Covered or Not? Home Insurance Exclusions
Posted on Mon, Apr 04, 2011
If you're like most people, your home is not just where you live - it's also your greatest asset. That's why you want to be sure that it is adequately protected with the right home insurance. No matter what type of home insurance policy you buy, there's a list of common "perils" that most insurance companies will not cover.
There are several different types of home insurance policies. These vary by whether you own a home, condo, or if you rent. The various policies provide different levels of coverage.
Are you familiar with the exclusions listed in your home insurance policy? Test your knowledge of which scenarios are covered in your policy.
Q: Are you covered for a flooded basement that destroys many of your belongings?
A: No. For protection against floods, you'll need flood insurance. Also, water coming into your home from backed-up sewers is typically excluded, but you can purchase optional coverage to protect yourself from this.
Q: One of your appliances catches fire and causes your hot water heater to explode. Are you covered?
A: Yes, you're covered. This is an instance of what insurance companies call a "sudden and accidental loss."
Q: What if you need modifications due to a building code upgrade or change?
A: A standard home insurance policy typically pays only for what you originally insured, with a small amount built in for building code upgrades (typically 10% of your dwelling coverage) for a covered loss.
Q: I'm running a small business from my home. Is my computer and office equipment covered?
A: If you run a business out of your home, you should be insured separately. A simple home office might require only an endorsement to a home insurance policy, but a hair salon, day care or construction business poses greater potential liability and requires a separate business insurance policy. Read more about insuring home-based businesses.
Q: Suppose lightning strikes a power line leading into your home. Are your damaged possessions covered?
A: Yes, damage caused by lightning — such as fire or damage to electronics from a surge — is covered.
Q: Are you covered if your house slides down a cliff?
A: No. If you build or buy a house on a cliff, be aware of the risks involved. Your standard home insurance policy won't pay if your house slides down because of a landslide, erosion or any other reason. Your best bet is to check with your agent about getting coverage for such an event.
Q: If a foreign army invades the United States and destroys your home in the process, are you covered?
A: No. Acts of war are not covered.
There are two important questions to ask your home insurance agent: What losses does your policy cover and not cover? What additional coverage might you need given your situation? Know what you're covered for before a disaster ocurrs.