Homeowners insurance can help you sleep better at night and minimize losses if your property is damaged or destroyed. But it doesn’t cover every peril that could befall your property.
Here’s a rundown of a baker’s dozen of threats you likely won’t be able to collect on through your homeowners coverage, at least without policy add-ons. We’ve divided the list into three categories: those perils that are rare for most homeowners; ones that are usually deemed the result of the property owner’s negligence; and issues where governments or businesses are responsible.
Awareness of these omissions from your homeowners insurance can help you plan for which, if any, additional coverages to obtain, and help you avoid filing claims that aren’t likely to pay off.
Rare and costly perils
Insurers cover certain, relatively uncommon threats with additional specialized policies, in which those at significant risk pay separately for protection against these relatively rare occurrences.
1. Flood damage
Most standard homeowners insurance does not include any coverage for flood damage – that is, for any impact from water that contacted the ground before it damaged the property. If you want flood coverage, you’ll have to buy a flood insurance policy from either the federal government or private insurers.
2. Earthquake damage
This won’t be an issue in most states, but if you are in an area that’s prone to serious earthquakes, you may want to get earthquake insurance, either as a separate policy or as an add-on to your homeowners insurance. It’s a specialized policy that covers any property damage and personal property losses caused by an earthquake.
3. Extreme wind damage
Damage from high winds is generally covered in homeowners insurance policy, with one caveat; if winds reach a certain hurricane strength, your policy’s deductible may be raised from a dollar amount to a percentage of your total coverage, such as 3% – which is often a higher sum.
Also, if you live in an area that gets a lot of hurricanes, wind damage coverage in these high-risk areas may not be covered by your regular policy; you may need to buy an additional wind-only policy.
4. High-value personal items
Like out-of-the-ordinary weather, the presence in homes of very valuable artwork and jewelry, among other items, is rare but potentially catastrophic in the event of a fire or other calamity. Homeowners insurance offers personal property coverage, but there’s a limit on its total value, generally to no more than 50% to 70% of the insured value of the home.
Further, you may be unable to claim more than $1,000 to $2,000 in losses per item, depending on the policy. To have pricier possessions covered will require additional “Coverage C” endorsements, which can be useful for items such as expensive jewelry or artwork.
Negligence on your part
Insurance won’t cover damage you might have prevented, or even actively caused yourself. Pay attention to the trouble signs of the following perils, because you can’t rely on your insurance to pay for their consequences.
5. Pest infestations
Homeowners insurance policies typically exclude the cost of removing infestations of pests such as insects or rodents. Such incursions are typically considered to be avoidable with good property maintenance. However, you might get secondary damage caused by the pests covered under the homeowner’s insurance policy – for example, the impact of a fire started by wires chewed by rats.
6. Sewer backups
Damage to your home and possessions from sewer backups into your property generally isn’t covered by regular homeowners’ policies. The causes of such backups, such as clogs from grease or tree roots, are mostly considered to be preventable. To get coverage, you typically need to add a sewer backup endorsement or water backup coverage to your policy.
7. Routine repairs or wear and tear
Your property has many components that will age over time. Their failure due to age will not be covered by your home insurance, nor will the consequences of neglecting required maintenance to them. For instance, if you allow your roof to age to the point where it leaks, you’ll be on the hook not only for its repair but any water damage that results from its condition.
8. Mold damage
In most cases, home mold damage is not covered by insurance policies. Such damage is usually considered preventable through adequate maintenance and, as needed, engaging professional help when the mold first arises.
Exceptions may arise when the mold results from a peril that is covered by the policy. For example, if a pipe bursts in the home, a setback that often is covered, removing any mold that subsequently grows could be within the policy’s scope as well.
9. Intentional loss
Unsurprisingly, if you intentionally damage your property to trigger a claim settlement, the insurer will not cover you. Worse, you will have committed insurance fraud, which can cause a prosecution.
Government or business actions
Your homeowners insurance generally doesn’t protect you against problems that result from errors or wrongdoing by public entities or private enterprises. These four impacts are among the likely omissions from your coverage.
10. Business-related damages or losses
Homeowners insurance policies are designed to protect physical assets rather than business ones. If you operate a business in your home, and it needs to close temporarily (or permanently) due to property damage, you won’t be reimbursed by your homeowner’s insurance for any losses due to the closure. You’ll likely need a rider or an additional business policy to get such losses covered.
11. Construction site risks
Construction within a house can pose significant risks of damage to the property. Few if any of these risks will be covered by your home insurance. To be protected, you will need to buy builder’s risk insurance, also known as course of construction insurance, which covers financial losses due to damages or disasters that occur during the building process.
12. Power-company surges
Your insurance company will offer coverage if any electronics in your home are damaged due to a power surge from a lightning strike. However, if your utility company causes such a surge, any resulting damage won’t be covered. Instead, you should contact the utility itself to seek compensation, and buy surge protectors, into which electronics can be plugged, in case of surges in the future.
13. Damage caused by government
Homeowners insurance companies won’t provide coverage if the government damages your property. Government confiscation and seizure of private property are also excluded from homeowners insurance coverage. (Alas, you’ll also be on your own and not protected by your insurance if a government’s military action results in property damage or destruction. This applies whether or not there’s been a formal declaration of war, or merely an ongoing conflict between nations or factions within a country.)
The bottom line on what insurance may not cover
A homeowners insurance policy isn’t designed to cover every property peril, merely the most frequent of them. Here’s what to be aware of – and what to do – about areas in which your policy won’t protect you.
To begin, it’s smart to research and heed the signs of incursions into your home of rats, termites or other pests, and act immediately when you see them. Don’t expect reimbursement for mold removal if you let part of your home remain wet for long enough for these spores to grow.
If you’re among those homeowners whose properties are most at risk from floods and earthquakes, or who just have a lower personal risk tolerance, you’ll need to weigh the cost of additional policy or add-on to your homeowners insurance to decide if the protection is a worthwhile buy for you.
Finally, don’t expect much or any reimbursement from your insurer should a government or business be responsible in any direct way for damage to your property. Those setbacks range from damage from a backhoe striking the home to a dam bursting and flooding you out. The responsible government should be your first resort for compensation, rather than your insurance company.
If in doubt about whether you are or aren’t protected for a peril under your homeowners insurance, check your policy or get in touch with your insurer.
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