injured on your property. For example, if a visitor slips and falls in your kitchen, your homeowners policy might cover the associated medical expenses.
This same protection does not extend to resident relatives, however. Anyone who lives at your house is excluded from your liability coverage.
11. Preventative Maintenance
Since insurance policies are designed to protect your home against sudden and accidental damage, your homeowners policy won't help you with home renovations or repairs for basic maintenance issues. You also cannot file an insurance claim for preventative maintenance, even if that action might stop damage from occurring. A common example is tree removal. If a tree falls on your roof as a result of a storm, your insurance will likely cover the repairs. However, insurance won't pay for the removal of a dead tree that seems likely to fall.
If you're found negligent in maintaining your property, an otherwise covered claim may be denied. In other words, if there's a rotting tree on your property, it's your responsibility to remove it before it has a chance to fall. Some types of preventative measures can help you save money on your insurance, however, such as improving your home's security system. It's a good idea to check with your insurer whenever you make improvements to your home to see how those changes might affect your policy.
No two policies are identical, and this list is by no means exhaustive. Depending on your specific policy and the coverage you pay for, you may find that your insurance does not cover something you'd always assumed it would.
To figure out exactly what your insurance covers, it's a good idea to talk with your own insurance company. Your agent will be happy to discuss your coverage and help you find ways to obtain the protection you need.