Homeowners insurance can cover many things, but it doesn't cover everything. Homeowners policies usually only cover specific risks associated with the insured home and its occupants. Homeowners insurance doesn't cover some risks, but there are ways to protect yourself from these potential threats. Let's look at some common risks not covered by homeowners insurance and how you can protect yourself from those liabilities.
Homeowners insurance is a form of property insurance that covers your home and its contents. It is designed to protect against financial loss if your home is damaged or destroyed by perils such as fire, wind, hail, and falling objects.
A homeowners insurance policy covers damage to your home and property. Some things are not covered by homeowners insurance, though. Here are some of the most common exclusions:
Many people believe that if they are injured on their property, the insurance will cover their medical bills and lost wages. Unfortunately, this is not true! If you have an accident on your property and get hurt, it is your responsibility to pay for your medical bills and lost wages. The only time homeowners insurance will pay for injuries sustained on the property is if someone else was responsible for the accident and caused it with intent (like a criminal).
The standard policy does not cover losses resulting from natural disasters such as flooding, earthquakes, or fire in most states (except for windstorms). You may have to buy separate flood insurance if you live in a high-risk area or have been advised by your lender to get it — otherwise, it won't cover any damage caused by these events under your homeowner's policy.
Flooding is usually caused by heavy rain or snowmelt, which causes water to rise over the banks of streams or rivers. Seepage occurs when water travels underground through cracks in pipes or foundation walls until it reaches the surface as a spring or small stream. These events can cause serious damage to homes and their contents; however, they are not typically covered under a homeowners policy because they do not result from direct contact with another object (e.g., fire).
If your basement floods due to a plumbing leak or burst pipe, you will likely have to pay for repairs out of pocket. Insurance companies do not usually cover mold growth caused by water leaks because it's considered an act of nature rather than an accident or negligence on the homeowner's part. Mold can also be caused by improper ventilation in areas like bathrooms, which means the homeowner could be held responsible for the cost of repairs.
If you have a fire caused by faulty electrical wiring, it will not cover the cost to repair the damage under your policy. The same goes for any damage resulting from a shorted-out circuit breaker or a blown fuse. The cost of fixing these problems must come out of your pocket unless you have purchased additional coverage to protect yourself from electrical mishaps and malfunctions (and most people don't).
According to the Insurance Information Institute (III), business equipment is generally not covered under homeowner's insurance policies, according to the Insurance Information Institute (III). That includes computers, printers, and fax machines used for home-based businesses. Instead, these items should be covered by commercial insurance policies tailored specifically for small businesses.
Jewelry and artwork can be challenging to replace, but they're often excluded from homeowners insurance policies because of their high value. If you want to protect them, you need to buy separate coverage.
Collisions with vehicles or other objects are typically covered under your auto insurance policy rather than your homeowners policy. If you have an older car that isn't worth much on its own but has high sentimental value, you may want to purchase collision coverage on it separately from your auto policy.
Homeowners insurance doesn't cover everything. You need to know if you want to protect yourself from the risks not covered by homeowners insurance.
Floaters are insurance types that cover specific items that are generally not covered under standard homeowners insurance policies. It may include jewelry, artwork, collectibles, and other valuable items. If you have these items in your home, consider adding a floater to your policy to protect them from theft or damage.
Alarm systems are another essential feature of a home security plan. These systems usually include devices that detect when someone has entered or exited your home without permission and alert authorities and devices that turn on lights and sound sirens if there is an intruder in the home. Video surveillance systems are also helpful in deterring intruders since they allow homeowners to monitor their property remotely via computer or smartphone app.
If you rent out rooms in your house or have tenants living with you temporarily, consider adding this rider to your homeowners policy. It will give them extra protection if anything happens while staying at your place — like someone stealing their stuff!
In summary, you should remember not to skimp when buying insurance plans. Think about what is covered and what may not be covered by your home insurance policy. This advice can be used when you purchase a new plan and the next time you review or renew your existing policy. Need help with a homesearch? SetValue can help - or learn more about homeownership on the SetValue ReSET blog!
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