What is and isn’t covered by homeowners insurance policies
Homeowners insurance financially protects you if your home is damaged, your possessions are stolen or damaged, and other occurrences. If you have a mortgage, homeowners insurance is required by your lender. Even if you don’t, it’s highly recommended to own insurance to avoid catastrophic losses.
Often when people go to make a claim, they’re surprised that their policies don’t cover certain items or events. On the flip side, people often don’t realize some of the occurrences that home insurance does cover.
While policies differ, here is a basic rundown of what typical homeowners policies do and don’t cover.
What is covered
In general, standard homeowners policies cover loss to any physical structure on the property, including the main residence, detached garages, sheds, fencing, and gazebos. Your coverage amount, minus deductible, should cover the cost of repairing the damaged property or rebuilding it if it’s destroyed.
Policies will also cover loss or damage to the contents of your home, such as furniture, jewelry, appliances, and electronics.
People are often surprised to learn that their homeowner’s policy will cover possessions that are not stored in your home at the time they are lost or damaged. If you have items in a storage unit damaged by fire, those will typically be covered. Same goes for your children’s possessions when they’re away at college, the diamond ring you lost while on vacation or the items stolen from your car parked at work.
Typically, the policy will cover both the structure and contents if any was lost, damaged or destroyed due to the following events:
Tornado or wind damage, but not hurricanes
Riots or civil unrest
Falling aircraft or aircraft parts
Also, you can also choose an upgraded policy that covers the above, plus in many cases the following occurrences:
The weight of ice, snow, or sleet
Internal flooding caused by appliances, plumbing, HVAC, or sprinkler system
Damage caused by wild animals
Items that fall from the sky, such as satellites or meteors
Additional items covered
If because of one of these events you cannot live in your home, policies will typically pay some of the cost for temporary alternative housing, such as a motel. However, policies usually will not cover lost wages or business income you might incur while dealing with the aftermath of these events.
Like auto insurance, homeowners policies have a liability component as well to protect you against large losses due to accidents or negligence. Examples include a child injured on the family trampoline, a visitor slipping on the ice walking to your door, the mail carrier being bitten by your dog, or guests who become extremely ill due to the poorly cooked dinner you served them.
Some insurers offer optional add-ons for homeowners in certain circumstances. For example, if you operate an in-home daycare, you can purchase additional coverage that protects you from liability if a customer’s child is sick or injured while you’re operating the business.
You can also buy additional coverage if you rent out part of your space or live in a three- or four-unit complex that covers the units and offers protection against injury to a tenant.
What isn’t covered
Regardless of which type of homeowners policy you own, you will typically not be reimbursed for loss or damage caused by the following events:
Sewer backups and sump pump failure
Mudslides and landslides
Sinkholes and other ground movement
If you live in an area at risk for floods, earthquakes, and/or hurricanes, there are separate policies available to protect you from losses caused by those specific natural disasters.
What happens if a home is damaged by wind and flooding from a severe weather event? Will it at least be covered by the wind damage? The short answer is no, because of a provision is known as “anti-concurrent causation.” This means that if two events happen at once, and one of those events, such as flooding, is not covered by insurance, then the policy might not cover damage from either event.
When shopping for policies, it’s important to assess all of your potential risks and look for the appropriate coverage. You should also discuss your needs with your agent and confirm what is and isn’t covered in your policy.