Caveat Emptor: Top Five Exclusions and Limitations on Most Homeowners’ Policies
Finding out there is no coverage after a claim is a frustration that consumers unfortunately have to face too often. When purchasing home insurance, there are some important exclusions and limitations to be aware of:
In order to have flood coverage in the event of a claim, flood coverage must be purchased separately. How is flood defined? The easiest way to think about “flood” is water that originates from outside your home. Flood can be rain, water backup of an exterior drain, rapid snowmelt, mudflow, and/or water surge from a body of water. It is important to note that flood can occur almost anywhere. Many people nowhere near a body of water have experienced flood losses. Even people who have historically never had an issue with water in their homes have recently been impacted.
Most people think that they have insurance coverage for natural disasters. Earthquakes are catastrophic events that can cause significant damage but are typically excluded on most policies. Additionally, it is important to note that policies with earthquake coverage included, often have large deductibles.
3. Jewelry and other valuables:
Homeowners policies usually have a very small coverage limit for jewelry, usually no greater than $5,000, and sometimes less. Items such as watches, an engagement ring, or even pieces that you have inherited, should be scheduled on your policy to ensure there is coverage. Coverage for fine arts, wine, silverware and other collectibles are subject to limitations; these items should be itemized on your policy to ensure the broadest coverage.
4. Wear and Tear:
Claims that occur due to a part of your home reaching the end of its lifespan are not covered. This includes damage caused as the result of improper home maintenance. The best example of this would be water damage to a home with an old, leaking roof. Coverage would not apply in this scenario since the roof needed to be replaced due to “wear and tear”. Generally speaking, anything that has not been maintained properly can be reason for a claim declination.
5. Business Property:
If you run a business out of your home, please take note that business property is either excluded or has a very small coverage limit. You should discuss your needs with your agent or broker if you need additional coverage.
If you would like to discuss any of the above topics further, get in touch today.