Various perils are covered under home insurance. Some of the common perils may include fire, lightning, windstorm and theft. Depending on the type of homeowner’s insurance policy, your home may be protected against named perils, which are specific incidents, or all perils except those specifically excluded. If your home insurance doesn’t cover a specific peril, it’s called an exclusion. It’s important to find out what exclusions are in your policy so you understand your options if you need to get additional coverage. Bankrate’s insurance editorial team explains what risks home insurance typically excludes.
Home Insurance Exclusions
Many perils are not covered by home insurance. To have cover against them, you may be able to add an endorsement from your home insurance company at an additional cost. Or, in some cases, you may need to purchase an entirely separate policy. Below are some of the most common home insurance exclusions and the steps you can take to obtain coverage.
Floods
Flood damage is almost always a homeowner’s foreclosure. Flood damage is a very common exclusion for HO-3 policies, but even homeowners with HO-5 policies, which provide broader coverage than HO-3 policies, are unlikely to be covered for flood damage.
You will need to purchase separate flood insurance to cover flood damage. Anyone can buy flood insurance, but your mortgage lender may require you to have flood insurance if your home is in a high-risk flood zone, as determined by the Federal Emergency Management Agency (FEMA) flood map. You can usually purchase flood insurance through the National Flood Insurance Program (NFIP) or from a private carrier.
Earthquake and Earth Movement
Like flood damage, earth moving damage is a common homeowner’s insurance exclusion. Excluded causes of loss typically include earthquakes, landslides, and mudslides. Because earthquakes can cause devastating damage, you may want to consider purchasing coverage, especially if you live in an earthquake-prone area like California. California residents can generally purchase earthquake insurance through the California Earthquake Authority (CEA) or a private insurer.
Depending on where you live and how frequent earthquakes and ground movements are, you may be able to get earthquake coverage by adding an endorsement to your home policy. If you live in an area particularly prone to earthquakes, you may need to purchase separate earthquake insurance.
Maintenance
If you own a home, you’ll probably need to do some maintenance at some point. This may include repairing an appliance or updating your plumbing or electrical systems. These types of repairs are often considered maintenance and are almost never covered by home insurance.
Taking a proactive approach to maintaining your home can help you solve problems before they become catastrophic. You may want to consider setting aside a portion of the money for home maintenance so that you have the funds to cover costs when a problem arises. If you are worried about being able to afford the cost of maintaining your home, you can also look into purchasing a home warranty.
Pests
Almost all homeowners policies exclude pest infestations, including insects and rodents. Whether your home is affected by termites, bed bugs, or mice, your home insurance may not cover the cost of eradication and remediation.
There is often no endorsement or separate policy that you can purchase to obtain coverage for these types of losses. However, a pest control company may offer a warranty for a period of time after your home is treated for an infestation.
Home Businesses
While your home insurance policy likely has liability coverage in case someone gets hurt in your home, coverage usually doesn’t apply to a home-based business. If a client slips and falls while visiting your home office, your home insurance will most likely not cover the resulting medical expenses or any legal fees or settlements if that person decides to sue. Similarly, most home insurance policies have a limit on the amount of coverage for business personal property, and some policies may exclude coverage entirely. If your work laptop is stolen while you are working from home, you may have limited or no coverage.
If you own a home business or work from home, you may be able to add some level of coverage to your home policy. If your business is larger, you may need a separate business policy for coverage.
Mold
In most cases, mold is an exclusion from home insurance unless the mold was caused by a covered peril. For example, if a storm breaks your window and the resulting water damage causes mold, you may have mold remediation coverage. But for mold that develops slowly or for which you can’t pinpoint the cause, you’ll likely have to pay for the necessary treatments and repairs out of pocket. Some companies may offer coverage for mold remediation, so you may want to talk to your insurance agent to see if this is an option for you.
Full Cost of High Value Items
While homeowners insurance may offer some coverage for your more expensive personal possessions, such as jewelry, art, and collectibles, most policies limit payout to a certain dollar amount, such as $1,500 for all of your jewelry.
If you have more expensive possessions such as high value jewellery, you may want to ask your home insurance company if they offer endorsements for high value items. These policies generally list expensive items individually and often cover them for their full replacement value. The endorsement may have a lower deductible than your home insurance or no deductible at all. Your company may also offer this coverage under a separate policy.
Insurance Companies and Household Insurance Exclusions
While many homeowners insurance companies may have exclusions in common, each insurance company is different. The best way to find out what exclusions are included in your policy is to consider reviewing your coverage and speaking with your insurance company’s licensed insurance agent to help you determine if you need additional coverage.
