According to a survey, 86% of Americans said that they fully understand the insurance coverage they have taken. However, they responded incorrectly or were unsure about specifics when their knowledge was tested. While all insurance policies contain a list of inclusions and exclusions from coverage, most insurance buyers overlook it. Then, it’s too late to rectify the consequences.
If you have an insurance policy, check out 12 home hazards it might not cover.
Flooding
Flooding is the most expensive disaster in the United States, causing average annual damages worth $4 billion. Yet, a standard homeowners policy excludes flooding damages due to rain, underground water, sewer, and sump pump backups. Unfortunately, 56% of Americans are not aware of this fact.
It would be best to take separate flood insurance from government or private insurers to cover the building, its contents, or both. It is recommended that people living in a high-risk flood-prone area should buy this policy. Water backup insurance against drain, sump pump, or sewer failure is add-on coverage available on a home insurance policy.
Earth Movements
Earth movements refer to earthquakes, land tremors, sinkholes, and landslides. You can’t claim losses due to these earth movements from a standard policy.
You can avail of earthquake insurance as an endorsement or a standalone policy. It typically covers the house, structures attached or not attached to the house, and personal property. Alternatively, you can buy a ‘Difference in Conditions’ policy, which provides all-in-one coverage for earthquakes, landslides, floods, and mudflows. Sinkhole insurance will allow you to raise a claim for structural damages and loss of personal belongings.
Wear and Tear/Renovations
70%of Americans are unaware that a standard homeowners policy excludes compensation for installing materials or fixtures during renovations. Remodeling projects are often subject to claim restrictions from insurance companies. For example, the policy does not cover maintenance of a leaking roof due to wear and tear. However, the insurance policy may reimburse the cost if the leakage is due to a hurricane.
When you renew the existing policy or buy a new one, ensure it accounts for your home’s rebuild value.
Acts of War
Your insurance policy has a war exclusion cause. It prevents you from claiming damages to your home due to declared or undeclared civil/nuclear war. A war can create massive and unpredictable destruction in the country. It is unworkable for insurance companies to anticipate or predefine war risks. The claims can amount to billions and can bankrupt the insurers.
Nuclear Hazards
Insurance companies exclude damages to your home in case of a nuclear meltdown or radiation leak. However, under the Price-Anderson Act, the government protects the public from personal injury and property damage due to nuclear accidents. It holds atomic power plant operators liable for nuclear hazards.
Government Actions
A government entity is authorized to confiscate your property or demolish your home in part or whole. While such an action can cause you distress, unfortunately, there is not much you can do about it. Your home insurance doesn’t protect you against repairs or replacements owing to government actions.
Mold
A standard policy may or may not cover mold. The determination of mold damage is tricky from an insurance perspective. Some insurers reject the repayment for mold remediation arising from poorly neglected water leakage in an aging house. However, if mold appears from a pipe burst after a storm, you may be lucky to get reimbursement.
Moisture control and routine mold cleanups are the best preventive actions to avoid financial losses.
Pet Damage
A pet, especially that of a dangerous or aggressive breed, represents a risk to human lives and property. Insurance companies provide limited coverage against pet damages. For instance, dog breeds such as German Shepherd, Pit Bull Terrier, Doberman Pinscher, and Rottweiler are ineligible for insurance.
Hence, if you own a furry companion, consider pet-specific endorsements while investing in home insurance.
Pest Infestations
Most insurance companies deny explicitly including losses due to termites, rodents, and other pests. They contend that pest infestations result from homeowner negligence.
Pest damage may be covered in unexpected circumstances, such as pests entering your home after a natural disaster like a storm. Another exceptional circumstance for claim eligibility is when a rodent, such as a mouse, chews through a wire, causing an electrical fire.
Tree Damage
Tree damage reimbursements are subject to terms and conditions in insurance. The policy doesn’t cover the cost of removing fallen or dead trees due to rot, age, flood, or earthquake. However, you can claim compensation for structural damages to your property if a tree falls due to hail, storms, snow and ice, or lightning-induced fire.
Intentional Damage by Residents
Vandalism or malicious mischief by people other than residents of a home falls under the scope of home insurance. You can file a claim for the damages to your property for such acts.
However, intentional acts committed by you or your family members do not qualify for insurance claims. For example, if your spouse breaks the television in a fit of anger, it is considered intentional damage.
Home-Based Business
The standard home insurance policy excludes liability coverage if you are a home-based business owner. For example, you will pay medical expenses or legal settlements from your pocket if your client has an accidental fall at your home. Buying a standalone home-based business insurance policy is recommended to safeguard from such scenarios.