We were talking with a friend the other day. The topic of conversation quickly turned to a recent claim he had made on his homeowner’s insurance policy. The claim was rejected outright and the friend had been completely blind-sided by the denial. At that point, it occurred to me that there are indeed homeowners who don’t regularly and diligently pay close attention to stipulations of their existing policies. Then you have those frequent legislative moves. They cause certain exclusions to creep in from time to time. The industry always strives to maintain the delicate balance of affordability and profitability. We started by reviewing our own policy. Then, we took a brief survey of those we interact with on a day-to-day basis. Eventually, we compiled a list of 7 things frequently not covered by homeowners insurance.
What We Mean by Not Covered by Homeowners Insurance
In general, we say something is not covered by homeowners insurance when you receive no compensation for the property or parcel when the corresponding event occurs. You also have to deal with deductibles and policy limits. For now, we mostly want to focus on items that might specifically fall outside of what your insurance company pays for following a claim.
1. Home Office Equipment
Your standard policy may include some limited form of coverage for home office items. In most cases, it won’t carry enough value to replace items stolen or damaged as part of a larger claim. When running a business out of your home, that equipment should have its own business insurance. For example, your policy may allocate $1,000 towards business items. That hardly covers a laptop, monitor, external drive, copier, and other items that may be clearly designated for business use. Check your policy so you know your limitations. Then, consider getting separate insurance or a rider to ensure everything you need to have covered is taken care of.
2. Sewage to the Street/Municipal Lines
This is a big one. What if your sewage backs up due to a tree growing through a 4-inch pipe from your home to the street? Your homeowners insurance probably won’t cover that. It’s also not the responsibility of the local municipality until it reaches the easement and becomes part of their network.
Most problems occur from the house to the main line. This presents a significant issue, particularly on older homes built before PVC became more commonly used. These older homes used either Orangeburg pipe or tar impregnated wood fiber sewer pipe. These remain very susceptible to deformation and the encroachment of tree roots. Eventually, these pipes deteriorate and need to be replaced. The homeowner needs to pick up the tab for that kind of work.
3. Burst Pipes
Burst pipes in the home are, unfortunately, not uncommon. Your insurance almost definitely pays for repairs due to a leak occurring in the home. It won’t cover a flood from an external source. It also may not actually cover repairing the damaged pipes themselves.
What?!? That’s right. Most homeowners insurance policies do not cover normal wear and tear. After a burst event, they may posit that your old pipes simply deteriorated over time (as they are apt to do). In that case, they cover the damages, but not the labor and costs to replace the original piping. This includes when you find you need to re-plumb the entire home or a large portion of it.
On top of this, if the insurance company determines that poor drainage caused the water problem, your claim may be denied. Insurance considers drainage a maintenance (and thus non-covered) issue.
If you live in Florida, or as we like to call it: “a bunch of houses built on sand” (see Matthew 7:24-27 for the reference) you may have heard of the potential sinkhole issue. And by “issue” we mean the earth swallowing up part or all of your home like some much-starved leviathan stopping by an all-you-can-eat swimming pool party. Sinkholes clearly are not covered by homeowners insurance and nobody wants to touch those policies with a 100-foot pole.
Since Florida has an inordinate amount of potential for sinkholes. This occurs because the land sits atop thousands of pools of underground water. Also, the entire area basically served as swamp land before the 1900s. Consequently, this may be a concern for you.
A majority of sinkholes occur in the west-central part of the state, but all over this has been something that concerns a variety of homeowners. Statistically, I don’t really consider it a big deal, but last year the state’s legislature allowed insurance companies to exclude sinkhole coverage from policies. That created a bit of an uproar and presents a situation whereby you may have a big mess if your house slowly, or suddenly, begins to sink into the earth.
Note: Most policies include catastrophic ground cover collapse. However, this only comes into play when an abrupt loss of ground cover produces structural damage to a building and results in government condemnation of the insured structure and an order to vacate the premises. This type of damage would have to be incredibly severe. The coverage is largely catastrophic-only in nature and won’t come into play unless your home is virtually swallowed up, in part or in whole, by a sinkhole.
5. Flood Damage
Flood damage includes water damage from external, typically, natural sources such as an ocean, a lake, or a river. If you do not have separate flood insurance coverage and your home floods due to torrential rainfall or storm surge from a hurricane, you’re not going to be covered. At least, the insurance company will blame as much as possible on the flood waters.
Flood insurance is often very inexpensive and should indeed be purchased if your home is anywhere within a 100-year flood plain. You can actually go online at FEMA and search their map service center for Flood Maps of your area and address.
This may go without saying, but insect damage, and particularly from termites, is not covered by your homeowners insurance. Your best bet here is to keep your home treated (or tented every 5 years if you live in the south where dry wood termites are a nuisance).
7. Power Surges (not from Lightning)
A lightning strike is covered, but electrical surges from your power company are likely not. In addition, your insurance may exclude coverage for “electronic components or circuitry that are part of appliances,
fixtures, computers, home entertainment units or other types of
electronic apparatus” even if a lightning strike was responsible. Policies differ on what’s covered, under what conditions, and the limitations for liability and types of equipment. It’s best to just be sure you’re up to speed on your policy and know what’s covered and what’s not.
Filling the Gaps Not Covered by Homeowners Insurance
There are plenty of other things that you may discover are not covered by homeowners insurance. This can include pets, detached sheds, tools, expensive jewelry, and other items. The best advice is always to speak with your agent and consult a professional if you have any questions. This guide was designed to open your eyes, but it’s no substitute for meeting with your insurance agent or seeking even more specific information on your own (that’s code for “Don’t come whining to us if our information led you astray!”).