Homeowner’s Insurance: Exclusions You Need to Know
Congratulations on your new home. Buying a home is never something to enter lightly. There are many legal issues to consider, such as the real estate contract, insurance needs, and the mortgage contract. Here, we will focus mostly on the homeowner’s insurance policy and the exclusions for which you may or may not be familiar.
While homeowner’s insurance is necessary, especially if you have a mortgage, and extremely helpful in helping you cover major issues as they occur with your home, there are exclusions. Some of the exclusions are expected. However, some are unexpected and can catch you off-guard if you are not prepared.
A typical homeowner’s insurance policy will not cover floods caused by natural disasters, weather, or outside elements. This is where it can be a little confusing. If a sewer line breaks outside of your home and your yard and basement gets flooded, you will have to pay out of pocket for the repairs, unless you have flood insurance. If there is a hurricane or simply a horrible rain storm that causes flooding in your home, you will only receive coverage for the repairs if you have flood insurance. However, if your water pipe bursts inside your ceiling and the walls and home are water damaged as a result, your homeowner’s coverage should help cover the repair costs. While this is considered a flood by normal definition, it is considered water damage by the insurance definition and would be covered.
- Natural Disasters
Natural disasters (or acts of God) are typically not covered by homeowner’s insurance. This includes things like flooding due to hurricanes, hurricane damage, earthquakes, mudslides, or other types of natural disasters. If you live in a zone in which any one of these disasters is fairly common, you may typically purchase a policy or rider that will cover damage as a result of a natural disaster.
- Damage to Equipment for Your Business
Running a business in your home does not mean that your business is covered by your homeowner’s insurance. Any business, whether the office is in your home or at a separate location, should have its own coverage for damage to equipment and other business issues. Therefore, your homeowner’s policy will not cover the damage to any business equipment that is damaged within the confines of your home.
- Acts of War
This exclusion may seem a bit odd. However, it is always good to know that it exists. When your home is damaged as the result of an act of war, your homeowner’s insurance will not cover the repairs necessary to restore your home. Acts of war include things like a bombing, gunfire, fire, or any other damage caused to your home as the result of declared or undeclared warfare. The incident must occur during a time in which war fought near your home.
- Acts of Neglect
This is another gray area in which many homeowners will make assumptions that are simply untrue. When you own a home, there are certain expectations put in place by your insurance company. This includes taking care of an issue before it becomes a larger issue. For instance, if you know you have a small leak in a pipe in your home, choosing to ignore that leak until the pipe bursts, can be considered an act of neglect. Your homeowner’s insurance will not cover the damage caused by this type of neglect. You are responsible for taking care of any issues that may arise before they become a larger problem. The key is, a reasonable person must have been able to know warning signs were occurring prior to the damage being done. If a reasonable person could have seen a repair was needed before a larger occurrence, then the insurance company will deny the claim.
This exclusion should be common sense. However, it is important to discuss it and its implications. An act of fraud, or an intentional act against the home, will never be covered by your homeowner’s insurance policy. This is one instance where no rider will help cover the damage. For example, if you purposely set fire to your home for the insurance money, your insurance will not pay the claim. Typically, these types of claims involve an investigation to determine the cause of the damage. Upon the results of the investigation, the insurance company will decide whether they believe the damage was the result of fraud or intentional actions or was a pure accident.
To learn more about homeowner’s insurance exclusions, contact the experts at Demont Insurance Agency at (850) 942-7760. Our licensed insurance experts will be happy to answer any questions you have.