A. You’re not covered if an invading army destroys your house, but you are covered if your house is either hit by a car or overrun by a skunk.
Knowledge is your best defense as a consumer. So, when disaster strikes your home, be it in the form of an army or your neighborhood skunk, you’ll know what to expect from your homeowners insurance quotes company.
Knowing exactly what your homeowners quotes policy covers and what is excluded also helps you figure out if you need to purchase special coverage for the exclusions.
A quick primer on standard homeowners insurance exclusions:
The first thing to know about exclusions is that they vary by policy type. An HO-1 covers a half-dozen perils: fire and lightning, windstorm and hail, explosion, riot, and civil commotion, damage from vehicles, and theft.
An HO-2 covers those perils, plus six more: falling objects, weight of ice, snow and sleet, accidental discharge or overflow of water from the plumbing, sudden and accidental tearing, cracking, burning, or bulging of a steam or hot-water heating system, freezing of plumbing, and artificially generated electrical current.
An HO-3 is often called a “broad-risk form” because it covers everything except the exclusions outlined in the policy. According to statistics from the National Association of Insurance Commissioners, 84.2% of homeowners have an HO-3 policy. The standard HO-3 policy contains a number of exclusions, including:
- Freezing of pipes in an unoccupied, vacant, or under-construction building
- Freezing, thawing, pressure, or weight of water or ice to a fence, pavement, patio, swimming pool, or dock
- Theft from a building that’s under construction
- Vandalism and malicious mischief if the building has been vacant for more than 30 days
- Wear and tear on the home including deterioration, insect and rodent infestation, settling, cracking, bulging, or expansion of pavement, walls, or foundations, or damage from domestic animals
- Structures used for a business
- Intentional damage
- Nuclear accident
- Cars, trucks, vans, motorcycles, aircraft, and boats with anything more than a small motor
- Property belonging to tenants
- Animals, birds, and fish
- Losses resulting from the failure to protect property after a loss.
What the experts say
We created a list of homeowner situations ranging from the mundane to the extraordinary and asked insurance experts if they thought a homeowner would be covered in each case. Our main sources were Ed Swanstrom, the vice president of product management at CNA Insurance Group, and Gary Hafner, director of personal lines/property at the Travelers Insurance Co.
Some common occurrences
A wild animal gets into your house and wreaks havoc:
Covered. You’re covered for this, as long as the animal is not a rodent, which isn’t covered. You’re also not covered if you own the animal that caused the damage. However, as Hafner points out, if a rodent or a pet does something that causes a fire, you are covered for the damage caused by the fire.
Termites, cockroaches, mice, or rats infest your home:
Not covered. This falls under the general exclusion of “wear and tear.” Insurance companies don’t consider a pest problem to be “sudden and accidental,” but rather part of routine maintenance around the house. (Sudden and accidental damage is covered.)
It depends. If your home is damaged for some reason and you need to upgrade it when you rebuild or repair, some policies will pay out if you need to upgrade to meet local building codes. Check your own policy to see if this applies to you.
It depends. Damage from floodwater is definitely not covered. For protection against that, you’ll need flood insurance. Water coming into your home from backed-up sewers is typically excluded, but you can purchase optional coverage to protect yourself from this.
Your home’s value on the real estate market plummets because a prison or a huge shopping mall is built on your block:
Not covered. As Swanstrom points out, “Selling cost has no direct relation to insurance.” Your house is insured for the amount you’ll need to rebuild it and replace the contents.
Power outage coming from outside your home:
Some coverage. Every policy contains coverage for the loss of food in your refrigerator and freezer, usually up to $500. Electronics, such as your computer, are not covered in case there’s a surge when the power comes back on. Both Hafner and Swanstrom say you should get a surge protector for such occasions.
A company dumps pollutants into a stream that runs through your property:
Not covered. If something like this were to occur, the offending company would be stuck with the clean-up bill — probably after a lengthy court battle. (Hafner points out that some policies contain coverage to clean up oil spilled in your house when your oil company fills your tank.)
Lightning strikes a power line leading into your house:
Covered. This is a basic coverage. Any damage caused by lightning — such as fire or damage to electronics from a surge — is covered.
An appliance catches fire or your hot-water heater explodes:
Covered. This is an instance of what insurance companies call a “sudden and accidental loss.” “You don’t know that your toaster is going to cause a fire that burns your house down,” says Swanstrom.
Soot from burning candles covers your house and your belongings:
Not covered. This is, on the other hand, according to both Hafner and Swanstrom, the exact opposite of a sudden and accidental loss. The soot accumulates on your belongings over a period of time and is not sudden. Both Hafner and Swanstrom say that the loss is also not accidental since the homeowner is the one burning the candles that produce the soot.
You’re running a small business from your home and a fire destroys your computer equipment:
Not covered. “There are a lot of entrepreneurs out there, and they need to know that their home business is not covered under their standard homeowners policy,” explains Swanstrom. “You need to go out and buy special coverage for your home-based business.”
Less common occurrences
A religious phenomena damages your home:
Covered. Every now and then you’ll hear about something like a house where oil is pouring out of the walls for no good reason and the Virgin Mary appears in the oil. If that happens to you, and you make a claim for the damage done to your walls, you’re covered. (Swanstrom mentions that the insurance company won’t take the rap for destroying the image of the religious figure.)
Planes, trains and automobiles hit your house:
Covered. Cars and trains fall under coverage for damage from vehicles hitting your house, while airplane damage is paid for by coverage for objects falling out of the sky.
An antigovernment militia violently takes over your town, destroying your home in the process:
Probably covered. A terrorist act such as this would almost certainly not fall under the exclusion for war. But, because no historical precedent exists, both Hafner and Swanstrom say that judging future circumstances would have to be done on a case-by-case basis.
A nuclear power plant goes on the fritz and irradiates your home and all of your possessions:
Not covered. Nuclear accidents are a standard exclusion. You’d have to go to the power company that owned the nuclear plant and get it to pay up.
Your house slides down a cliff:
Not covered. If you build or buy a house on a cliff, hopefully you are aware of the risks involved. Your standard homeowners policy won’t pay if your house slides down because of a landslide or any other reason. Your best bet is to go check with your agent about getting coverage from surplus-lines insurers. (If you live in California, be aware that your California Earthquake Authority policy will cover earth movement only if it is seismically induced, so if you live on a cliff overlooking the Pacific, you, too, will need coverage from a surplus carrier.)
Your house is swallowed by a sinkhole because it was built over an old coal mine:
Not covered. This is a problem for homeowners in the Coal Belt states, including Illinois, Ohio, Pennsylvania, and West Virginia. While your homeowners policy doesn’t cover this, you can purchase coverage (known as mine subsidence insurance), usually from your state’s Mine Subsidence Authority. Check with your state’s department of insurance or your agent.
A meteorite plummets to Earth and lands in your family room:
Covered. Not all meteorites are going to be big enough to destroy humankind as we know it. So, fortunately, there is coverage for this. This, like an airplane hitting your house, is in the category of objects falling from the sky. Additionally, if part of the Mir space station hits your house, you’re covered!
Check that policy
Hafner and Swanstrom both emphasize that the most important way to educate yourself is to read your policy. If you come across something you don’t understand, ask your agent or insurance company questions.