What Homeowners Insurance Doesn't Cover
Your homeowner’s insurance may not cover some common disasters and hazards
Homeowners insurance can save you thousands of dollars if you experience a fire, wind damage, burglary, or other mishap. Unfortunately, there are some common disasters and hazards that your homeowner’s insurance most likely will not cover, leaving you to either foot the bill entirely or seek out additional forms of coverage.
Floods and Earthquakes
While it may come as a surprise, floods and earthquakes are typically not covered by homeowner’s insurance. If you live in an area where flooding is a possibility (particularly in a designated flood zone1), it's smart to get flood insurance, which you can get from the National Flood Insurance Program or through some private insurance companies. Flood insurance will generally provide you with cash value coverage for possessions, as well as structural damage. Even if you are not in a designated flood zone, it can be a good idea to purchase flood insurance if you live near a creek or a steep hill, which could potentially send water and/or melted ice and snow your way.
Earthquake coverage is also a good idea if you live in an area prone to them, though deductibles tend to be higher in such areas. Like flood insurance, you may need to purchase this as a separate policy, though most insurance companies do offer it.
Be sure to check out the Insurance Information Institute's guide to which disasters are covered by homeowner’s insurance.2
Termites are another issue that can ruin your home, yet they are not likely to be covered by your homeowner’s insurance. These little insects can do a great deal of damage, especially if an infestation continues for any substantial length of time.
Insurance policies generally do not cover infestations because in their view, these are preventable issues that can be solved by maintenance. The best way to combat and/or prevent this threat is to invest in a pest control service. It's an extra cost, but could save you a great deal of money in the long run. At the very least, have regular termite inspections scheduled once every year or two.
Termites aren't the only living organism that can badly damage your home. Mold can do this as well, and with effects that can also badly damage the health of your family. Like termites, mold is unlikely to be covered by your homeowner’s insurance policy. Some policies do cover it, but these usually severely limit that coverage.
Insurance companies also tend to view mold as a maintenance issue that can be prevented, so your best weapon against it is to do just that. Get rid of leaks and moisture as quickly as possible to prevent mold from appearing and spreading.
Sewer and Pipe Issues
Sewer and pipe problems are also unlikely to be covered by your homeowner’s insurance policy. This is yet another potential catastrophe that can be guarded against by purchasing a separate policy. Sewer backups that lead to basement damage can cost you anywhere from $5,000 to more than $25,000.3 It's certainly not an issue to dismiss just because your homeowners’ insurance doesn't cover it.
You may be covered if you have a burst pipe, but even that is no guarantee. It could depend on how the burst occurred. If it's determined to be the homeowner's fault (which even a burst pipe because of freezing can be considered), you may still find yourself out of luck with regards to coverage.
Ultimately, it's a good idea to be prepared for any possible disaster or event that can damage your home, and all homeowners should know exactly what their insurance policies do and do not cover. If your existing policy doesn’t cover all possible contingencies, it may be time to check out supplemental coverage.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.