What Home Insurance Does Not Cover
While having a homeowners insurance policy can cover you against a wide variety of expensive scenarios, there are several exclusions you may not realize. Whether you’re in the market for a new home insurance policy or you just want to be better prepared in case you need to file a claim, it’s a good idea to learn more about the most common things your policy won’t cover.
Earth Movements
If you live in a part of the country that experiences regular seismic activity, you’ve probably already looked into your earthquake coverage options. In addition to earthquakes, many policies won’t cover other types of earth moments. These can include shockwaves, sinkholes and mudslides.
Coverage Tip: If you’ve recently moved to a new area, remember to look into the types of earth movements that are most common. It’s always better to have insurance against a possible earthquake or mudslide than to attempt to deal with the costly destruction without it.
Floods
Floods and water damage can be one of the more confusing aspects of homeowners insurance coverage because it doesn’t always seem to make sense on the surface. For instance, your typical policy wouldn’t cover you if a powerful storm flooded your area and damaged your home, but it most likely would still cover you if your icemaker broke and flooded your home with 20,000 gallons of water while you were at the office. Water damage from water and sewer line backups may also be excluded.
Coverage Tip: Depending on where you live, you may have the ability to purchase flood insurance. While this type of insurance policy is rarely cheap, it can provide valuable financial assistance if your home sits on low ground with the potential for flooding.
Home Businesses
If you’ve recently started a business out of an extra room in your home, you may be surprised to discover that your homeowners insurance policy excludes business equipment, inventory and supplies during the claims process. Since this exclusion can often extend to any computer equipment you use jointly for business and personal purposes, you may want to look into a home office insurance policy.
Coverage Tip: The liability portion of your home insurance also won’t extend to your home business, whether the injury happens within your home or not. If clients occasionally must come to your home for business purposes and they injure themselves while on your property, you could be out the money for their medical bills.
Valuable Possessions
To a degree, your regular homeowners insurance policy will cover the valuables within your home under the personal property coverage limit. Not only are you out of luck if you have $30,000 worth of valuables that are destroyed in a fire and your personal property limit is $20,000, but there could also be limits for specific items as well. If you collect rare works of art or priceless gems, you’ll need a separate insurance policy to fully protect them.
Coverage Tip: If you have a relatively expensive diamond engagement ring that your insurer tells you your home insurance policy will cover, consider having it appraised. That will help ensure you and your insurer are both on the same page about its value.