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What your home insurance may not cover

September 16, 2015

When faced with raging winds, high waters or the shaking earth, a home insurance policy can provide much-needed peace of mind. With insurance, you can believe your home and belongings are protected in case the waters breach the foundation or the winds rip apart your roof. Many homeowners select a standard policy without reading the fine print and don't give their home insurance a second thought—until the waters recede, the winds abate and the claim they just filed for the damage is denied.

Will your home insurance policy really protect you when disaster strikes?

Unfortunately, many policyholders don't take the time to understand their coverage until it's too late. Contrary to what you might assume, a standard home insurance policy is meaningless in the face of some of the most commonly occurring disasters. Rather than facing a horrible surprise later, make sure you understand your policy before disaster strikes. Here are some occasions where damage to your home will likely not be covered:

Floods

"Make sure you understand your policy before disaster strikes.”

Most floods are not considered nationally declared disasters, so it's rare to find a standard homeowners' insurance policy that will cover them. However, homeowners and renters can purchase flood insurance through as handful of private companies as well as the National Flood Insurance Program, which is available in all states through the Federal Emergency Management Agency. NFIP covers up to $100,000 worth of damage to the home's contents and up to $250,000 in damage to the home's structure.

Windstorms, hurricanes and tornadoes

Though many standard policies do cover damage from heavy winds, your policy might be the exception, depending on where you live. Areas where wind-related perils are common, such as the hurricane-heavy coastal areas of Florida or the Tornado Alley states of the Midwest, might not have windstorm damage included in a standard policy. And remember, even if windstorms are covered in your policy, flood damage likely is not. If you live in an area where hurricanes are common, make sure you find out exactly what your policy will cover.

Earthquakes

Nearly all standard homeowners insurance excludes earthquakes. Luckily, this particular disaster affects only a small area of the country, and in quake-heavy California the coverage is available through the not-for-profit California Earthquake Authority.

Broken pipes

While flood insurance isn't standard, most policies will cover damage from a burst pipe, both inside and outside the home. However, there is one major exception:  If your insurance company finds that the pipe broke due to homeowner negligence, your claim will likely be denied. If your pipes burst because you allowed them to freeze, didn't replace them when they became old or let your cousin install your new washing machine instead of hiring a professional, your insurance company will likely conclude you are responsible for the damage.

Simultaneous events

Let's say your home suffers damage from a hurricane, including wind damage to your roof and flood damage to your basement. Your standard homeowners insurance policy does not cover floods, but it does cover a windstorm. So your roof damage should be covered, right? Maybe not. A clause called anti-concurrent causation says if damage is caused simultaneously by a covered peril (like a windstorm) and an excluded one (like a flood), none of the damage will be covered. These cases are often disputed and many end up in court, with the homeowner sometimes being awarded the claim.

If you have questions about what is or isn't covered in your policy, make sure you talk to your agent. Act as your own advocate:  review your policy at least once a year and keep records of any claims you've filed or conversations you've had with the company. If you're worried your current policy won't protect your home, compare home insurance policies across different companies. Most importantly, get this information early and often. In the case of home insurance, what you don't know can hurt you.