Last Updated: December 9th, 2014
No matter what type of home insurance policy you buy, there's a list of common problems (called "perils") that most insurance companies will not cover.
Knowledge is your best defense when you have a possible home insurance claim. Knowing exactly what your homeowners insurance policy covers and excludes also helps you determine whether you want to purchase additional coverage.
For example, do you know which of these problems is not covered by a home insurance policy?
- A car careens off the street and crashes through your living room wall.
- A skunk gets into your house and stinks up everything you own.
- A foreign army invades the United States, destroying your house in the process.
Answer: You're not covered if an invading army destroys your house (acts of war are excluded), but you are covered if your house is hit by a car or perfumed by a skunk.
Things covered by home insurance policies
There are a variety of standard homeowners insurance policies. The most basic policy, HO-1, covers only a few perils and insurance companies have stopped selling it in most states. The HO-2, generally called the "broad form," covers 16 perils. They are:
- Fire or lightning.
- Windstorm or hail.
- Riot or civil commotion.
- Damage caused by aircraft.
- Damage caused by vehicles.
- Vandalism or malicious mischief.
- Volcanic eruption.
- Falling objects.
- Weight of ice, snow or sleet which causes damage to a building.
- Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system or from a household appliance.
- Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system or an air conditioning or automatic fire-protective system.
- Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system or of a household appliance.
- Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component).
An HO-3 policy is often called a "special form" because it covers everything except certain perils outlined in the policy. It is the most popular type of policy. The standard HO-3 policy contains these exclusions:
- Ordinance or law. such as demolition or construction required to bring
your house up to code.
- Earth movement. such as earthquakes, shockwaves, sinkholes, landslides and mudflows.
- Water damage. such as floods, sewer back-ups and water that seeps through the foundation.
- Power failure.
- Neglect. meaning you failed to take reasonable means to save your property during or after a loss.
- War. including undeclared war and civil war.
- Nuclear hazard.
- Intentional loss. meaning something you did on purpose with the intent to cause a loss.
- Governmental action. such as the destruction, confiscation or seizure of covered property by any governmental or public authority.
- Loss to property, resulting from faulty zoning, bad repair or workmanship, faulty construction materials and defective maintenance.
There are two important questions to ask your home insurance agent: What losses does your policy cover and not cover? And what additional coverage might you need given your situation?
Examples of home insurance exclusions
Since policies can differ by state and insurance company, the only way to know what your exclusions are is to read your own policy. If you come across something you don't understand, ask your agent or insurance company about it. Here are some scenarios that address home insurance exclusions.
Q: What happens if a wild animal sneaks into my home and wreaks havoc?
A: You're covered. Technically, the animal vandalized your home. Vandalism is covered under most standard policies.
A: Not covered. If your home suffers damage and you want to upgrade it when you repair, you'll have to do it at your own expense. A standard home insurance policy pays only for what you originally insured. However, some insurance companies sell a "rebuilding ordinance or law coverage" rider. This extra coverage pays a specific amount toward upgrade costs — but under this type of policy you have to suffer a disaster before it will pay to upgrade.
Q: My basement flooded and most of my possessions have been destroyed. Am I covered?
A: No. For protection against floods, you'll need flood insurance. Also, water coming into your home from backed-up sewers is typically excluded, but you can purchase optional coverage to protect yourself from this.
Q: Can I make an insurance claim for my home's value plummeting after the city built a prison in the area?
Q: Am I covered for damage to my home that resulted from a power outage?
Freaky incidents and home insurance exclusions