Homeowners insurance is designed to financially protect the home and its contents in the case of a disaster or accident. Think of it as an investment (but one with restrictions).
It’s essential to understand the limitations and exclusions that homeowners insurance policies have. By understanding what is excluded before the worst happens, homeowners can make informed decisions about insurance coverage options and ensure adequate protection in the event of a loss or damage.
What does home insurance not cover
A home insurance policy provides financial protection against losses and damages (whether due to accident, disaster or theft) to the home and personal belongings. Home insurance typically covers the dwelling itself, other structures on the premises (like detached garages, sheds, or fences), personal property, loss of use, liability and medical payments.
So now that we know what is included in home insurance, you might be asking: what does homeowners insurance not cover?
Read on to learn more about these threats to your home and what you can do to mitigate risks.
Outside water damage
When we hear “water damage,” we tend to think of flooding or a burst pipe. While a burst pipe may be covered (depending on the cause), outside water damage is typically not covered.
Outside water damage refers to damage caused by water from outside the property, such as heavy rain, flooding, or overflowing bodies of water. This type of damage can result in foundational issues, leaks, and mold.
Homeowners insurance does cover water damage, but only if it's caused by a covered peril. If you have a leaky faucet and it causes a flood in your home, that coverage will apply. But if you live on a floodplain, you may be paying out-of-pocket when it comes to water damage.
Flooding
Standard homeowners insurance policies do not cover damage caused by “acts of god” such as flooding.
According to the National Flood Insurance Program (NFIP), 90% of all natural disasters involve flooding.1 But don’t worry; if you live in an area that is prone to flooding, you’re not out of luck. Flood insurance policies are provided by the NFIP and are available to homeowners who live in areas designated as high-risk flood zones.
Protecting against water damage
As homeowners, it is imperative to take steps to protect your home from outside water damage. The last thing you want to worry about is destruction of your property (or how to pay for the damage) when it could have been prevented.
Some steps you can take to mitigate or even prevent water damage include:
-
Ensure your property is draining appropriately with proper grading
-
Monitor your landscape for sinking
-
Check and clean gutters regularly
Earthquakes and landslides
Earthquakes are another natural disaster not covered by standard homeowners insurance policies. They can cause significant damage to homes, including cracks in the foundation, damaged walls, and broken windows—or in the worst cases, a complete loss.
Seismic events can be hard to predict and can take place at any time, which is why it's important to obtain earthquake coverage if you live in a designated earthquake zone. Earthquake coverage must be purchased as either an endorsement (if offered by your provider) or as a stand-alone policy.
Landslides
Although you might consider a landslide seismic activity or an earth movement, your insurer likely does not. Landslides are typically caused by water accumulation and/or erosion of the landscape, and are therefore considered—you guessed it—an act of god.2
Maintenance issues
Homeowners insurance policies also don’t cover damage caused by normal wear and tear, or in other words, maintenance. For example, if the roof of your home needs to be replaced due to its age, it would not be covered by homeowners insurance.
Similarly, if your appliances or other personal belongings become worn out due to regular use, homeowners insurance would not cover the replacement costs.
Infestations
One common exclusion that is often overlooked is infestations, such as termites, rodents, or other pests. Infestations can cause significant damage to a home, weakening the structure of the home, compromising insulation and wiring, and causing odors and unsanitary conditions.
While some policies may offer limited coverage in the event of damage caused by pests—such as holes in the walls or ruined insulation—homeowners who are faced with an infestation will likely have to pay out of pocket to have the problem resolved. Pest infestations are typically considered the homeowner's responsibility, as they are considered preventable with proper maintenance and inspections.
Dog Restrictions
When it comes to homeowners insurance, owning a dog is an important consideration that might catch you off guard.
Insurance providers often have dog breed restrictions in place due to expensive liability claims. According to the Insurance Information Institute, the average dog bite claim in 2020 amounted to a staggering $50,245.3 Luckily, there are insurance providers like Openly, who offer policies without dog breed restrictions.
However, even if your provider does not have breed restrictions, insurers may choose to limit coverage based on the dog’s individual history.
If the dog is considered a “dangerous dog”—meaning, it has caused an injury or poses a risk of injury to others—any incidents involving your dog will likely not be covered and you may be responsible for any damages.4
To ensure that you, your guests, and your pet are protected, it’s important to pay close attention to any clauses regarding dog ownership in your policy.
Power surges or outages
Power surges and outages are caused by a sudden spike in electricity and can instantly destroy or damage electronics, appliances, and wiring. They are also, unfortunately, not covered by homeowners insurance. If there is a lightning strike or other power-related emergency at home, it's up to the homeowner to fix the damage.
Preparing for and preventing power surges
Fortunately, there are things homeowners can do to protect against these types of losses:
-
Inventory personal items to ensure appropriate replacement coverage has been secured
-
Use surge protectors on electronic devices like televisions and computers
-
Track how long it takes for lights and appliances to turn back on after an outage
High-value items
Homeowners insurance policies often have limits on the amount of coverage included for high-value items, such as jewelry, artwork, and collectibles.
To protect high-value items, it is important to discuss your needs with your insurance agent and to purchase additional coverage for these items. This coverage is often referred to as "scheduled items" and provides coverage for items not adequately covered by standard homeowners insurance policies.
Insurance companies may require documentation of the value of high-value items, such as appraisals or receipts, in order to provide adequate compensation in the event of a loss or damage. It may be worth looking into a carrier that provides blanket coverage (additional protection under a predetermined limit) to reduce the number of appraisals required.
What does homeowners insurance cover?
Homeowners insurance typically covers damages to the home and personal property from perils specifically included—or specifically excluded in you policy—like theft or fire, liability for injuries on the property, and some living expenses if the home is uninhabitable. Your policy will spell out the coverage limits, and conditions, for filing insurance claims.
Home insurance policies distinguish between dwelling protection, personal property coverage, and liability coverage, ensuring homeowners can recover from a covered loss.
Avoid surprises: know before you buy
Homeowners insurance is not a comprehensive policy. It covers your home, but not everything inside it. By understanding the exclusions and limitations of your homeowners insurance policy, you can make informed decisions about your insurance coverage and ensure that you have adequate protection in the event of a loss or damage.
If you are unsure about the coverage provided by your homeowners insurance policy, it is recommended that you speak with your home insurance agent to discuss your insurance needs and to ensure that you have adequate coverage.
Frequently asked questions
Q. How do homeowners insurance policies address flood damage?
A. Homeowners should be aware that standard policies typically do not include coverage for flood damage. For protection against floods, supplementing your homeowners insurance policy with a separate flood insurance policy, especially if situated in a flood-prone zone, is advisable.
Q. Can personal property receive full coverage under homeowners insurance?
A. While homeowners policies offer personal property coverage, high-value items may exceed standard limits. It's recommended that homeowners assess personal property coverage specifics in their policy, or consider additional endorsements such as blanket or scheduled items coverage to maintain comprehensive protection.
Q. How does liability coverage under homeowners insurance protect homeowners?
A. Liability coverage is a an important part of homeowners insurance, providing protection for claims for filed against the homeowner for bodily injury or property damage inflicted on others, including legal costs (up to the policy's coverage limit).
*We provide this information to help you understand insurance. Any coverage is subject to the terms of your policy. Please refer to your policy and declaration page for complete coverage details.
1 Insurance Information Institute. Spotlight on: Flood insurance. 6 December 2022. Accessed 6 February 2023. https://www.iii.org/article/spotlight-on-flood-insurance
2 Insurance Information Institute. Insurance for landslides and mudflow. Accessed 6 February 2023. https://www.iii.org/article/insurance-for-landslides-and-mudflow/spotlight-on-flood-insurance
3 Ed Leefeldt. Dog Breeds Banned By Home Insurance Companies. October 15, 2022. Accessed 27 February 2023. https://www.forbes.com/advisor/homeowners-insurance/banned-dog-breed-lists/
4 Charlotte Walden. State dangerous dog laws. Michigan State University Animal Legal & Historical Center. 2019. Accessed 9 February 2023. http://www.animallaw.info/topic/state-dangerous-dog-laws
