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Homeowners insurance exclusions

Avoid surprises on home insurance claims by knowing these common exclusions upfront

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Home and personal property insurance feature different damage situations that can’t receive payouts, even if you file a claim. To avoid misunderstandings, read your policy documents in detail to see which of these common exclusions apply to you.

1. Flooding and storms

Many people assume protection from flooding is included in homeowners insurance, although flooding from rain or storms is a common exclusion. Flood insurance is an extra-cost option typically bought through the National Flood Insurance Program (NFIP).

Also, some home insurance companies exclude damage from power surges or other storm-related damage like removing downed trees from your yard. If you live in a flood- or storm-prone area, you’ll want to read your policy’s fine print to find out your exact coverage.

2. Earthquakes, landslides and sinkholes

Your home insurance policy limits coverage against natural disasters, as seen with flooding and storm damage. While you can find protection from hail, wind or tornadoes, land movements like earthquakes or sinkholes are typically excluded.

3. Neglect or wear and tear

If you or a previous owner doesn’t maintain water pipes or sewage, you could pay for water leaks or damage from everyday use out of your own wallet. However, water or sewer problems should qualify as covered damage if it happens suddenly, unless you could have prevented it through regular maintenance.

4. Bug or rodent infestation

Insect and vermin infestations are excluded from many homeowner insurance policies. You’ll have to pay to get rid of unwanted guests and for cleanup services.

5. Mold

If you have problems with mold in your home and it’s related to water or moisture buildup, many policies exclude this type of damage. You can find insurance companies who add mold coverage as an additional option, but coverage may be limited to mold from unknown and unpreventable water damage. Whether or not you’re covered, make sure to check your home’s humidity levels year-round to avoid this threat to your health and home.

6. Yard and landscaping

Your home’s policy might pay out for damage to your flowers, shrubs and landscape features, but only for specific causes like a fire or lightning strike. You won’t be covered for landscaping damage caused by pests, animals or guests, and yard damage from wind or storms also might be excluded.

7. Car damage or pet injuries

Your car won’t be covered by your home insurance policy if it gets damaged while parked at your house. You’ll need to cover any damage with car insurance, but this type of policy is also required to drive legally on public roads.

Likewise, home insurers don’t consider pets as part of your personal property. If your pet gets injured, you’ll need separate pet insurance to pay vet bills. Also, if your pet damages your belongings like chewing up your couch or knocking over your TV, home insurance won’t cover the cost.

8. Business equipment

Any equipment you use for business might be excluded or have low limits that won’t cover many expensive tools. For example, if your insurance company limits business equipment coverage to $2,500, your policy will pay for damage to equipment valued up to that amount. If your equipment costs you above that limit to replace, you’ll want to buy separate business property insurance.

Business equipment can include:

  • A home office computer and printer used primarily for business
  • Inventory that you keep at home prior to selling
  • Any trade equipment like video or photography gear, carpentry or landscaping tools
  • Musical instruments used for paid concerts and gigs
  • Any tool that helps you perform work or make money

If you don’t know whether you need separate business insurance, talk to your insurance agent to make sure, rather than finding out after filing a claim.

9. Intentional damage

Any malicious or intentional damage done to your home isn’t covered by homeowners insurance. If you damage your home and file a claim on purpose, your actions can lead to an insurance fraud charge with legal penalties.

10. Damage from renters

If you rent your home out as a landlord or are using Airbnb, your insurance likely won’t cover damage to your guests’ personal items or medical injuries without rental coverage.

For listing with homesharing sites, you can look to add homesharing insurance coverage to your home’s policy. Homesharing coverage pays for damage to your home or personal belongings from storms, fire or theft as well as lost income coverage following damage.

For most other rental situations, you’ll need landlord insurance to protect this business venture. Landlord policies cover physical damage to the home, lost rental income and liability insurance if you’re faulted with a renter getting hurt or their belongings damaged at the rental property. However, if your tenants break an appliance or wear out the carpet, your landlord policy won’t foot the bill.

11. Nuclear damage

The perils covered under your homeowners insurance doesn’t include nuclear events. That means you can’t file a claim for any damage from nuclear accidents or hazardous waste brought on your property. Most people don’t have to worry much about this risk, but understand the risks involved with your home’s location, like if you live near a nuclear power plant.

12. Acts of war

Damage from military invasions, revolutions or acts of terrorism may not be included with your homeowners policy. However, you should have protection if a riot or civil disturbance causes damage to your home or belongings.

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Why do home insurance policies set coverage exclusions?

Exclusions in a home insurance policy eliminate risks that an insurance company isn’t willing to cover. It may ban these situations for several reasons, including:

  • An event could lead to too many claims. Some risks can’t be insured against because they would affect a large number of policyholders at the same time, like an earthquake or act of war.
  • The situation is preventable. Insurance companies don’t want to pay out for your own failure to protect your home and personal belongings.
  • You can control the risks through maintenance. Some risks and damage happen because you’re not properly maintaining your property. That’s why you’ll bear the cost for your home’s wear and tear, mold or gradual deterioration.
  • The damage followed your illegal actions. If you or someone else uses your property for unlawful purposes that lead to damage, your insurance company can’t condone that situation with an insurance payout. So if you’ve set up an illicit lab in your spare room and it burns your house down, don’t expect any love from your insurer.
  • The type of damage is an optional extra. Some risks only get covered if you pay an additional premium for extra coverage. You’ll pay more for specific damage like flooding or damage to valuable belongings because it poses an extra risk to your insurance company.

Bottom line

Your insurance company excludes certain types of damage from your homeowners insurance for valid reasons, especially if it raises the risk of a claim. By reading your policy’s fine details, you can get a clear picture of the coverage you have. Then, you can adjust accordingly or shop around for other home insurance policies with the coverage you need.

Frequently asked questions about home insurance exclusions

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