Disasters That Your Homeowner’s Insurance May Not Cover

by Steve CookMay 12, 2017

News coverage of hurricanes, tornadoes, and floods always features sad footage of wrecked homes and homeless families. As victims struggle to put their lives back together, you hope they have adequate insurance to cover their losses.

Unfortunately, many homeowners don’t. Some major disasters, including floods, landslides, and earthquakes are not covered under standard homeowners’ policies. The Federal Emergency Management Agency’s (FEMA) provides flood insurance to owners who live in flood prone areas. Homeowners must obtain additional coverage at additional expense from private insurers for damage caused by the movement of the earth. Damage from pests, such as termites and carpenter ants, also require coverage under pest control policies offered by exterminators.
Homeowners may also find out the hard way that homeowners’ policies covering hurricanes and tornadoes may have deductibles much higher than for other claims. They may also discover that the actual cash value policy, the minimum required by mortgage lenders to protect their investment in the home, covers what the house might be worth, but not what it would cost to rebuild it. Say you wanted to sell your home tomorrow, and it’s worth $85,000. But if it burns to the ground and the cost to rebuild is $150,000, you risk not having enough coverage.

On the other hand, standard policies may cover some things that will surprise you. In addition to obvious losses like fire and theft, these include:

  • Loss of use. If you’ve experienced a fire and can no longer occupy your home, your loss of use coverage would pay for things like hotel costs and unexpected food costs while your home undergoes repairs.
  • Mold. Most policies cover the cost of removing mold if the problem was caused by an even, like a plumbing leak. If the problem is a chronic one that results from poor maintenance, a claim may be denied.
  • Riots. A typical policy will cover your home and personal property if they are damaged during civil unrest.
  • Volcanoes (but not earthquakes). If your home is in the path of an erupting volcano, rest assured you’ll be covered.
  • Other structures such as sheds, gazebos, even dog houses. Your policy covers your entire property, including all structures—even Fido’s!
  • Identity theft. Today many homeowners’ policies cover the costs of fixing your credit reports and restoring your identity, including the cost of lost wages, phone bills and possibly even legal representation
  • Anything you travel with. Most homeowners policies cover your belongings wherever they go, under something called an “off-premises” provision. That means that if your laptop or luggage is stolen while you’re on vacation in Europe, you’re usually covered.
  • Home upgrades required by law. If your local government passes an ordinance requiring your home to have a new roof, the cost of that improvement is often covered.

Take a moment to read the fine print in your homeowners’ policy to familiarize yourself with its terms and coverage. Look for potential events for which you might want to obtain additional coverage.

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About The Author
Steve Cook
Steve Cook is editor and co-publisher of Real Estate Economy Watch. He is a member of the board of the National Association of Real Estate Editors and writes for several leading Web sites, including Inman News. From 1999 to 2007 he was vice president for public affairs at the National Association of Realtors.

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