Home insurance exclusions: What your policy doesn’t cover (2024)

Different types of insurance policies can vary in the number of items they will and will not cover. When an insurance policy excludes something, it meansyou have no coverage for that particular item. If you make a claim for it, the claim will be denied. While there is likely a section in your homeowners’ insurance policy labeled “Exclusions,” other exclusions may appear anywhere in your policy. Insurers use home insurance exclusions to manage their risk and keep premiums affordable. Let’s examine common exclusions and how endorsem*nts can help you get the coverage you need from your home policy.

What is an exclusion?

In insurance,exclusionsserve as a way to clarify the coverages granted by the homeowners’ policy. Exclusions take coverage away from the Insuring Agreement of your policy. In addition, they serve to outline whatever isnot covered under your insurance policy. Three categories help break it down more clearly:

  1. Excluded perils:Causes of a loss, like fire, water, hail, or theft.
  2. Excluded property:Coverage may apply to some types of property, but not others. For example, a home insurance policy may not cover jewelry.
  3. Excluded actions:Coverage will not be available for any loss if it was due to an intentional or fraudulent act.

A named perils policy covers all the perils it lists specifically and excludes all other perils. However, a comprehensive policy covers everything except what it lists as ‘excluded’.

Reasons insurers may have home insurance exclusions

Insurers use home insurance exclusions to manage their risk and keep premiums affordable. There are many examples of why your insurer might choose to exclude something from a policy:

  • The risk is too high.Some things are excluded because the risk of loss is simply too great. Homes located on a known floodplain often have flood coverage excluded from their home insurance policies. Why? Because it’s near impossible to provide this coverage at an affordable premium.
  • The loss is covered elsewhere.Nuclear activity is excluded from home insurance, for example. Home insurance policies exclude motor vehicles because auto insurance policies cover them instead.
  • They can’t price the risk.As an example, policies exclude war, because there’s simply no way to estimate the potential losses from a war or any predictable timeframe in which one can happen.
  • The loss is avoidable. Home insurance providers encourage customers to take reasonable steps to prevent losses. Wear and tear is excluded because homeowners are responsible for regular maintenance of their home.

Common home insurance exclusions

According to Financial Services Commission of Ontario (FSCO), home insurance exclusions are specific hazards or situations for which your insurance company will not provide coverage. Waiting until disaster strikes to find out what your homeowners insurance policy does not cover your claim is not the best approach. Take the time now to familiarize yourself with the home insurance exclusions outlined in your policy. Below are some of the potential causes of loss (also known as “perils”) for which most insurance companies will not provide coverage:

  • Damage from wear and tear, rust, corrosion or gradual deterioration.
  • Water damage caused by flood, underground water or water that enters through cracks in your foundation.
  • Damage arising from the freezing of indoor plumbing.

Note: If you are away from home for more than four consecutive days over the normal heating months, you must drain the plumbing or arrange to have your home inspected on a daily basis by a competent individual to ensure that heat is maintained. If, however, freezing-related damage occurs despite such precautions, it might be covered.

  • Damage to the exterior of your home as the result of freezing, melting/moving snow or ice and heaving frost.
  • Damage caused by snow slide, landslide and other forms of earth movement (e.g., earthquakes). However, damage from a fire or explosion from earth movement may be covered.
  • Existing damage isn’t usually covered if it existed before the policy was taken out.
  • Intentional or criminal acts (fraudulent claims).

Other exclusions:

  • Certain dog breeds: Dog bites comprise over one-third of home insurance liability claims. So, it may not be a surprise to learn that not every dog breed is covered by your typical home insurance policy. Breeds which are known for having aggressive tendencies or have been otherwise branded as ‘dangerous’ may be left out of a policy. Your isure broker will be able to determine whether or not your dog’s breed affects your insurance. However, this isn’t the case for all insurers!
  • Losses due to war, including terrorism and nuclear risks.
  • Governmental seizure or destruction of property.
  • Illegally acquired property and losses or damage associated.
  • Damage from contaminants or pollutants, unless the loss or damage results from the sudden and accidental bursting or overflowing of your home’s oil tank or pipes.
  • If a power surge causes damage to an electronic device in your home and it’s a peril in the personal property or contents coverage of your homeowners insurance policy, you’ll most likely receive compensation to repair or replace the item. While they should be included in your fire coverage, you may find yourself uninsured if a fire is triggered by shoddy electrical work or outdated wiring.
  • Home-based business liability: A homeowners’ policy protects your home and property from various types of damage. But there are some things your insurance won’t cover. This can include protection for yourhome business. Fortunately, most major insurers offer home-based business coverage.
  • Renters: Most home insurance policies don’t cover damage or loss caused by renters staying in the home. They need to protect themselves and their belongings with their own renters’ or tenant insurance policy.

Home insurance endorsem*nts (optional coverage)

A standard home insurance policy will ensure that you are covered for the insured perils listed in your policy. However, some disasters are not typically covered, meaning that you can face expensive repair or replacement costs yourself. For those events that are not covered in your standard policy, you may want to purchase extra coverage, also known as endorsem*nts or riders.

Common endorsem*nts include:

  • Flood (overland water): Covers damage caused by bodies of water overflowing onto dry land. If you live in a flood plain, this coverage may not be available to purchase.
  • Wind damage: Covers damage to the structure of the building, broken windows, damaged contents and cleaning up debris. Water damage from rain and hail may not be covered.
  • Sewer back up coverage: Covers damage caused by backed up sewers, drains, toilets and showers. Sewer back up is not typically covered under standard policies.
  • Scheduled personal articles: If you have valuable items, such as jewelry, electronics, fine art, collectibles, bikes or boats, you may need to purchase extra coverage to protect them fully. You need to provide current appraisals to the insurer in order to get the right amount of coverage.
  • Equipment breakdown: Covers unforeseen breakdowns (not general wear and tear) in major pieces of equipment, like laundry and kitchen appliances, heating and air-conditioning systems, security systems and computers.
  • Guaranteed Replacement Cost:Ensures that you receive the full amount needed to repair your home or replace contents, without any reduction for depreciation, to the limit insured. Most standard policies pay out an Actual Cash Value which is determined by subtracting the depreciation value from theReplacement Cost Value.
  • Earthquake:Earthquakes are not included in most standard policies; however, if an earthquake causes a fire, the fire damage will be covered. An earthquake endorsem*nt insures against earthquake damage, and may also entitle the homeowner to additional living expenses if they are unable to live in the home.

Umbrella insurance policy

Your home and auto insurance policies may not fully cover the costs of a lawsuit or claim against you. An umbrella insurance policy can cover expenses outside the limits of your other policies. Not all insurance companies offer umbrella policies, so speak to your isure broker to see if it’s an option you should consider.

While there are many reasons for home insurance exclusions, the ultimate goal is to keep premiums low for clients. Home insurance exclusions are one of the main tools insurers have to ensure they’re using their customers’ premiums responsibly. Understanding your home insurance policy is essential to ensure that your premium covers what you expect it to. Being clear about your policy is vital so that you can avoid any coverage gaps. Knowing the exclusions of your home insurance policy can help you to identify where gaps exist. When in doubt, your isure representative can review your policy’s exclusions with you and advise which endorsem*nts can help give you the coverage you need for your home.

Related Articles

Understanding your home insurance policy: A breakdown

What are the three different types of home insurance coverage?

7 home insurance endorsem*nts worth adding to your policy

Home insurance exclusions: What your policy doesn’t cover (2024)

FAQs

What is the most common damage to your home that insurance does not cover? ›

Poor maintenance or neglect

In other words, basic maintenance and wear and tear are typically not covered by homeowners insurance. So, for example, if your AC goes out in the middle of the summer, you'll have to pay to fix it.

What are four major exclusions found in homeowners insurance policies pertaining to real property? ›

Important: Read exclusions in your insurance contract. Earthquake, flood, mold, earth movement, and “wear and tear” are some of the perils that are usually excluded.

What is the liability portion of a homeowners insurance policy meant to cover responses? ›

Liability covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets.

What is excluded from coverage in a homeowners policy? ›

Termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear are not covered. Damage caused by smog or smoke from industrial or agricultural operations is also not covered. If something is poorly made or has a hidden defect, this is generally excluded and won't be covered.

What not to say to home insurance? ›

Admitting Fault, Even Partial Fault.

Avoid any language that could be construed as apologetic or blameful. Admitting any level of fault can eliminate or reduce the compensation that may be available.

What are common exceptions within home insurance? ›

Earthquakes, landslides and sinkholes generally aren't covered under home insurance. Exceptions include Florida and Tennessee, where insurers must offer optional sinkhole protection. Aside from that, you'll need separate coverage for these disasters, which your insurer can help you find.

What condition voids a homeowner's policy? ›

Your insurance policy may be voided if you do not perform necessary repairs and upkeep on your home. For instance, if you don't repair your roof and your ceilings incur water damage, you could not be protected. Check with your insurance to understand what your responsibilities are in terms of house maintenance.

What are two examples each of commonly covered and not covered homeowners insurance situations? ›

Typical homeowners insurance policies offer coverage for damage caused by fires, lightning strikes, windstorms and hail. But, it's important to know that not all natural disasters are covered by homeowners insurance. For example, damage caused by earthquakes and floods are not typically covered by homeowners insurance.

What are typical exclusions in an insurance policy? ›

Typical examples of excluded perils under a homeowners policy are flood, earthquake, and nuclear radiation. A typical example of an excluded loss under an automobile policy is damage due to wear and tear.

Which of the following is not covered by homeowners insurance? ›

Standard homeowners insurance does NOT cover damage caused by flooding, earthquakes, termites, mold, or normal wear and tear.

What is not protected by most homeowners insurance? ›

Homeowners insurance doesn't cover floods, earthquakes, typical wear and tear, and damage due to insufficient maintenance. You can usually add flood and earthquake coverage to your policy for an additional fee, but wear and tear and damage from a lack of maintenance are considered preventable.

What is the standard coverage for homeowners insurance? ›

Standard homeowners policies provide coverage for disasters such as damage due to fire, lightning, hail and explosions. Those who live in areas where there is risk of flood or earthquake will need coverage for those disasters, as well.

What type of events are typically excluded from homeowners insurance? ›

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.

Which of the following do most homeowner's policies exclude coverage for? ›

Common exclusions in even the most comprehensive homeowners policies include: earth movement, such as earthquakes; sinkholes or landslides that damage your home; water damage, such as floods or sewer back-ups that leak through a pipe or seep through the foundation causing damage to your home; damage resulting from ...

Which of the following losses would not be covered by a homeowners policy? ›

Homeowners insurance also protects you against liability for accidents that injure other people or damage their property. The policy covers medical expenses for persons accidentally injured on your property. The policy does not protect you against losses from floods, earthquakes, mudslides, mudflows or landslides.

What are the three events that aren't covered by insurance and why? ›

Events typically not covered by standard homeowners insurance include: Floods. Earthquakes, sinkholes and other "earth movement" Other natural disasters (depending on geographic location)

What risks are generally not covered by insurance? ›

An uninsurable risk could include a situation in which insurance is against the law, such as coverage for criminal penalties. An uninsurable risk can be an event that's too likely to occur, such as a hurricane or flood, in an area where those disasters are frequent.

What disaster is typically not covered by property insurance? ›

Floods. Flood coverage is excluded from all types of homeowners insurance policies. Climate change has caused devastating flood events to happen more frequently across the country, especially in recent years.

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