You may not have considered homeowner’s insurance policy gaps. You own a home. You buy homeowners insurance. Simple, right?
Not always. There are a number of situations a standard homeowner’s policy doesn’t cover. Understand the gaps in a standard policy to avoid an expensive lesson.
Common Homeowner’s Insurance Policy Gaps (When You Need More Than a Standard Policy)
Many standard policies don’t cover these (and other) situations. Make sure you talk to your broker/agent if any of these homeowner’s insurance policy gaps apply to you:
- Home-Based Business. According to the government, over 12% of all U.S. households operate a full- or part-time home-based business. Property coverage won’t be affected by having a home office or home-based business. However, business liability, workers compensation, and other potential sources of claims aren’t typically included in a homeowner’s policy.
- Fuel. Gasoline or liquid fuel in your garage may void coverage of that structure, especially if that fuel causes a fire or is in some other way the reason for a claim.
- Named Insureds. A homeowner’s policy will name the people who are insured for property losses and liability. Typically, this includes resident relatives and resident relative minors. The catch: The “named insured” (probably you) must be occupying the home on a primary basis. If the named insured is living elsewhere and letting someone else live in the house, there may not be any coverage offered if there is a loss.
- Earthquakes and Floods. According to the U.S. Geological Survey’s Earthquake Information Center, all 50 states have reported earthquakes. They truly can happen anywhere. And homes far from an ocean, lake or river can still be flooded after heavy rains. Sinkholes often aren’t covered, and they can happen anywhere, too.
- Valuable Items. Jewelry, artwork, guns, coin collections, furs, silverware and other high-value items either aren’t covered, or only covered for minimal amounts, in a standard homeowner’s policy. And if you keep a lot of cash at home, that usually isn’t covered, either.
- Service Lines. As a homeowner, you’re responsible for the water and sewer lines that run from the exterior of your property to the service lines in the street. Standard policies exclude repairs to these lines, which can cost thousands of dollars.
Other common homeowner policy gaps and exclusions include war, terrorism, sewer/sump pump back-up and others. Make sure you understand what is and isn’t covered in your insurance policy, and ask about any additional coverages you may need.