Whether you just started gathering quotes for your first home insurance policy or have had homeowners insurance coverage for years, it can be helpful to understand what your policy covers and what it does not cover. Homeowners insurance exclusions are relatively common.
When you understand what situations are covered by your home insurance policy, you may be able to identify potential coverage gaps. This might allow you to take steps to obtain coverage for scenarios excluded by your standard homeowners insurance policy. Planning for the unexpected, including understanding your home insurance exclusions, might help to protect your finances in the event of a disaster.
Home insurance exclusions
Although the coverages provided by home insurance companies vary, there are several instances that are generally not covered by a standard home insurance policy. To get coverage for these often-excluded situations, you may need to add an endorsement or purchase an entirely separate policy.
Here are some of the most common home insurance exclusions — and what you can do to get coverage.
Damage caused by floods is almost always a homeowners exclusion. Flood damage is a very common HO-3 policy exclusion, but even homeowners with HO-5 policies, which provide broader coverage than HO-3 policies, are likely not covered for flood damage.
That could be a serious problem if you live in a flood-prone area since flood damage can be very expensive — just an inch of water could cause $25,000 of damage. Although homeowners in flood plains may be aware of the need for flood insurance, flooding can happen anywhere.
To get coverage for flood damage, you will need to purchase a separate flood insurance policy.
Earthquakes and earth movement
Just like flood damage, damage caused by earth movement is a common homeowners insurance exclusion. The excluded causes of loss typically include earthquakes, landslides and mudflows. Because earthquakes can cause devastating amounts of damage, you may want to consider purchasing coverage, particularly if you live in an earthquake-prone area like California.
Depending on where you live and how common earthquakes and earth movement are, you may be able to get earthquake coverage by adding an endorsement to your home policy. If you live in a particularly earthquake-prone area, you may need to purchase a separate earthquake insurance policy.
If you own a home, you are likely going to have to do some maintenance work at some point. This could include repairing an appliance or updating your plumbing or electrical systems. These types of repairs are often considered maintenance and home insurance almost never covers them.
Being proactive about your home maintenance could help you to solve problems before they become catastrophic. You may want to consider setting aside a portion of money for home maintenance, so that you have the funds to cover the costs when an issue arises. If you have concerns about being able to afford the cost of keeping up your home, you can also explore purchasing a home warranty.
Almost all homeowners policies exclude infestations of vermin, including insects and rodents. Whether your home is affected by termites, bedbugs or mice, your home insurance coverage is not likely to cover the eradication and remediation costs.
There is not often an endorsement or separate policy that you can purchase to gain insurance coverage for these types of losses. However, a pest control company may offer a warranty for a certain length of time after your house is treated for an infestation.
While your home policy likely has liability insurance in case someone gets injured at your home, the coverage does not typically extend to a home-based business. If a client slips and falls while visiting your home office, your home insurance most likely will not cover the resulting medical expenses or any legal fees or settlements should that individual decide to sue. Similarly, most home insurance policies have a limit on the amount of business personal property coverage you have, and some policies may exclude coverage entirely. If your work laptop is stolen while you are working from home, you may have limited or no coverage.
If you own a home-based business or if you work from home, you may be able to add a certain level of coverage to your home insurance policy. If your business is more extensive, you may need a separate business policy for coverage.
In most cases, mold is a home insurance exclusion unless the mold resulted from a covered peril. For example, if a storm breaks your window and the resulting water damage causes mold, you may have coverage for the mold remediation. But for mold that develops slowly or for which you cannot identify a cause, you will likely need to pay for any necessary treatment and repairs out of pocket. You may be able to increase the level of mold coverage on your home policy, but this option differs by company.
The full cost of high-value items
While homeowners insurance may offer some coverage for your pricier personal property like jewelry, art and collectibles, most policies cap the payout at a certain dollar amount, like $1,500 for all of your jewelry.
If you have more expensive possessions like high-value jewelry, you may want to ask your home insurance company if they offer endorsements for high-value items. These policy riders generally list the expensive items individually and often cover them for their full replacement value. The endorsement may have a lower deductible than your home insurance policy or no deductible at all. Your company might also offer this coverage on a standalone policy.
Insurance companies and home insurance exclusions
While there are many home insurance exclusions that are standard for most companies, each insurance company is different, as is each insurance policy. Reviewing your coverage and talking to your insurer about your specific policy may help you identify if you need additional coverage.
Frequently asked questions
Why are some damages excluded from home insurance?
Homeowners insurance is designed to protect your finances against sudden and accidental damage, like storm damage or someone falling and hurting themselves. Certain exclusions fall outside of the spectrum of sudden or accidental. Pests and mold, for example, typically take a period of time to develop into a problem. Other exclusions, like floods or earthquakes, can cause such catastrophic damage that they warrant their own rating metrics separate from a home insurance policy. Excluding these coverages under standard home insurance policies may help insurance companies offer cheaper standard coverage.
How do I know what my policy excludes?
The exclusions of your insurance policy should be in your paperwork. You can also talk to your company or agent to get a better sense of what is excluded. Although there are often standard homeowners insurance exclusions, and many exclusions depend on the type of policy you have, your exclusions could also depend on your insurance company, your location and your specific situation. For example, some home policies can be amended to exclude coverage for your roof if it is in especially poor shape.
Do all home insurance policies have the same exclusions?
Many home insurance policies have common exclusions, including flood and earthquake coverage. However, all companies are different. Some companies may include typically excluded coverages. Additionally, some companies could have exclusions that are relatively rare in the industry. Talking to your agent about your specific policy could help you better understand what your policy does and does not cover.