What’s Not Covered by Your Homeowner’s Insurance May Surprise You

homeowners insuranceWhen buying a homeowner’s insurance policy, look carefully at the wording -- what you don’t see could end up biting you. Here are four major items to verify with your agent when buying or updating your homeowner’s insurance policy:
  1. Flood Damage. Most homeowner’s insurance policies do not automatically cover damage from what is usually called “surface water.” If you live in a high-risk area, you probably were required by your bank to purchase flood insurance with your homeowner’s policy. But because standard policies are written with the “average” homeowner in mind, you can only get coverage for flood damage if you purchase it separately. If you are not required to purchase flood insurance but live in an area that’s even at moderate risk for flooding, seriously consider adding flood insurance to your homeowner’s policy. The extra insurance could cost you as much as $500 per year, depending on what flood zone your home is in – but compare to a $100,000 loss from flood damage, it’s money well spent.
  2. Motorized vehicles. People might assume that if a car or motorcycle is destroyed while parked in a garage that burns down, the homeowner’s policy automatically covers it. Not so – if a vehicle is used on a roadway, it may not be covered. A four-wheeler that’s not used for home maintenance may not be covered. Your boat might not even be covered. Check with your insurance agent and parse the find print of your policy – if you haven’t already done so. Certain items might be covered under your auto insurance policy, but make sure you know what is covered, and what the coverage is.
  3. Personal items. That $10,000 stamp collection you have tucked away in 14 carefully catalogued albums probably is not covered by your homeowner’s policy -- even if, in general, your personal belongings are. That’s because costly items such as jewelry, firearms and collections typically are subject to sub-limits – a $500 or $1,000 standard limit on coverage within the total amount (say, $100,000 worth) of personal belongings that the policy covers. Check to see which items in your house are subject to those sub-limits. If you want those items covered by insurance, they also need to have a separate policy or rider covering them, for which you pay an extra premium.
  4. Lost items. If a personal item, such as a camera or an expensive purse, is stolen or destroyed in a storm or fire, you are covered for the value for that item above your deductible. However, if you simply lose that item out of forgetfulness, what is sometimes derisively called the “stupidity clause” kicks in. In short, tough luck.
For a rundown of helpful hints, check out this free Consumers’ Guide to Home Insurance from the National Association of Insurance Commissioners. Other helpful websites: Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net Free eBook shows how to make a home disaster plan  


 

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