What Home Insurance Doesn’t Cover: 7 Surprising Exclusions You Should Know

When disaster strikes our homes, we expect the insurance company to do their best to help us through the process. Unfortunately, that’s not always the case. Many homeowners assume that their insurance policy will cover just about any disaster or mishap, only to find out the hard way that certain damages aren’t included. Many times, the information coming from the insurance company can be misleading.

So, what doesn’t home insurance cover? Let’s explore seven common exclusions that might surprise you and explain how you can protect yourself from these potential gaps.

1. Flood Damage

Standard home insurance policies typically exclude flood damage. This exclusion often catches homeowners off guard, especially those living in areas prone to flash floods or coastal storms.

So, what can you do? Consider purchasing a separate flood insurance policy through providers like the National Flood Insurance Program (NFIP) or private insurers if your home is in a flood-prone area.

Additionally, it’s worth noting that the burden of proof for flood damage is on the insurance company. Since most homeowner’s insurance policies don’t cover flood damage, insurers might attempt to classify water damage as flood damage to avoid payouts. However, if the insurance company cannot adequately prove the damage meets the narrow definition of “flood” as outlined in the policy, they are typically responsible for covering the water damage.

2. Earthquake Damage

Many homeowners assume their standard insurance policy will cover quake-related damages, but most policies specifically exclude earthquakes. Cracked foundations, toppled walls, and other structural damage caused by seismic activity are not part of typical coverage.

If you live in an area with seismic activity, adding an earthquake insurance rider or purchasing a standalone policy is a wise choice.

3. Wear and Tear

Over time, every home faces natural aging and deterioration. Roof leaks from years of wear, plumbing system breakdowns, or cracked driveways are all examples of damage caused by gradual wear and tear. Home insurance policies view these as maintenance issues, not sudden or accidental losses, so they’re excluded from coverage.

Regular maintenance and inspections can help you catch and address issues before they escalate. Creating a home maintenance fund is another proactive step.

4. Mold Damage

What if you discover mold in your basement or behind the walls? Mold damage is generally excluded unless it’s the direct result of a covered peril, such as a burst pipe. Insurers typically consider mold prevention part of routine home maintenance.

So, ensure your home is well-ventilated and address water leaks immediately to prevent mold growth. In some cases, you can purchase additional mold coverage for extra peace of mind.

5. Sewer Backup

Imagine coming home to find your basement flooded with sewage. Many homeowners don’t realize that a standard policy doesn’t cover sewer or drain backups. This type of damage can be both expensive and unpleasant to deal with.

Look into adding sewer backup coverage as an endorsement to your policy. This extra layer of protection can save you from significant out-of-pocket expenses.

6. Pest Infestations

Termites, rodents, and other pests can cause extensive damage to your home’s structure. However, home insurance policies generally exclude pest infestations because they’re considered preventable through proper maintenance and pest control.

That means you need to schedule regular pest inspections and treatments to keep your home safe from these unwelcome invaders.

7. Luxury and High-Value Items

If you own valuable items, consider purchasing a personal property endorsement or a separate policy to ensure full coverage. Your grandmother’s heirloom jewelry or your high-end electronics might not be fully covered. While home insurance typically includes some personal property protection, it often sets limits on high-value items. For example, jewelry might only be covered up to $1,500.

Additional Things to Keep in Mind

Inflation Coverage and Policy Gaps: Insurance companies often include “inflation protection” in policies, which adjusts coverage to account for increases in a home’s value. However, insurers don’t always disclose how they calculate these adjustments, and you may not receive the full value owed during a claim. Reviewing your policy’s terms and asking for clarification can help avoid surprises.

Living Expenses Coverage: If your home becomes uninhabitable due to covered damages, your insurance is generally responsible for paying necessary living expenses. This includes finding accommodations similar in quality to your home while repairs are underway.

Hidden Additional Coverages: Many policies include special or additional coverages for items like debris removal, landscaping, or bringing repairs up to current building codes. These benefits are often buried in the fine print, so it’s worth examining your policy closely to ensure you take full advantage of what you’ve paid for.

Duty to Cooperate: Homeowners are required to cooperate with insurers during claim investigations. However, this duty has reasonable limits. Some insurance companies may try to overburden policyholders with excessive requests to delay or deny claims. Knowing your rights can help you push back against unreasonable demands.

Protecting Yourself Against Gaps

Home insurance is a critical safety net, but understanding its limitations is equally important. Here are a few practical steps to ensure you’re fully protected:

Review Your Policy: Take the time to read and understand your policy’s fine print. Don’t hesitate to ask your insurer for clarification.

Perform a Risk Assessment: Identify risks specific to your location, like floods or earthquakes, and seek additional coverage if needed.

Consult an Expert: An insurance agent or broker can help you tailor a policy that fits your unique needs.

Home insurance is an invaluable tool, but it’s not a catch-all solution. By knowing what’s excluded and taking proactive steps to fill those gaps, you can ensure your home and belongings are truly protected. Remember, peace of mind comes from preparation—and that starts with understanding your coverage.