Things Your Homeowners Policy Doesn't Cover
By Melissa Gannon
Homeowners insurance is considered an all-risk policy, but there are several exceptions.
Following is an excerpt from TheStreet.com Ratings’ Consumer Guide to Homeowners Insurance explaining the many incidents a homeowners policy won’t cover.
TheStreet.com rates the financial strength of 900 homeowners insurers nationwide to help consumers find sound companies with whom to do business. State Farm and Allstate (Stock Quote: ALL) dominate the industry, but there are many companies in excellent financial shape that you should consider when you’re shopping for homeowners insurance. You can also go to TheStreet.com to look up your specific company.
You can read more about it in detail in the Consumer Guide, but to provide background on the information provided here, you should know that Coverage A is dwellings, Coverage B is other structures, Coverage C is personal propert, and Coverage D is loss of use.
Although the homeowners policy is considered an all-risk policy and will cover you for most losses you incur, there are some exclusions or causes that it won’t cover.
Coverage A and B
- Collapse – The collapse of your house is excluded unless the cause of loss is listed in the additional coverages section of your policy.
- Freezing – Freezing of plumbing, heating, or air conditioning systems is excluded if the heat has not been maintained while the building is vacant, unoccupied, or under construction.
- Flood – The most important thing to know is that your policy does NOT cover flood. You must purchase a separate policy to cover damage from a flood. Flood has been an excluded peril since 1968 when the government started the National Flood Insurance Program. Even if you don’t live in a designated flood zone, it is important to have flood insurance in the event of hurricanes or heavy rains. Also, premiums for flood insurance can be inexpensive depending upon your flood risk. You can purchase a flood policy through your homeowners insurer or find an agent through the flood program. Visit www.FloodSmart.gov to learn how the National Flood Insurance Program defines a flood and learn how much your annual flood insurance premium can cost.
- Foundations, Retaining Walls, and Nonbuilding Structures – Loss to these items (including fences, swimming pools, and docks) by freezing, thawing, pressure or weight of water or ice is not covered.
- Dwelling under Construction – Theft from a dwelling under construction is excluded. Theft of material is also excluded until the dwelling is finished.
- Vandalism and Malicious Mischief – This exclusion only applies if the building has been vacant for more than 30 consecutive days before the loss. (Vacant being empty and unfurnished and unoccupied being a furnished home where the residents are on vacation.)
- Mold, Fungus or Wet Rot - Loss caused by Mold, Fungus or Wet Rot is not covered if caused by a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixture or equipment. Please review your individual policy carefully in order to comprehend exactly what is covered.
- Risks of Direct Physical Loss Exclusion –The homeowners form insures your property against any loss as long as it isn’t excluded. This section lists some of the other specific causes that aren’t covered. Examples are: wear and tear, smog, birds, rodents, animals owned or kept by an insured, and settling.
- Concurrent Causation Exclusions – This section deals with more than one event causing a loss. The policy details how losses are handled when one cause is covered and another isn’t.
Coverage A, B, C and D
- Ordinance or Law – Loss from the enforcement of any law relating to the construction, repair, or demolition of a building. An endorsement can be added to the policy to add back this coverage.
- Earth Movement – This is to exclude damage from earthquakes and landslides. Earthquake coverage can be added back to the policy as an endorsement if you live in an area that may be prone to earthquakes.
- Water Damage – This is to exclude flood (which can be purchased separately) as well as sewer backup.
- Power Failure – This is to exclude claims for damaged food from power outages.
- Neglect – This encourages the insured to take reasonable steps to save endangered property.
- War – Damage to your home from war, declared or not is excluded.
Coverage E and F
- Expected or intended injury or damage – This section excludes intentional acts.
- Insured’s business – Any damage or injury that arises out of your business is excluded.
- Premises rented or held for rental – There is no coverage for liability arising from renting any part of your property to someone else.
- Professional services – This is similar to the business exclusion and excludes liability from providing or not providing professional services.
- Noninsured locations – Any location that is not listed on the policy as an insured location.
- Motor vehicles – Homeowners policies provide no coverage for liability arising from owning or using a motor or motorized vehicle. Not included in this definition are trailers, golf carts, garden tractor, or motorized wheelchair.
- Watercraft – The policy excludes any and all liability arising from owning and using a watercraft.
- Aircraft - The policy excludes any and all liability arising from owning and using an aircraft.
- War – There is no coverage for liability arising from war.
- Communicable disease – There is no liability coverage for infecting another person with a communicable disease.
- Abuse or sexual molestation – There is no liability coverage for damage arising out of abuse (physical or mental) or sexual molestation.
- Controlled substances – There is no liability coverage for damage arising out of the use, sale, etc. of a controlled substance.
- Home day care – Coverage is limited under section 1 (property) but and excluded in section 2 (liability) of the policy. There is usually an endorsement added to the policy that clarifies home day care as a business and thus excludes it. You would need separate coverage to protect yourself against potential liability as a home day care provider.
TheStreet.com Ratings issues financial strength ratings on each of the nation’s 4,000 life, health, annuity, and property/casualty insurers are available on the Insurers & HMOs Screener. In addition, the Financial Strength Ratings for 8,600 banks and savings and loans are available at no charge on the Banks & Thrifts Screener.
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