When was the last time you looked at your homeowner’s insurance policy?
If you are like most homeowners, you may have spent some time on it when you bought your home, but probably haven’t looked at it in a while. With an increased number of recent weather-related events, it is a good idea to pull the policy out of your drawer and give it a look. You may be surprised to find that you don’t have all the coverage you need. With a little bit of research, it is also alarming to discover certain items you thought were covered are not. It is too late to adjust your policy when the storm hits. Here are four items you may be surprised to know are not covered by homeowner’s insurance.
Flooding: Your homeowner’s insurance does not cover flooding due to excessive rain. It is estimated that insurance companies lost millions, possibly billions, of dollars from Hurricane Katrina. The government was left holding the bag and took steps to adjust how insurance companies cover policies; they imposed more stringent guidelines for flood insurance. Any property located near a significant body of water is required to have flood insurance. The closer to the water you are, the higher your annual premium will be. Your home may be destroyed by flooding and may need a complete rebuild, but unless you have specific flood insurance you won’t be covered.
Total Rebuild: When looking at your policy, you should know how much replacement coverage you have. If there is a major event, such as a fire, without proper coverage you may have to pay out of pocket. This will leave you with some funds but not as much as you need to rebuild the property. It is important to note that any change in your insurance typically needs to be in place for at least 60-90 days. Increasing the replacement coverage right before a big storm won’t be implemented for at least a few months.
Pipe Damage: Pipe damage is always a tricky thing for an insurance company to assess. On the surface, if a pipe explodes and floods the basement, you are usually covered for the damage. However, the insurance company may want to conduct an investigation to find the cause of the burst, and the results may lower your coverage. For example, if your tenants turned the heat off before leaving town for a week causing them to freeze and explode you will not be covered. Or if the sewer line needed to be cleaned and the damage is caused by negligence you may be out of luck.
Mold: Mold damage is not only a serious health risk, but is something that is not covered by insurance. In most cases you can get rid of surface mold with some bleach as soon as you see it, however, if you don’t know the problem exists it will quickly spread and become a serious problem. Even though this may or may not be caused by negligence it is not covered by insurance.
Understanding an insurance policy, even for experienced homeowners, can be confusing. It is best to give your insurance provider a ring and spend a few minutes reviewing your policy. Do you know what your policy covers?