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What Does Your Homeowner’s Insurance Cover?

by Emily Guy Birken

After Hurricane Katrina, many people were surprised to learn that basic homeowner’s insurance did not cover flood damage. In the best case scenario, Americans watching the aftermath of the terrible storm called up their insurance agent and reviewed their policy. For a lot of people, unfortunately, it got put on the back burner—something to take care of “some day.” Don’t let some day be the day that you find yourself lacking necessary coverage. Here is a list of common losses that your basic homeowner’s probably doesn’t cover—and what you should do about it:

flood insurance

You need a separate flood insurance policy.

1. Floods, earthquakes and landslides. If you live in an area that is prone to any of these issues, know that your homeowner’s insurance will generally not cover them. Flood insurance is available through FEMA with the National Flood Insurance Program (find out how to file a FEMA claim). It is possible to also bridge your coverage with specific earthquake and landslide insurance, if this is a possible hazard in your area. Your best bet is to learn the geological risks before you buy a house—because the insurance companies certainly know what they are!

2. Termites and mold. Sadly, these common problems that can literally eat away at your house are not often covered. This is because the destruction termites and mold can wreak do not occur suddenly, but instead over a period of time. Insurance companies consider this to be a maintenance issue, and therefore the responsibility of the homeowner. If you do have an issue with termites, mold or other pests, you will have to call in a professional to get rid of them. Keep that from happening by staying on top of your home maintenance.

3. Cars, boats and other vehicles damaged or stolen on your property. While umbrella coverage may take care of the friend’s car that you’re borrowing after a tree next to your driveway drops a branch through the windshield, you will have to have purchased that umbrella coverage ahead of time. Don’t assume that your homeowner’s insurance is prepared to cover losses of visiting vehicles! Talk to your insurance agent about how much umbrella insurance would be prudent for your situation.

4. Intentional damage. Insurance companies are obviously leery of damage done to homes on purpose. If the damage is committed by a resident of the house, it is an obvious conflict and there will be no coverage. Things can be a little tricky even if the trickster is a non-resident. Unfortunately, there is no way to protect yourself from this ahead of time, but it is good to know that this is not something your insurance company will pay for.

5. All of your valuables. Though homeowner’s insurance certainly will cover the valuables in your home in case of loss, there is generally a limit to how much the company will reimburse. Know what your limits are! If you have a great deal of computer equipment, all of your grandmother’s jewels, or an impressive art collection, take out extra insurance for them. If you’re not sure if you need extra insurance, go ahead and have your valuables appraised. It will be worth your peace of mind.

Homeowner’s insurance comes with a great deal of fine print. Though most of us could think of many things we’d rather do than read our policy, it’s important to know what it covers BEFORE you need it.

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photo source: U.S. Geological Survey.


Published or updated May 20, 2011.
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{ 5 comments… read them below or add one }

1 Pat S

Love to see a similar article on renter’s insurance.

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2 Jodi

It always takes such disasters before people realize that they are not covered for things like floods. this is something the insurance complanies should have to be up front about

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3 Ryan

My insurance company was very up front about this when I purchased my home last month and asked for a homeowner’s insurance quote. Part of my loan approval also included verifying my home was not located in a flood plain (which is isn’t). I also believe I signed some documentation regarding flood insurance, but to be honest, I signed so many papers that day I can’t remember everything I signed… Anyway, in my personal experience, my insurance company has always been up front about flood insurance, but it could, of course, vary by each policy provider – which is just another reason to get multiple quotes!

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4 William C. Doin

I have owned my home (Mortgage) for Twenty years, and pay insurance with my escrow.
In New York, What is the amount(s) for my escrow RESERVE? Example You Need two monthly Escrow amounts . Does New York State require This ?
I never heard of such A Law and I am receiving an escrow shortage for me to send them more Insurance money.

Please Reply

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5 Ryan

William, I recommend contacting your escrow company and ask them to send you their policy in writing, or point you to the law which requires the extra money. this way you know how much you are required to pay, and why.

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