23 Things Your Homeowners Insurance Policy Probably Does Not Cover
When you bought homeowners insurance, you picked coverage limits and deductibles. But did you think about what homeowners insurance doesn’t cover?
Imagine coming home one day to find that lightning has struck the mature tree next to your house, which fell on your garage, causing major damage. Do you know what’s typically covered by your homeowners insurance policy, and would this be included?
Agent Wade Wostal works closely with an insurance agent in his building. He’s seen cases where homeowners thought they’d found a cheaper policy elsewhere, but “there’s too many loopholes out there, there’s too many people out there who do offer coverage and they don’t explain what’s in the policy,” and the cheaper policy had unfortunate coverage gaps.
When you’re buying insurance, your focus is on protecting your asset, and you might not ask yourself, “What does homeowners insurance not cover?” But, in some circumstances, the answer to that question might matter more!
Chantal Roberts spent 20 years in leadership at major insurance companies educating claims partners and overseeing training before becoming an expert witness for those involved in the insurance claims process. She warns homeowners that despite what an insurance agent may promise, “There is no such thing as an ‘all-risk’ policy. It’s the ‘Everything-is-Covered-Except-What’s-Excluded-Policy,’ which is not nearly as sexy. So, homeowners get very upset when they learn they have exclusions.”
It’s usually best to figure out what’s covered (and what’s not) well before you need to know; we’ve rounded up the biggest things that homeowners think should be covered by their insurance policy…but aren’t.
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Natural disasters typically excluded
Homeowners insurance companies can’t predict acts of nature — like a lightning strike — and often exempt them from coverage. Therefore, in our example, the cost of tree removal and repairing your garage would be your responsibility. These “acts of God” are forces of nature that man can’t control.
Roberts explains that acts of God are “generally excluded because there isn’t a good way to protect the asset (house) from that peril. You can’t move a house if a hurricane is coming.”
When you bought your house, the seller should have provided you with a natural hazard report, and it could give you some clues to what hazards you might face in your new home.
Flood damage
If you bought a home in a flood zone, you will need to purchase additional protection. Standard homeowners policies don’t cover flood damage. If you have a mortgage on the house, your lender will require you to buy protection through the National Flood Insurance program.
The amount of coverage you’ll need, as well as your premiums, will depend upon your new home’s flood zone.
Earthquakes or sinkholes
Standard homeowner’s insurance doesn’t cover earthquake damage or destruction, even if you live in a fault zone. States like California require homeowners to purchase separate earthquake insurance.
If sinkholes open up your property, any damage they cause won’t fall under homeowners insurance unless you bought a sinkhole rider (also called an endorsement).
Simultaneous catastrophes
In some policies, you won’t be able to file a claim for simultaneous natural disasters. For example, you can’t file a claim for both wind and water damage at the same time — which could be a problem if you live in a hurricane-prone area.
Home maintenance-related exclusions
As a homeowner, you’re responsible for routine maintenance. If neglected maintenance leads to damage, under replacement cost coverage, you’re reimbursed the damaged item, less depreciation. “If the house is well-maintained, there will be less depreciation taken at the front end of the claim settlement process,” Roberts explains. So, you’d get more money back.
Standard policies cover water damage from burst pipes but may not replace or repair the pipes themselves. That’s because it’s your job to keep the basement and home warm enough to prevent pipes from freezing. Failed pipes are one of the most common claims issues Roberts has seen in her career, and she warns that “if the pipe is located in a wall, it could get expensive to get to the pipe to fix it (which the homeowner would owe).”
The same rationale applies to sewer backups. If the pipe backs up, your insurer assumes you didn’t perform routine maintenance like cleaning out the pipes and checking for debris.
Pests, including termites, don’t suddenly invade and damage your home. In theory, a homeowner would have time to catch them and treat for pests, so homeowners insurance excludes their damage from coverage.
Improperly ventilated homes, homes with leaking roofs, or damaged foundations can all have problems with mold, fungus, or wet rot. Because a homeowner could prevent that damage, they must pay to fix it.
