What’s Not Covered? 12 Common Exclusions in Your Home Insurance Policy
Rats nests, termites and mold? Some of the grossest home hassles are also some of the most problematic when it comes to making insurance claims, not because they’re disgusting but because in most cases, they are not covered. We talked to Carl Gross, Vice President and CAO of Globe Midwest/Adjusters International, and Greg Raab, Director of Operations at Adjusters International, to find out what perils are often excluded in standard home insurance policies.
What are some common exclusions in home insurance policies?
- Earth Movement – Damage caused by earth movement such as earthquakes, landslides, mud flow, mudslide, sinkhole, subsidence, erosion and movement from improper compaction and possible volcanic action are usually excluded. Gross notes that separate coverage can often be purchased to cover excluded weather events.
- Neglect – If a property is not properly maintained, meaning that repairs have not been made and routine inspections have not been performed, then damage from a weather event or fire may be denied. A common example of this is a roof in need of repairs or maintenance that leads to water damage.
- Intentional Loss – If a policyholder damages their property intentionally, such as setting their own house on fire, then none of the damage will be covered.
- Vacant Property – If a property has been vacant for a specified number of days (usually 30 days or more, meaning that no one has lived in the house or building, then vandalism, freezing and other damage will likely not be covered. This exclusion shifts the responsibility to the homeowner to ensure the property is protected while vacant.
- Flooding – Most insurance policies exclude flood damage, meaning damage resulting from rising waters rather than water entering a penetration in the roof, walls or windows of a home. For that reason, homeowners in flood prone areas should consider whether the purchase of flood insurance is prudent. Separate flood insurance policies can be purchased through the National Flood Insurance Program to cover water that flows in from outside of the house.
- Preexisting Damage – Most policies also exclude preexisting damage, meaning damage that results from ordinary wear and tear, or manufacturing defects.
- Mold – Another big exclusion? Mold! Mold damage resulting from dampness or failure to maintain the property is excluded. However, ensuing mold damage as a result of a pipe break and water damage may be covered up to a specified limit which is typically $5,000, according to Gross.
- Bugs and Rodents – Damage resulting from termites, cockroaches, rodents, birds and vermin are not usually covered. Most standard policies have exclusions that specifically exclude insects and the damage that they can cause to wooden structures, roofs, etc. Raab notes that if it’s sudden and accidental, it’s probably included and if it’s gradual it’s probably excluded. For example, damage from skunks and bed bugs that occurred slowly over time would normally not be covered.
- War and Nuclear Accident – If you live near a nuclear power plant and the facility experiences a radiation leak or explosion that damages your home, it will likely not be covered. War and acts of terrorism are usually also excluded.
- Small Businesses Being Run from Your Home – Equipment and supplies for any type of small business that is being run out of a home will not be covered unless special coverage has been purchased for this purpose.
- Pet Damage from Large or Aggressive Breeds – If a policyholder owns an aggressive dog breed, such as a Rottweiler or a Pitbull, and they damage the property, this will not be covered. However, damage inflicted by a small dog, such as a Shih Tzu, usually will be.
- Matching – Although some high-end policies do cover matching — which means that if a few tiles in a floor are damaged, the insurance company has to pay to replace the whole floor so that all of the tiles match – most standard policies exclude this.
How can homeowners find out what’s excluded in their policies?
They can request a certified copy of their policy from their agent and can also access their policy documents online, depending on the insurance company from which it was purchased, said Gross. Every policy should have a page labeled exclusions. Agents and brokers should also be able to provide this information.
What can homeowners do if they don’t agree with exclusions?
Can they ask that exclusions be removed before they sign and purchase the policy or are they set in stone?
“Policies are standardized forms that usually cannot be changed. Exclusions are included in policies because insurers don’t want to accept the risk,” said Raab. “However, there may be other coverage or endorsements that can be added to cover excluded losses in the policy. Policyholders should contact their agent if there is specific coverage that they are seeking which is not already included in their policy.”
Gross notes that if a claim is denied due to an exclusion, homeowners don’t always have to accept it as the final word.
“Keep in mind that if your claim is denied, the adjuster must provide the reason an exclusion applies to your loss. Just providing the exclusionary policy language is not sufficient,” said Gross. “Too often, consumers are simply comparing prices, but you get what you pay for, and the least expensive policy may have exclusions that severely restrict coverage. Policyholders should be aware of what they are purchasing and seek the guidance of a good agent to help them select the right policy.”