Quite possibly one of the most important insurance policies you will purchase is your homeowners policy, which can protect you from unexpected loss and significant financial strain. While your standard homeowners insurance policy provides coverage against many different types of risks, you should be aware of several important exclusions to avoid costly surprises at the most inopportune times.
For an additional cost, you can add earthquake insurance to your standard homeowners insurance policy; however, it is very costly, and coverage is calculated differently than your standard policy. On the higher-risk West Coast, it can cost $15 per $1,000 of earthquake coverage, with deductibles ranging from 10 percent to 15 percent of your structure insurance amount. Your personal belongings are covered only up to a set dollar amount, and many items are not covered under the earthquake policy at all, such as separate structures, fences and pools.
Flood and Other Water Damage
Flood insurance covers damage caused by spring thaw, heavy rains, snowmelt, flash floods and mudflows, but you must buy it as a separate insurance policy from the Federal Emergency Management Agency (FEMA) under the National Flood Insurance Program. Even just 1 inch of water inside a 1,000 square foot home could cost over $10,000 in damage. You can purchase insurance coverage for other types of water damage, such as overflows from sewer systems or drains, for an additional cost.
Maintenance and Inherent Vice Exclusions
Termite or rodent damage, rust and rot, mold, general wear and tear and other property damage caused by neglect or improper maintenance is not covered under your standard homeowners policy. Damage from power outages, such as spoiled food, is also excluded. Poorly made or defective products are not covered, based on the inherent vice exclusion, which means external factors did not cause the loss.
Personal injury liability, which protects you from defamation of character or slander lawsuits, is not covered under your standard homeowners policy but can be purchased for an additional cost. You can also purchase coverage for damage caused by war, nuclear hazard and identity theft for an additional cost. Governmental actions and ordinances that result in the destruction, confiscation or seizure of covered property are fully excluded from coverage.
- CBSNews.com: Earthquake insurance: 8 things you need to know
- FloodSmart.gov: The Cost of Flooding
- Homesite.com: What’s NOT Covered On a Standard Homeowners Insurance Policy
- PropertyInsuranceCoverageLaw.com: The Latent Defect or Inherent Vice Exclusion: Deconstructing the All-Risk Policy
- Insure.com: Home insurance exclusions: What your policy won’t cover
Blyss Cruz has called Alaska home for 30 years. She has written numerous business, financial and legal documents related to her long-time employment in both the public and private financial sectors. Cruz holds a B.S. in Paralegal Studies and an MBA in business and accounting.