What Your Homeowner's Insurance DOESN'T Cover

Often, when homeowners seek insurance for their dwelling, there remains some confusion regarding what is--and is not--actually covered in the event of damage or loss. While the fine print covers this information, many of the exclusions and minimal coverage terminology is lengthy and sometimes overlooked. Here, we will touch upon typical exclusions and basic coverage on your homeowner's policy (also known as the HO-3).

• Earthquake and Water Damage: In all states except California, earthquakes (including sinkholes and other earth movements) and not covered under the standard policy. However, earthquake coverage can be purchased as an addendum for an additional fee. Water damage, including sewer system challenges, backups and overflows are also not typically covered under standard policies. Flood insurance is available as a separate policy altogether which can only be purchased through the National Flood Insurance program (a government run program).
• War or Nuclear Hazards: While we hope this never becomes a challenge, in the event of war or nuclear hazards, any resulting damages are not covered through standard policies.
• Maintenance Challenges: Damage resulting from termites, insects, birds, rodents, smog, smoke and general wear and tear are not covered under standard policies. Further, if your home has been poorly constructed, has a hidden defect or experiences mechanical breakdown, this is considered part of the inherent vice exclusion which is not covered.

Standard homeowners insurance policies operate by the replacement cost, assigning an actual cash value to determine the settlement amount. This would also include depreciation cost, but you can add an endorsement which will allow for the item to be replace at cost, rather than at its depreciated value. Valuables such as gold, silverware, furs, high-end watches, etc. are typically covered up to $1,000. If you own a watercraft and it is stolen from your home, it is typically covered up to $1,000 only, so in both instances you may wish to add endorsements to cover any losses. Though liability coverage is often included to a minimal amount, medical bills can prove financially draining; thus you might consider increasing those third party liability limits as well.

Contact the agents at Little Insurance Group for a professional evaluation of your needs and options.