The Exclusion of Preexisting Damage on an Insurance Policy

Purchasing an insurance policy is designed to provide you with a way to protect your financial position in regard to property that you own. It is not meant to be a way to make a profit from the insurance companies. Because of this, insurance companies have strict rules about excluding preexisting damage on property from their coverage.

Preexisting Damage Exclusion

Most property insurance policies have a preexisting damage exclusion attached to them. This is an exclusion that deals with eliminating coverage on any damage that was already in place at the time the insurance policy was taken out. For example, if you buy a homeowner's insurance policy after your roof is damaged in a hailstorm, the insurance company is under no obligation to pay for the damage to your roof. This is because the insurance policy was not in place at the time of the storm.


The reasoning behind insurance companies putting an exclusion on preexisting damage is that it would allow customers to obtain money for repairs even though they did not have coverage. If insurance companies did not have a preexisting damage exclusion, it would allow customers to avoid buying insurance until they had some kind of damage. Then they could simply pay a premium and be covered for damage that had already occurred, instead of paying every month in the anticipation of possible future damage.

Examining Property

Because of the preexisting damage exclusion, many insurance companies may want to know the current condition of your property when you take out an insurance policy. This is the same principle behind taking a medical exam before you get life insurance. In many cases, the insurance company will want to see the vehicle that you are insuring or get a home inspection report when you insure a house. This way, they can see if any damage is already present at the time you buy the policy.


In some cases, it may be possible to buy an insurance policy on property that has already been damaged without acknowledging that damage. While it is possible to do this, if you try to collect on that damage, you are engaging in fraud. Insurance fraud is a crime that is punishable by fines and jail time. It is important to disclose any damage to the insurance company when you initially get the policy so that you are not subject to being accused of fraud later on.