Covered’s independent insurance advisors invest a ton of time in helping people like you understand what’s covered by their homeowners insurance. They invest just as much time in helping them understand what isn’t covered.
With that in mind, welcome to today’s policy detail blog, which focuses on the most common exclusions to standard homeowners insurance policies. When you better understand where you may lack coverage, you know better where you may want to add endorsements or purchase additional coverage. Trust us: Underinsurance isn’t worth the risk. Let’s make sure you’re covered!
Before we jump in, however, let’s make sure this much is clear:
- For all claims, your insurer will identify and examine the root cause of the issue.
- The nature of that cause determines whether the issue will be covered.
- That means the same issue could be covered or excluded, depending on what caused it.
Our list of common exclusions includes several illustrative situations in which the issue may or may not be excluded, depending on the root cause.
So, keeping that in mind, what are the most common exclusions to standard homeowners policies?
Stuff That’s Your Fault
Did you do something with the intent of causing damage or loss to your property? Clearly, people who set fire to their own homes in the hopes of a big insurance payoff fail fully to understand this one. The same goes for your policy’s personal liability coverage. If you intentionally cause someone to be injured on your property, you’ll get no financial help from your insurer.
Did you fail to take reasonable actions to protect or save your property during or after a loss? No, this doesn’t mean you should stay in your home when it’s on fire, furiously tossing buckets of water into the flaming inferno. It does mean that removing extra brush and deadfall from your property is an excellent idea. That way, in the event of a fire, you haven’t inadvertently provided extra kindling.
This category is also why you should file any claims in a timely manner. For example, if a massive hailstorm damaged your roof and you report it right away, you’ve got a good chance of getting your claim paid. If you wait a year to file your claim and the delay you caused means your home incurs yet more damage, your insurer may deny your claim.
For your sake, we hope you’re not conducting illegal activities in your home. If you are — and we’re pretty sure this is a big “No duh” — any associated property damage is not covered.
Okay, so this one isn’t necessarily your fault. But the majority of mold damage indeed results from homeowner negligence (e.g., you’ve let a leak go on too long). If it’s caused by a naturally occurring flood, you’re still out of luck in a standard policy (see “acts of God” below). There are, however, a handful of situations in which mold damage will be covered (e.g., a pipe bursts and you take immediate action to fix it).
Insect or Vermin Infestations
Sorry, we know this one seems a tiny bit unfair. Can you help it if a giant colony of mice, bedbugs, or termites seems to have moved in? The answer is… yes, most likely, you could’ve helped it. An insect or vermin infestation sizable enough that you’re considering an insurance claim likely indicates a lack of timely preventive or follow-up maintenance.
Bodily Injury Caused by Your Pets
You’re liable for what your pets do. No matter how adorable and harmless you believe your little Fido to be, if he’s considered an aggressive breed, he may not be covered. He could even disqualify you from getting insurance. That said, if you do own a potentially aggressive pet of any type, it’s crucial that you discuss it with your advisor. Additional coverage or training may provide a workaround.
Stuff That’s the Fault of Various World Governments
If the US government (or any public authority) confiscates, siezes, or destroys any of your covered property, your insurance company will not reimburse you. To take up any grievances, you’ll have to deal directly with Uncle Sam.
Acts of War
This includes both undeclared war and any civil warfare.
It’s terrifying to imagine your home being damaged by irradiation or destroyed by a nuclear explosion. In the miniscule chance it happens to you, you’ll have to take up your complaint with the nuclear power company. That said, if a nuclear hazard causes a fire in your home, resulting fire damage may be covered.
Stuff That’s the Fault of Outdated Construction or Bad Workmanship
Laws or Ordinances
Say you’re renovating your home and you find out neither your electricity nor your plumbing are up to code. (You know, like in every other episode of The Property Brothers. OH THE DRAMA.) To proceed with your renovations, you’ll have to bring everything up to current building code and ordinance standards. Typical policies won’t help with these costs. That said, many insurers will let you add an ordinance or law endorsement. City ordinances change often and the cost for this coverage isn’t excessive, so it’s worth considering.
Faulty Construction, Zoning, Repairs, or Maintenance
Did the original builders of your home build it in the wrong place (relative to zoning laws) or use sub-par materials? Or did you get something fixed… that wasn’t really fixed? If someone else is liable for faulty workmanship or maintenance that caused damage or loss to covered property, it’s not covered. Protect yourself from costly repairs and years of litigation by always requiring proof of insurance from any contractors who work on your home. The proof of insurance should list you as an additional insured.
Way Too Much Fun Considered Too High-risk
The high risk of you being held liable for someone else’s pool-related injury means no standard policy will cover a pool. In fact, some insurers will flat-out deny homeowners coverage if there’s a pool on the property, especially if it has a diving board. (But please, don’t try hiding it. When your insurer finds out, they’ll drop you like a hot penny.)
Again, the risk of personal injury-related lawsuits is just too high. That said, some insurers will cover your trampoline provided certain safety precautions (e.g., net enclosure, fenced-in yard) are in place.
SIGH. But there’s clearly a reason more people don’t build homes up in trees. If you’ve got one or plan to build one, talk to your advisor about including a policy rider.
Stuff That’s Just Really, Really Nice
Do you have a collection of fine art, fine jewelry, fine watches, or other valuable items that you keep in your home? Fine, but its value probably exceeds the limits of the personal property coverage in a standard policy. That means it’s not covered. Talk to your advisor about adding a personal articles floater.
Stuff That’s Mother Nature’s Fault
Acts of God
Ever heard of “acts of God”? When used in insurance policies, this phrase isn’t associated with any religion. The point of the unusual verbiage is that natural disasters are not in our control. Since they’re neither preventable nor predictable, it’d be a losing proposition for insurers to provide across-the-board coverage for these perils. Fortunately, homeowners insurance policies are typically specific about which “acts of God” constitute uncovered perils, and your policy may indeed cover certain “acts of God.” That said, we’ve listed the most common excluded perils below.
Whether the water damage was caused by a sewer back-up, a flood, a hurricane, or water seeping into your foundation, it’s not covered in a typical homeowners insurance policy. Certain instances may be covered (e.g., if your pipes burst). You can, however, have your advisor help you purchase a separate flood insurance policy. Homeowners in high-risk areas who hold mortgages from federally regulated lenders are mandated to purchase flood coverage.
Wind Damage in Hurricane-prone States
If you live in an area in which hurricanes are common, it’s likely that wind damage is either (a) not covered within your standard policy or (b) carries a separate, and likely sizable, deductible. Ask your insurer whether a separate wind damage policy is the right choice. This applies to hail as well.
Did your home fall into a sinkhole after an earthquake that caused a flood caused a giant landslide and mudflow above your property? WOW that sucks. But it’s simply not covered in a typical policy. You can, however, purchase earthquake insurance as an added endorsement in your policy.
Even if you don’t live in California, it’s worth considering. According to the United States Geological Survey (USGS), the risk for earthquakes now extends further across the US than most people realize. The USGS regularly publishes information about seismicity — that’s a fancy way to say if and how often earthquakes happen in your area — in your state. Check it out.
Over time, our homes get old. A certain amount of wear and tear is natural and inevitable. As a responsible, insurance-deserving homeowner, you’re expected to perform reasonable maintenance to make sure that normal wear and tear doesn’t turn into a bigger problem.
Did a regional power failure lead to a chain of events that blew up your expensive computer? Though it’s possible the power failure was caused by lack of maintenance on the part of the electric company, it’s also possible that it was simply reaaaaally hot out and everybody turned on their AC at once. Whoops. Again, power outages are neither preventable nor predictable, so typical policies won’t cover any resulting damage. That said, many policies will cover the cost of the food in your refrigerator going bad. And if it was a localized power failure (e.g., high winds knocked down the power line that serves your house), it may be covered.
Stuff That Happens in Your Home-based Business
If your home-based business constitutes only a simple home office (e.g., computer, printer, desk) and you entertain no clients in your home, a simple endorsement in your homeowners policy should do the trick. If it’s anything more complex, you should obtain a separate business insurance policy.
Still have questions about what’s excluded from your homeowners insurance policy? Covered’s independent advisors can help you with a free policy review. Give us a call at (303) 302-9927 or send us a message.