What Homeowners Insurance Doesn’t Cover – Insurance doesn’t cover everything most homeowners expect. This is what we are going to discuss today. There are too many homeowners, even those real estate investing, that believe their insurance policies cover any and every type of damage imaginable.
This is simply not the case. The reason for the misunderstanding is most homeowners don’t read their insurance policy. Therefore, they don’t understand what it doesn’t cover nor what it does. This can lead to very big problems if they are unfortunate enough to encounter some damage not covered by their insurance policy.
What Homeowners Insurance Doesn’t Cover
What Homeowners Insurance Doesn't Cover
Today, we are discussing what your homeowners insurance doesn’t cover. Believe me, it is more than you anticipate, but many of the items are not likely to happen.
I first became aware that homeowners insurance policies don’t cover everything as a real estate appraiser in the Chicago area. Inside of the appraisal, it is imperative you mark if the property is in a flood zone or not. If this section of the appraisal isn’t market, then it will not pass review and it will have to be redone.
The reason the flood zone needs to be determined is because most homeowners insurance doesn’t cover floods. If the homeowner wants to have flood insurance, which all homes inside of the flood zone must have, then it must be purchased separately (in the state of Illinois). This can add an unexpected cost to the homeowner in the process. This was all new to me, but I am glad I learned the lesson.
There are actually a few more items not covered under homeowners insurance. Let’s take a moment and dive through a few of these. If you have any comments or questions, please feel free to add them in the comment section below the article. We love to hear from our readership and get a fresh perspective from you.
Damages Homeowners Insurance Doesn’t Cover
Flood Damage – Most homeowners think they have flood insurance, but as mentioned above if you don’t have a separate insurance policy for flood or a rider attached to your basic homeowners insurance policy, then you are more than likely not covered.
Cars, Boats, Motorcycles Stolen or Damaged – Most people believe these personal possessions are covered under their homeowners insurance, but they are not. You need separate policies for each in order to have them covered. This is personal property that is insurable, therefore, you must insure them separately.
Waterline Break – If the waterline breaks that supplies your home, you may think you have coverage, but you don’t. This can be very unfortunate and your insurance agent may feel for you, but they are not obligated to give you compensation during this event. These damages can be very costly, but would have to come out of your pocket which can severely set your financial plans back.
Sewer Line Break – Here is another municipality damage that could cost you. If you take the time to read your homeowners insurance policy, you will notice this damage isn’t covered either. Although it seems like it would make sense, it isn’t and you are vulnerable to a serious damage with this one.
Earthquake – If you are in an area that receives earthquakes, then you have to purchase separate earthquake insurance. This is similar to the flood insurance where it seems like it would be covered, but it isn’t. It is recommended to have this sort of insurance if you are in these areas as an earthquake can total your home and cost you significantly.
Mold – To be honest, I thought this was covered under the typical homeowners insurance policy, but it doesn’t cover mold. Here is another example of where you have to add a separate policy or addendum to your policy to have coverage from mold.
What Homeowners Insurance Doesn't Cover
Termites & Infestations – Just like mold, termites and other infestations that might occur in a home are not covered. These little critters can do major damage to your property and bank account if you allow them time to do major damage. You are better off spraying your home and ensure they never have the opportunity to cause major damage or you will regret it.
Stolen or Injured Pets – Not sure why many people would think their pets would be protected in a homeowners insurance policy, but they are not.
Source: Survey “What Isn’t Covered By Your Homeowners Insurance?” from The National Association of Insurance Commissioners.
The items listed above can be added to your insurance policies, but they have to be done as an addendum or separate policy. They all can be rather costly if they happen to you, so it is recommended you cover yourself if you live in an area where these things could happen. None of the repairs or damages will be light on your finances, so most of the time it makes sense to protect yourself and your investment. - What Homeowners Insurance Doesn’t Cover
Good points! I live in an earthquake area (southern California) and had to add earthquake coverage to my homeowners policy to have coverage.
Good move, the cost of rebuilding after an earthquake has to be crazy expensive and a financial killer. Good luck out there. I don’t know how you Californians do it.
Bottom line: It is necessary that you read your insurance policy to fully understand the things that are covered and not covered by your home insurance.
Absolutely, Jason!