Buying your first home comes with quite a few surprises. While most buyers are prepared to sign up for homeowner’s insurance, they often overestimate their coverage. There are a number of unexpected things your homeowner’s insurance doesn’t cover, and in case of an emergency, you don’t want to be caught off guard. Here are some common events not included in your policy.
Earthquakes and Floods
Okay, so depending on where you live, earthquakes and floods might not be common, exactly, but it’s still worth pointing out.
Most natural disasters are indeed covered by your homeowner’s insurance—things like tornadoes or lightning strikes or even volcanic eruptions. Earthquakes and floods are usually a different story, as the Insurance Information Institute points out. In fact, here’s a handy chart they provide that details which disasters are indeed covered:
You can buy separate flood insurance from private carriers or from the National Flood Insurance Program. And if you live in a designated flood zone, flood insurance might be a requirement (You can find out if you’re in a flood zone using FEMA’s online flood map). Most insurance policies also include an addendum for earthquake insurance, unless you live in California. The California Earthquake Authority handles this type of insurance and it’s offered under a separate policy.
Mold and Termites
Mold and termites are pretty common issues homeowners face. Unfortunately, both are typically excluded from your policy for the same reason: they’re generally considered to be damage due to lack of maintenance. Most policies at least limit the coverage if they don’t fully exclude it.
You want to be extra vigilant about prevention. If you have any leaky pipes or flooding, for example, make sure to nip them in the bud and clean up completely to prevent mold from growing in the first place.
If you renovate to your home, you might even consider using mold-resistant drywall. Mold remediation company GTA Mold Removal explains:
Traditional drywall is composed of a gypsum plaster core pressed between plies of paper. Mold-resistant drywall is paperless — the gypsum core is covered in fiberglass, making the surface highly water-resistant. Moisture-resistant drywall is especially valuable in areas prone to wetness, such as bathrooms, laundry rooms, basements, and kitchens. Not only is traditional drywall more susceptible to mold than the paperless kind, but it is also difficult to rid of mold, and removal and replacement can be expensive. Mold-resistant gypsum board is also available; the core of the drywall is developed in such a way to prevent moisture absorption, and thus prevent mold growth.
To prevent termites, get your home inspected by a professional periodically. Most experts suggest checking every couple of years. Once the termites spread, they can cause some major structural damage, and that can cost upwards of thousands of dollars to treat and fix. Catch them early, and you can limit the damage.
Sewer Backups and Burst Pipes
Your standard insurance policy probably doesn’t cover sewer backups (but you can purchase it separately for about $50 extra a year). However, most standard policies will cover your expenses if you have to live somewhere else because your home is uninhabitable. The Insurance Information Institute reports:
For homes that have been severely damaged and are uninhabitable, homeowners policies may provide Loss of Use coverage, which provides reimbursement for lodging, food and other living expenses you may incur as a result of having to live outside of your home. Loss of Use coverage also reimburses you for the lost rental income if you rent out part of the house.
Burst pipes, on the other hand, are often covered by your standard policy. However, if your insurance company determines the damage was due to your own negligence, they might not cover you. For example, if your home had a slow leak and you put off fixing it, the insurance company may consider that negligence. Similarly, this is why it’s also important to keep pipes from freezing in the winter and protect them while you travel. If your pipes burst and the insurance company determines you didn’t take proper care of them, you may be out of luck.
Home Office Hazards
Maybe you have a bedroom you use for a home office, or a converted garage used for conducting business. Whatever your home office looks like, don’t expect your homeowner’s policy to cover your business expenses. Bankrate explains:
If your inventory catches fire in the garage, forget about it. Unless you have home business insurance that specifically covers your home-based business, you’re on your own.
If an individual is running a business out of their home, they can’t rely on a
homeowners
policy to provide coverage,” says Jeff Olmstead, assistant vice president for small commercial underwriting at
The Hartford
insurance company.
Your insurance probably covers and damage or issues to the home itself, but you’ll generally need separate business insurance to cover your work-related expenses. Some policies do offer a “business endorsement,” though. For an extra $25-$50 a year, you can get coverage for things like your computer or perhaps even slip-and-fall liability coverage, Bankrate adds.
Some Liability Issues
Let’s say your seemingly harmless German Shepherd nips the Amazon delivery guy, and now he needs stitches. It happens: according to the insurance information Institute, dog bites account for more than one-third of all homeowners insurance claims. Problem is, some policies exclude certain dog breeds, which means you’re liable for any dog bite issues and claims. Get familiar with your policy and see if your dog is covered. If not, you’ll want to be extra mindful about his or her behavior.
Trampolines, treehouses, and pools are other tricky areas. Some policies specifically exclude injuries from trampolines, and while injuries from pools are usually covered, the policy probably has some fine print involved. For example, in some cases, if you have a diving board installed, the coverage is null. The same goes for treehouses. They’re considered high-risk structures, so a lot of policies exclude them or at least include details about how they should be installed. You definitely want to read your policy and see what’s covered if you have any of these items in your home.
That’s a good general rule for all of these, though. Standard homeowner’s insurance certainly doesn’t cover everything. When you know what is and isn’t included, you’ll be better prepared and you can plan accordingly.