Home insurance is a must-have for homeowners who want to protect their investment, and it’s usually required if you have a mortgage. But having home insurance doesn’t mean you’re covered against all problems that can damage your house or drain your savings.
What is and isn’t covered depends on your policy type. An HO-2 policy, for instance, is a “named-peril” plan that protects you against 16 specific issues, while an HO-3 or HO-5 policy will cover more problems but at a higher cost.
But even the best policies won’t compensate you for everything. Here are nine things most homeowners insurance policies won’t cover.
1. Ground movement
Earthquakes, landslides and sinkholes aren’t covered under home insurance — with an exception for the latter in Florida and Tennessee, where insurers must offer optional sinkhole protection. Aside from that, you’ll need separate policies for these disasters. Your insurer should be able to help you find companies in your area that offer earthquake, sinkhole or “difference in conditions” (which covers landslides) policies.
Floods — like those from overflowing rivers or torrential rain — are not covered by home insurance. For that, look into buying flood insurance. Your home insurer may offer water backup coverage, which covers certain overflow and sewage issues. However, burst pipes are generally covered — for example, if the water pipe behind your washing machine bursts and spews water.
Home insurers won’t pay to fix mold damage if it’s caused by water associated with long-term leaks, poor home maintenance, construction defects or naturally occurring floods. However, your standard policy may cover repairs if the mold stems from a sudden leak in your plumbing, as long as you take action to fix the problem right away.
4. Wear and tear
Home insurance is meant for sudden or accidental problems such as storms, burglaries and fires — but not as a cure-all for general wear and tear. You’re expected to perform basic maintenance to keep your home from slipping into disrepair. Maintaining your home’s roof and exterior, replacing worn-out flooring and tending to slow-leaking pipes are examples of things you should handle yourself over time.
Bedbugs, termites, mice and other vermin are typically excluded from home insurance for the same reason wear and tear isn’t covered. As far as your insurer is concerned, ridding your place of infestations and fixing the damage left behind is simply part of maintaining your home. Rats.
6. Nuclear hazards
Home insurance doesn’t provide coverage for nuclear accidents. Fortunately, you’re unlikely to need it. Nuclear power companies are required to provide their own liability insurance to cover damages if you live inside the affected area of a hazard.
7. Government action
Acts of public authorities are not your insurer’s problem. If the government confiscates your belongings, for instance, or condemns your home and takes over the land, your policy won’t cover the cost to repair or replace your property.
8. Dangerous or aggressive dogs
Our canine pals occupy an interesting and sometimes confusing position within home insurance. Dog bites account for more than one-third of liability claims, according to the Insurance Information Institute, making it seem like dog-bite lawsuits against you are covered by insurance. Yet certain aggressive or dangerous dogs may not be covered and could even prevent you from getting approved for a policy. Some companies blacklist breeds that are known for inflicting severe injuries, such as pit bulls, Rottweilers and wolf hybrids. Other insurers, such as State Farm, won’t deny coverage based on breed alone but will look at an individual dog’s history of aggression.
Always tell your insurer if you own a dog. And if you own a potentially dangerous dog, you may get leeway if you use training and socialization to improve its behavior to a level your insurer is satisfied with.
9. Wind damage in hurricane-prone states
If you live along the Atlantic or Gulf coasts, where hurricane risk is highest, you may need to buy separate windstorm insurance. Even if wind coverage is included in your home insurance policy, wind damage can cost you. In 19 states and the District of Columbia, insurers charge a special wind deductible. Instead of a dollar amount, these deductibles are calculated as a percentage of your home’s insured value, usually between 1% and 5%.
This can really add up. For example, if your home is insured for $500,000 and you have a 5% wind deductible, your insurer will cut $25,000 from your claim payment. Not all companies allow you to select your deductible percentage, but if yours does, going low at 1% or 2% can make a big difference if you ever have a claim.
Remember to read your home insurance policy thoroughly. You don’t want to find out too late that a problem isn’t covered.
If you already have coverage, talk to your insurer about potential problems that aren’t covered by your policy that concern you. You may be able to add endorsements — add-ons that will cost extra — to get more protection. At the very least, your insurance company can point you toward the coverage you need elsewhere.
Alex Glenn is a staff writer at NerdWallet, a consumer finance site. Email: [email protected].
This post was updated. It was originally published Sept. 27, 2013.