It’s important to familiarize yourself with a policy’s coverage before you sign. It’s an unpleasant surprise when you find out your homeowner’s policy doesn’t cover something you thought it did. Let’s read the fine print.
Property damage that is not covered
The typical homeowner’s policy covers your dwelling in the event of damage by fire, smoke, explosion, windstorm, lightning strike, hail, falling objects, vandalism and damage by rioters. But several other types of damage are not covered or are covered only in certain circumstances.
- Water. Your homeowner’s policy will not cover flood damage caused by heavy rainfall and overflowing bodies of water. If you live in an area that is prone to flooding, you should purchase a separate flood insurance policy through the federal government’s National Flood Insurance Program. Additionally, water damage caused by a slow leak or any other situation caused by lack of home maintenance is not covered. But if water damage results from high winds tearing off a portion of roof and rain falling inside your home during a storm, you’ll be covered.
- Mold. Whether a homeowner’s policy covers mold damage depends upon its cause. If proper home maintenance could have prevented the problem that caused the mold, the damage will not be covered. Nor will there be coverage if high humidity caused the mold. But homeowner’s policies usually cover mold damage if it’s brought about by a covered peril, particularly a sudden event such as a burst pipe or water getting into the house because of windstorm damage.
- Sewage backup. Damage from this source is generally not covered, although you may be able to purchase separate coverage for it.
- Termites. Termite damage isn’t covered by homeowner’s policies, but your pest control company may offer a warranty against damage from these wood-destroying insects.
- Fine jewelry. Typically homeowner’s policies do not cover expensive pieces. Purchase additional coverage specifically for this purpose.
- Earthquake. Damage from an earthquake isn’t covered, but earthquake damage is.
- Sinkholes. Homeowner’s coverage is not available for sinkhole damage except in Tennessee and Florida, where separate policies are available.
- Poor contractor work. Damage from this source isn’t covered by your homeowner’s policy but should be by the contractor’s liability insurance. Before hiring a contractor make sure he has liability insurance covering failures in his workmanship, plus coverage for injuries to his workers if they occur at your home. Get a copy of the contractor’s coverage in either electronic or hard copy form.
Personal liabilities that are not covered
- What happens when a visitor gets hurt on your property? In most cases, the policy will pay for her medical costs up to whatever coverage limits you purchase. If the injured person’s costs exceed your policy limits, however, you will be liable for the extra amount. You can purchase a separate umbrella liability policy to give you additional protection in this situation.
- If your dog bites someone, your homeowner’s policy will generally cover your personal liability unless the dog is a breed that’s dangerous and your policy specifically excludes it. Find out if your dog is covered when you buy the policy. Don’t hide the fact that you own an excluded breed from the insurer. If you do, you won’t have coverage if the dog bites someone, leaving you personally liable out of pocket. Your policy also could be canceled.
- Trampoline injuries are a major headache that homeowner policies often exclude. Insurance companies take a dim view of trampolines, perhaps because nearly a quarter-million trampoline injuries are treated annually.
- Pools. You can get a homeowner’s policy providing coverage, but your rates will be higher. Additionally, you must abide by local laws that require a fence, a self-closing and locking gate, and other requirements. Read your policy carefully regarding necessary safeguards and whether it excludes accidents involving a diving board. Don’t carry a minimum liability cap of $100,000. Instead, buy liability coverage of $300,000 or more. An umbrella policy might also be a good idea if there’s a pool on your property.
Be sure to ask questions when buying a homeowner’s policy to avoid painful surprises.