If you are like most American homeowners, you have little to no idea what is not covered by homeowners insurance. Most of us do not fully read our policies, we scan through the highlights, and leave the fine print to review later but never actually review it.
Knowing what is not covered by homeowners insurance is a very important piece of knowledge. It can help you to have realistic expectations and be prepared for the worst. Now, that is not saying that the worst is going to happen but it is always a good idea to hope for the best and be prepared for the worst. Of course, when looking for coverage make a list of home insurance companies and see what each offers.
The Nuts and Bolts of Homeowners Insurance
There are some pretty standard parts to a homeowners insurance policy. Most policies are written to cover damage to your home that is out of your control. For example, while your homeowners may not cover water heater repair, it may cover damage caused by a faulty water heater. Of course, on the other side of the coin sometimes homeowners policies can vary widely in their coverage. Many people make the choice of enlisting the help of an agent.
It may not cover the cost of affordable pest control services but may cover the damage that termites can cause to your home. When you look at a list of home insurance companies you’ll notice most plans are similar in many ways, and of course, there are some differences. The best way to know what your policy covers is to get up close and personal with the language and the fine print. Of course, it also helps to have an experienced agent on your side that can push you in the right direction when you are buying your policy. If your insurance covers the work, you will not have to focus on affordable pest control services. You can look for the best in the area, the pest control services you know will keep your home safe. When looking for affordable homeowners insurance quotes, make sure you take coverage into consideration. What’s affordable today can be expensive tomorrow if the right things are not covered.
There are a few standards when it comes to what is not covered by homeowners insurance including:
- Pre existing conditions. Let’s say your roofing needs to be replaced when you take on the policy but you do not get it done, than 5 days later your roof collapses. You may have a go of it trying to get your homeowners insurance company to pay for the damage. Pre-existing conditions will not be covered
- Neglect can also be an issue. For example, your home is not kept up and you do not live in it and it catches on fire because it is neglected, there will likely be an investigation that will result in you not getting the incident covered.
- An event that is exclusively listed as a non-covered event. Your homeowners policy should have an easy to read section that states these incidents are not covered.
It is important that you have an agent on your side that can help to guide you through the process. If you have any questions or any concerns an agent can help to answer your questions and provide you with some expert advice.
There are steps that you can take to ensure that you have the right policy and limit sections about what is not covered by homeowners insurance. Learning more about what you can do to ensure that you have the coverage that you need.
A Quick Lesson In Terms
Homeowner plans use specific terms familiarizing yourself with the terms before you sign up for a policy is a good idea so there will be no surprise as to what is not covered by homeowners insurance. Here are some terms you should know and there meaning:
- Claim Settlement Provision –this term is used to describe how the claim payment will be determined.
- Coverage is what the extent of coverage your policy carries.
- Premium is how much you will pay for the policy.
- A deductible is how much you will have to pay before the insurance company pays out. For example, if you have a $1000 deductible and you have $5000 in damages, you will have to pay $1000 and the insurance company will pay the other $4000.
- Dwelling only coverage is coverage that only protects the house itself and not the surrounding property or other structures on the property.
- Loss mitigation-steps that are expected to reduce loss of and damage to property.
- Named peril. This is named risks that are named in an insurance plan they can be both covered and uncovered perils. For example, your plan may state an “act of God” is covered, which means you would be covered for storm damage. Open peril plans will itemize each peril that is not covered by your insurance policy.
- Limit of liability. Your insurance plan may come with a limit of liability which means the insurance company has predetermined the value of your property and they will only pay total losses up to that much. For example, you live in a million dollar home but the real estate market was on a downward turn for a while and now your home is only worth $800,000, if there is a case of total loss you will only be compensated for $800,000.
Limit Your Risks
One of the biggest risk factors to accidents, injuries, and property damage is to stay up on maintenance and get repairs done as soon as they are noticed. For example, having regular air duct cleaning, can help to ensure the health of your HVAC system which can reduce the risk of breakdown and any associated damages.
Emergency tree work that needs to be done after a storm can also help to prevent further damage. Many insurance policies will cover the cost of removing felled trees during a storm, but likely will not cover the cost of removing a widowmaker that has died off and is hanging precariously over your garage.
Additionally, that dangerous tree limb if not dealt with can cause damage, that your insurance policy may not cover. Ensuring that you stay in good graces with your homeowners insurance company starts with taking the steps to protect your property and ensure that maintenance is done to control as much risk as you can.
A good rule of thumb is to address issues before they become full-blown problems. For example, regular roof inspections can identify any problems before they get out of control and prevent property damage. You have the control to take preventive steps to ensure that you do not find out too late what is not covered by homeowners insurance.
Hire Certified Workers
Another mistake that many homeowners make is looking for the cheapest deal they can find and cutting corners on home improvements and repairs. Although many homewners like taking on handyman home projects, it is not always appropriate. For example, if you need a sump pump installation done to keep the basement dry (and you should absolutely have one if your basement is known for filing with water during storms) hire a certified electrical contractor to do the wiring. Here is why it is important to hire a certified professional instead of making it one of your handyman home projects:
- The job is done right.
- You will have coverage if something does go wrong.
- Safety will be enhanced.
Having a certified professional manage your household repairs and improvements will ensure that the work is done up to code. If there is a problem down the line you will have protection from both your insurance company and from the contractor that did the work.
Avoiding Some of the Pitfalls
Some homeowners have found that it is not so much what is not covered by homeowners insurance but what amount of damage is covered by homeowners insurance. The fact is if you have an emergency plumbing situation and you do not call in the emergency plumber and a great deal of water damage occurs you can be at risk for not being compensated for all the damage. As a homeowner the insurance company expects that you will take steps to minimize damages.
Another good example is roof damage after a hurricane or other big storm. While no one expects a homeowner to get up on the roof and start repairing the problem, it is expected that you will do what you can to prevent further damage. For example, using tarps inside the home to prevent further wall and floor damage. Of course, safety first in all situations.
You get the idea, you have to take reasonable steps to prevent the spread of property damage. You cannot just leave the property as is and expect that all the damage will be covered by your insurance policy if you did not take reasonable steps to protect the property.
What Else Can You Do To Ensure You Do Not Learn a Hard Lesson?
It cannot be stressed enough to go over your homeowners policy with a fine-tooth comb and become really familiar with what is not covered by homeowners insurance. If you have unusual situations such as:
- You have made upgrades to your home that you need specific coverage for.
- You have buildings on your property for storage and other things that you want protected.
- If you have a swimming pool
You want to be sure that you list every piece of property on your property that you want to have covered. For example, you erect a large pole building and you want to be sure that it is included in your policy. In some instances, you may have to provide pictures of the structures any other areas that you feel should be a part of the coverage.
Honesty is always the best policy when it comes to your homeowners policy. If your agent or the carrier asks you questions, be honest with your answers. You do not want to hide facts about your home or the damage to your home when you first sign up for your plan.
It is important that you understand that not every homeowners plan is comprehensive. A comprehensive plan typically covers against theft, fire and damages. You will pay more in premiums for a comprehensive plan but you will get more protection. If you are interested in finding comprehensive or complete coverage it is important that you speak to an agent about what your coverage options.
What Should be Your Goal?
The goal with any insurance plan including homeowners insurance is to get the best value. To determine what the best value is for your unique situation you do have to do a little research. Your homeowners policy should clearly state what is not covered by homeowners insurance and also be:
- Able to fit in your budget comfortably.
- Provide the right coverage for your situation. In other words, having $100K in coverage for a home that is worth $300K is a serious misstep.
- Set with a reasonable deductible.
Of course, it is important to know what is not covered by homeowners insurance but it is also very important to know what is. You want to be sure that you shopping for the best value and not the lowest premium price. While budgeting is always important finding the lowest price premium does in no way guarantee that you are getting the best value.
Your plan has to provide you with the right coverage for your situation. This is not something you want to skimp on because insurance may not seem like a big thing right now, but if you should ever have to file a claim and about 65% of homeowners will this year alone, you want to know that you have adequate coverage.
Let’s talk about deductibles. It can be very tempting to opt-in for the higher deductible and the lower monthly premium but the fact is should you have to file a claim and have to pay a high deductible out of pocket it can present as a huge problem for your budget at that time.
High deductibles to get very low premiums can backfire if you ever need to file a claim. It is important that you seriously consider what you need from your homeowners insurance and focus on that instead of focusing on low costs.
In many cases, the right policy will have a lot more of what is covered than what is not covered by homeowners insurance. You really cannot put a price tag on peace of mind. Having the security of knowing that your home and property are protected is worth getting to know your homeowners insurance plan and giving it the attention that it deserves. If you need help reach out to an insurance agent and get the help that you need. Your home is worthy of great protection.