The homeowners insurance policy is complex. It is not unusual for the average person to not know every detail of their home insurance policy. Even insurance professionals have to look at the policy from time to time to confirm their beliefs. Homeowners insurance is a must-have for homeowners who want to protect their investment. It is usually required if you have a mortgage. An HO-2 policy is a named-peril plan that protects you from 16 specific perils, while an HO-3 protects you from all perils except those specifically excluded in the policy.
There are some common misconceptions of what is covered with a homeowners insurance policy that can have some serious consequences. We have assembled a list of 12 major exclusions to your homeowners insurance policy.
Many homeowners don’t understand that flood insurance is not part of the standard homeowners insurance policy. Flood insurance policies are separate policies from your homeowners insurance policy. What exactly constitutes a flood? Many people only think of floods as major events that can wipe out entire neighborhoods. Small events of rising water can be construed as a flood event by your policy and will not be covered. These can include sewer back-ups or water that seeps through the foundation. You should read your policy’s definition of what constitutes a flood and think about the possibility that such an event can affect your home.
Earth movement of any nature is excluded from your homeowners insurance policy. This includes earthquakes, shockwaves, sinkholes, landslides and mudflows. Earthquake coverage is generally procured with a separate policy. In addition to earthquakes, the policy excludes all costs to repair land that has subsided or is unstable. This can undermine your entire house but it is not normally covered in the policy.
Any damage to your home as a result of military action is not covered by the policy, regardless of whether the damage if from an declared or undeclared war. If a nuclear weapon goes off accidentally, it is considered to be a warlike action and will also be excluded. You are just out of luck in these situations.
Wear and Tear
Just like your car, your house experiences normal and expected deterioration. This is an inevitable part of owning a house. Insurance is only designed to protect against unforeseen losses, which does not include wear and tear. Regular maintenance of your home is your responsibility.
Homeowners insurance policy does not cover loss or damage from nuclear reaction or radiation or radioactive contamination, except that ensuing fire is explicitly covered.
Ordinance or Law
The policy covers the building as it exists, but it does not cover the cost to upgrade the building to current building codes and ordinances after a loss. This includes demolition or construction required to bring your house up to code.
Your homeowners insurance policy does not cover physical damage losses which result from any governmental seizure or destruction, except when the destruction is to prevent the spread of fire.
This one seems pretty obvious. If you burn your house down intentionally, you really shouldn't expect the insurance company to pay to rebuild your home. Anything you do to intentionally cause a loss will not be covered by your policy.
Maintenance or Workmanship Issues
A homeowners insurance policy is not a home maintenance or home warranty policy. Damage as a result of a lack of maintenance or poor workmanship is considered to be within your control and is not covered. You must take the necessary steps to maintain and protect your home. Certainly you should not expect your home insurance policy to cover these damages.
There are a few events and incidents that the insurance industry has declared "fundamentally uninsurable". Terrorist acts—events involving the use of biological, chemical, nuclear, or radioactive weapons--are one of them.
Insurance companies don't view trampolines as harmless pieces of play equipment. Many companies will not cover trampoline-related injuries. Some will withhold coverage entirely if you have one on your property.
Injuries caused by certain breed of dogs
When it comes to homeowners insurance, all dogs are not treated equally. Some insurers won't cover injuries by certain high-risk breeds.
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