November 19, 2015

Most common perils not covered under homeowners insurance

What are the most common perils not covered under a homeowners policy?  What to look for and what to ask.

The most common perils not covered under homeowners insurance polices very somewhat from state to state and much more so with what insurance policy you may have.  Kindly read your own insurance policy to read the specifics of what is and is not covered.  The below list is meant to be an idea of what is most likely not covered by a somewhat typical HO3 home insurance policy in California.  This is not intended to be a comprehensive list by any means.

Most common perils not covered under homeowners insurance:

Flood – Typical floods whether from river water, from groundwater, from the ocean, or simple water build up, are pretty much never covered by typical homeowners insurance.  Most flood insurance is written through FEMA and offered either by your insurance company, another independent insurance company, or direct from FEMA.  Flood insurance pricing varies dramatically by the flood zone that your house is in and your flood loss history.  Flood Insurance can very expensive for some.    More information about Flood Insurance Questions found here.

Backup and Sewer – Most homes do not cover if your drain overflows or if your sump pump were to break down.  Good New though, this coverage can usually easily be added to a homeowner policy by way of an endorsement.  See my blog post on The Most Common Endorsements for Homeowners Insurance.

Earthquake– Earthquake, like Flood is almost never covered under a typical homeowners insurance policy.  Earthquake Insurance would typically be sold as either an endorsement to the primary homeowners insurance policy or as a standalone earthquake policy.  In recent years, standalone earthquake insurance has become more and more common and the costs have come down.  Given that California is such a center of earthquake faults, it is a bit surprising that more people do not opt for EQ Insurance.    In California when you purchase a homeowners insurance policy you will note that you will receive a mandatory offer of insurance from your insurance provider.

War – generally fully excluded from most home insurance policies.   A significant Side Note to the War Exclusion is Terrorism.  Although most policies may not make light of an exlclusion for Terrorism, it can often be defined as a characteristic as essentially War or War Like and therefore, in may be excluded.

Nuclear, Accident or Otherwise – also generally fully excluded from most policies.

Riot – Civil commotion and riot are generally not covered at all on Homeowners Insurance policy forms.   What exactly is the difference between a riot and general crime?   Please Read your policy form.

Terrorism – Terrorism coverage is typically no longer covered.  However, it may depend of the form of attack that the terrorist choose, Chemical, etc.

Your Business – Although not a direct peril, a Work from home business typically would either have ‘no’ or ‘very little’ coverage.  If you work from home please call your insurance agent to discuss.  Consider Reading my article Insuring a One Woman Operation from your Home.  Even if you have a small amount of coverage for your business on your homeowners insurance it is incredibly unlikely that it provides any liability insurance.  So get some business insurance.

Home Day Care Business – One type of business that is generally completely excluded is the Home Day Care Business .  It is my belief that this is specifically mentioned because it is one of the more common work from home businesses that produces significant claims.

Maintenance Damage – simply not covered.  Have something that needed fixing and you failed to take care of it – not covered.    I am asked how an insurance company might know that you failed to take action on something needing repair to which I often reply “they know more than you think.”

Sinkhole – this may be excluded depending on your state and your insurance policy.  Check your policy.  All home insurance policies essentially exclude all forms of land movement.

Mudslide, Landslide, Mudflow – Most of these are probably not covered it really depends.  Mudflows may be covered under your Flood Insurance policy if you have one.  Landslide is generally only covered by a special insurance policy and very difficult to find Landslide Insurance in California.

Landslides area also considered a form of land movement which is just excluded.

Falling Object – it depends on your coverage form, Read your policy.

Weight of Snow and Ice – it depends on your coverage form, Read your policy.  Obviously if you live and reside in an area that gets snow build up this might be a deal breaker for you, ask your agent.   In the San Francisco Bay area we rarely if ever get snow and really never get build up.  In other parts of California, say Lake Tahoe this can be a consideration.

Discharge of water from plumbing – it depends on your coverage form, Read your policy.  The exact definition of what may and may not be covered by your policy can be tricky, read your policy thoroughly.  It may require that the water damage be “sudden” as opposed to slow.

Mold, mold generally is excluded to a large extent.  Some policies allow limited coverage via a mold endorsement.   Ask if the endorsement covers for both property and liability coverage.    The property coverage is typically a sub limit, or smaller amount of property coverage, say only  $10,000.

Freezing of plumbing– it depends on your coverage form, Read your policy.  This one can be a bit tricky as it often requires you to care for your home.  What exactly entails ‘care’ may be a bit surprising.   If you are concerned at all about your pipes freezing when are away, although I am not a plumber, I highly suggest turning off your water at the source.

Artificial Electric Current – Probably not, but check your policy.

Termites and other Pests, generally excluded in many policies.   Pest inspections are very important to get with a new home and if you see any signs of issue, call an exterminator immedialty.

Personal Injury, generally excluded, but typically can be added by way of an endorsement.  What is Personal Injury?  “PI includes: false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction; slander; libel; and invasion of privacy” from an IRMI (International Risk Management Institute) definition.  Some Affluent insurance carriers though, may carry it standard.  Personal Injury may also be procured by means of adding an umbrella insurance policy.  However, you should speak with your agent, independent or captive, on this one.

Windstorms – Windstorms may not be covered under some insurance policies in other parts of the country.  This is usually not the situation here in California.   In Hurricane territory things are vastly different, so contact your independent insurance agent.

Trampolines – Trampolines are increasingly being removed from coverage.  If you have one or are considering buying one, please see your insurance contract.   If you are adding one, contact your agent.  If you have been dropped by your insurance carrier for having one and you have all the necessary protection equipment, speak with a licensed independent insurance broker to see if a new policy can by procured.

Vicious Dog Breeds – What is a vicious breed? many of the breeds are obvious – Pit Bulls, Rot Weilers, Huskys, etc.  Check the list on your insurance policy to confirm.  In general there is no liability coverage (increasingly) with any vicious dog breed or any dog that may have a bite history.   If you are getting one of these dogs, you may first want to speak with an insurance specialist.   Unfortunately, I realize that this means that rescuing and unwanted dog much more difficult for some families.

Coverage for Certain High Value Items – beyond a low amount of between $1K to $2K, most home insurance policies will have limited (if any) coverage for certain things such as jewelry, precious stones, fine arts, silverware, collections of any kind, cash, coins, securities, money like securities, gold, silver, cameras, china, crystal, firearms, golfing equipment, musical equipment, personal computers,  stamps, and many other items.  Consult your insurance broker for anything that you own that is worth more than about $1K.  Good news though, most of these items can be added to your homeowners policy for coverage via an endorsement.   The endorsement is often what is known as a Floater or a Valuable Items Endorsement .  These endorsements though can be more expensive for the endorsement than the actual home insurance.   Credit is sometimes given for either a central burgalar alarm or certain kinds of vaults that are bolted to the foundation.

Absolute Liability – there are certain liability coverages that are generally excluded based on common sense.  Exotic animals, unfenced pools, among other things.

For more information consider reading : Which Disasters are Covered by Homeowners Insurance from the III.org (Insurance Information Institute.) I have said it already, but this is NOT A COMPLETE LIST, so speak with your licensed agent about what types of things you are not insured against both for property coverage AND liability coverage.  Some of these insurance coverage holes are rather simple to plug by buying a good insurance policy such as coverage for a safe trampoline .  Some are easy to plug with simple add on endorsements (see most common home insurance endorsements) such as Personal Injury, Backup Sewer Drain, and Mold.  Still others are simple fixes by procuring seperate policies such as Earthquake and Flood Insurance.   Lastly there are some coverages voids that you will most likely just have to live with.

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