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What your home insurance doesn't cover

March 11, 2016
Home insurance does not cover termite damage.

If you think your home insurance covers anything that could possibly go wrong in your home, it may be time to take a closer look at your policy. While standard home insurance does provide extensive coverage and can bring you financial protection in a variety of circumstances, there are also many circumstances it leaves out.

Carole Walker, executive director of the Rocky Mountain Insurance Information Association, spoke with Bankrate about the lack of knowledge many homeowners have regarding their home insurance coverage.

“We often hear from people that the only time they think about what their insurance covers is when they go to file a claim,” she explained. “Of course, then it's too late.”

Being aware of what you're not covered for can help you make sure you are not blindsided by unexpected out-of-pocket expenses when your home is damaged. Even more, it can help you figure out if you want to purchase additional coverage.

Floods and earthquakes

While standard home insurance protects you from damage by many natural disasters, it will not provide coverage in the event your home is damaged by a flood or earthquake.

According to Time magazine, homeowners may not think it necessary to purchase additional flood or earthquake insurance unless they live in an area that regularly experiences floods or rests near a major fault line. Still, the publication highly encouraged any homeowner to get the added coverage. There is always a chance your community will experience a flood or tremor, and the damage can really cost you.

Mold and termites Mold presents a huge health risk to residents of a home, and in general standard insurance does not cover it. You must take measures to prevent the growth of mold in your home, and if mold is discovered you must take immediate measures to have it removed. Consult the Environmental Protection Agency's "A Brief Guide to Mold Moisture and Your Home" to learn more about how to keep your home safe.

"Your home insurance will not cover you if your home is infested with termites.”

According to the National Pest Management Association, termites cause about $5 billion worth of damage every year in the U.S. Your home insurance will not cover you if your home is infested with termites. Time discussed the possibility of obtaining termite coverage through a pest removal service, though it will also pay off to have your home regularly checked for termites. Janet Patrick, a spokeswoman for the Illinois Insurance Association, told Bankrate that catching termites early can help homeowners escape structural damage.

Making sure your home is up to code Realtor.com explained that your home insurance will cover the repairs if your home is damaged during a storm or fire. If, however, during the process of those repairs it is discovered your home does not meet current codes, the insurance company will only cover 10 percent of the upgrade costs.

Billy Van Jura, owner of Birchyard, an insurance planning firm and brokerage in New York, explained to Realtor.com that home insurance policies tend to cover the costs of returning the home to the state it was in before the damage. It will not, however, pay to upgrade it further.

The bottom line:  know your home insurance policy like the back of your hand. It could save you a big shock somewhere down the road.