To all the nasty surprises life can throw at you include learning after the fact that your homeowners insurance policy doesn’t cover something you just naturally assumed it did. Adding insult to injury is also finding out that an inexpensive rider to your policy could have taken up the slack. With so many new and first-time homeowners out there, here’s a little primer to help you understand the limitations and exclusions that are typically attached to a basic homeowner insurance policy.
Do you have all-risk or named-perils coverage? All-risk homeowners insurance coverage covers almost everything that isn’t specifically excluded and duly noted on your policy. Named-peril homeowners insurance coverage only covers the conditions and losses that are named on your policy, with every other conceivable hazard excluded.
Ever since 9/11, insurance companies have been specifically excluding acts of terrorism from homeowners coverage. Nuclear accidents and acts of war have historically always been excluded.
Once upon a time, water damage and any subsequent related problems like mold were typically covered in your homeowners policy. Then people started filing lots of claims for mold damage. Now the majority of the state insurance regulators let insurance companies put a cap on mold remediation benefits or exclude it completely. Many companies are capping water damage payouts, too.
Dog bites are on the rise. So are law suits and claims arising from dog bites. Consequently, if you own a breed that has a bad reputation (we know, there are no bad breeds, only bad owners, but insurance companies go by the odds), expect to pay a higher premium. And don’t be surprised if you’re turned down altogether. The same holds true if your dog has ever been cited for biting, regardless of its breed.
Intentional, malicious damage may or may not be covered, depending on who the perp was. If it was committed by your live-in mother-in-law, your policy may exclude coverage. If your ex-spouse takes a chain saw to the house, it probably is covered.
If damage to your home resulted from neglect on your part, the insurance company probably will deny your claim. Not repairing a leaking roof for years on end is considered neglect. So is termite infestation.
Damages from flood and volcanic eruptions are not covered in basic policies. You’ll need a separate policy. Damages from hurricanes and tornados may or may not be covered, depending on your provider.
Expensive jewelry, antiques, coin and stamp collections, valuable art work, guns, pricey furs and similar luxury items probably aren’t sufficiently covered under your basic homeowners insurance policy. Consider supplemental coverage for your high ticket items.
Are you operating an office in your home with lots of expensive computer equipment? Most basic homeowner policies cap what they’ll pay for home office equipment. Look into a small business insurance policy to cover these items in the event of theft or damage.
Our point here is to never assume you’re covered. Individual policies vary, so check yours.