What does homeowners insurance not cover?

When Hurricane Michael hit the Florida Gulf Coast as a Category 5 storm in 2018, it caused over $25 billion in damageOpens in a New Window.‍ ‍ ^{See note 1} Almost $5 million of that damage was at Tyndall Air Force BaseOpens in a New Window.‍ ‍ ^{See note 1}

For some homeowners it was more than a natural disaster. Many thought their standard home insurance policies would cover damage from the storm.

They were in for a rude awakening.

Homeowners policies may have exclusions or limitations for damages due to certain weather conditions like wind or hail. Flooding is also typically excluded, which can limit coverage for damage from heavy rains and storm surge.

Sadly, it seems many residents were not aware of the financial risks they faced, even if they knew they were in hurricane territory. Less than 40% of homes in the Florida Panhandle had active policies from the National Flood Insurance Program, or NFIP, in place when Michael made landfall.

You might be thinking, "That would never happen to me!" But the unfortunate reality is that misconceptions about homeowners insurance are quite common, both in high- and low-risk areas. Far too many people live under the assumption that their policy covers just about everything. That's not the case. Not knowing the limits of your homeowners policy can be an expensive mistake.

If you want to reduce the unexpected costs of getting caught without coverage, it's important to understand what homeowners insurance doesn't cover. You may be able to insure against some additional unexpected losses with an endorsement or another insurance policy.

Are floods covered by homeowners insurance?

Don't assume just because you aren't near a river or coastline that you aren't susceptible to flooding, which occurs any time groundwater enters a house. If it can rain, your home can flood.

Keep these facts in mind:

• In 2021, the average residential flood claim resulting from Hurricane Ida was more than $55,000Opens in a New Window.‍ ‍ ^{See note 1} Just a few inches of water in a home can cause tens of thousands of dollars in damages.
• Flood insurance is available via the NFIP, which is underwritten by the Federal Emergency Management Agency, or FEMA.
• There is usually a 30-day waiting period from the date of purchase before the policy goes into effect. So don't wait until disaster looms to buy coverage.

Earthquake insurance 101

You don't need to live on a fault line to incur earthquake damage as defined by insurers. If there is any kind of shifting or movement of the earth, the damage likely isn’t covered by a standard homeowners policy.

Keep in mind:

• Quakes aren't limited to California. A temblor damaged the Washington Monument in 2011.
• The U.S. Geological Survey, or USGS, updated its long-term seismic hazard maps in 2014 to show increased earthquake risk for half the country. In 2016 and 2017, USGS also published short-term seismic hazard models from induced and natural earthquakes, assessing the risk around the country for natural quakes and earth shifting caused by mining operations like hydraulic fracturing or fracking.
• You may be able to reduce damage from minor quakes by making improvements to potential trouble spots in your home.
• You may be able to add earthquake coverage to your homeowners policy with a rider or other insurance. In California, for example, you may be able to purchase earthquake insurance from the California Earthquake AuthorityOpens in a New Window.‍ ‍ ^{See note 1}
• If you rent, you may already have earthquake coverage for your belongings through your renters insurance. Check your policy to see what it covers.

Supplemental protection from wind and hail damage

Mother Nature is unpredictable and severe weather events like wind, hailstorms, tornadoes and hurricanes can damage your home. While your homeowners coverage will typically cover most weather-related events, your insurer may have certain coverage limitations, or you may have a different deductible for certain types of weather.

For example, supplemental windstorm insurance coverage usually protects your property from hail damage if you have broken windows, or dents in shingles and siding. Hurricane damage from collapsed walls or damage to your roof, doors and windows from a tornado, may also be covered.

In states like Florida and other high-risk areas, wind and hail damage are excluded as part of a general homeowners policy and require separate windstorm coverage. It's important to review your policy to understand how your coverage would apply.

What kind of homeowners coverage do you need?

Your home is likely your biggest asset, so you want to make sure it’s protected. That’s why it’s important to be familiar with some of the different components of a homeowners insurance policy:

• Roof repair and replacement coverage: Covers the repair or replacement of your roof. Depreciation may apply depending on your policy, and you’ll likely have to pay a deductible.
• Dwelling coverage: Covers the physical structure of your home.
• Water backup coverage: Covers the cost of repairing damage caused by water from off-site sewer backups and sump pump overflows. This can be part of your homeowners policy or added as a supplement, depending on where you live.
• Other structure coverage: Covers costs to repair structures on your property that aren’t connected to your home, like a fence, pool or detached garage. Know your limits, though; some policies don’t offer as much coverage for separate structures as they do your main residence.
• Medical coverage: Covers the medical costs of others who might be injured on your property, up to the policy limit. It can also cover medical costs of others who are injured by you or your actions when you aren’t on your property.

What about general liability protection?

Weather isn't the only thing that can put your property and your finances at risk. Liability protection is a component of most homeowners insurance policies. Depending on your situation, your baseline liability protection through your policy may be adequate; however, several situations might call for an umbrella policy, which provides additional liability coverage. Some extra considerations include:

• Do your children play contact sports? Do you own a large dog or have a swimming pool? That could mean you have a higher-risk property.
• Hosting get-togethers, like parties on game day or dinner gatherings, or hiring contractors to come into the home to clean, make repairs or babysit, can leave you open to liability if someone is injured in your house.
• Libel and slander may not be covered. Maybe you had a bad experience at a restaurant and derided their poor work on social media. If the owners decide to sue, a standard homeowners policy may not be sufficient.

Is a homeowners policy enough?

It’s important to remember that while your homeowners policy covers your home and most of your belongings, it might not cover everything. For example, if you play musical instruments or have highly valuable collectibles like art or jewelry, your homeowners policy might not cover those items if they are lost or damaged, even in a natural disaster.

So what can you insure? Just about everything. But if you’re worried about personal property like jewelry, musical instruments, cameras, silverware, furs and stamp or coin collections, you might consider valuable personal property insurance.

These policies offer more protection than a homeowners or renters insurance policy, and can be an affordable way to customize your coverage so you have peace of mind.

Get to know your insurance.

When it comes to insurance, the best policy is to know your policy. The last thing you want when a natural disaster or other major incident occurs is to be caught without coverage you thought you had.

Talk to your insurer to make sure you understand what your policy does or doesn't cover, like damage from flooding, earthquakes, wind, hail and liability, and whether you need additional home insurance coverage. Once you can clearly see the gaps in your coverage, you can decide how to protect yourself, your family and your finances. At the least, a well-stocked emergency fund can help you be better prepared.

All coverages described are subject to the terms and conditions of your policy.