Does Home Insurance Cover Foundation Damage?

Home insurance protects a dwelling and personal property against specified risks. Foundation damage is a significant challenge due to potential structural issues. Understanding how home insurance addresses foundation damage helps homeowners manage expectations and plan for repairs. This article clarifies how home insurance handles foundation damage, detailing what is covered, common exclusions, and additional coverage options.

Standard Coverage for Foundation Damage

Standard homeowner’s insurance policies, like an HO-3 policy, provide “open perils” coverage for the dwelling. This means the policy covers foundation damage from any cause unless explicitly excluded. Coverage is primarily determined by the event that caused the damage, rather than the damage itself.

Foundation damage is covered when it results from sudden and accidental perils, such as:
Fire that compromises structural integrity.
Explosion near the home leading to cracks or shifts.
Vandalism or malicious mischief.
Falling objects, like a large tree limb.
Vehicle collision causing direct damage.

Sudden and accidental discharge or overflow of water or steam from a plumbing, heating, air conditioning, or sprinkler system (e.g., a burst pipe) can also lead to covered foundation damage. The sudden nature of the event is a key factor for coverage.

Common Exclusions for Foundation Damage

Home insurance policies exclude many common causes of foundation damage, often related to gradual issues or large-scale, uninsurable events.

Earth movement, including earthquakes, landslides, mudslides, and sinkholes, is a primary exclusion. These events require separate specialized insurance or endorsements.

Various forms of water damage that are not sudden and accidental are also excluded. Flood damage, from rising water outside the home, requires a separate flood insurance policy. Damage from water backing up through sewers or drains, or overflowing from a sump pump, is typically excluded and often needs a specific endorsement. Continuous or repeated seepage or leakage of water over time, from plumbing or external sources, is generally not covered. This highlights the difference between sudden events and gradual water intrusion.

Damage from wear and tear, deterioration, or lack of maintenance is consistently excluded. This includes issues from natural aging or neglect. Poor construction, faulty workmanship, or design defects are also common exclusions. Finally, damage due to natural settling, shrinking, bulging, or expansion of the house or foundation is typically excluded, unless caused by a covered peril. Animal or pest damage, like from termites or rodents, is also excluded.

Additional Coverage Options

Homeowners can secure additional coverage for many foundation damage causes excluded under standard policies, typically as separate policies or endorsements.

Flood insurance is essential for flood-related foundation damage, often obtained through the National Flood Insurance Program (NFIP) or private insurers.

For water backup issues, a sump pump and water backup endorsement can be added, covering damage from water backing up through sewers or drains, or overflowing from a sump pump.

Earthquake insurance is available as a separate policy or endorsement for seismic activity and other earth movements.

Service line coverage protects against damage to utility lines from the street to the house. While primarily for line repair, it could offer recourse if a damaged line causes foundation damage. Homeowners should consult their insurance provider to understand these options.

Filing a Foundation Damage Claim

When a homeowner suspects foundation damage that might be covered by insurance, documenting the damage immediately is a first step. This involves taking clear photographs and videos, noting the date and providing a detailed description. If the cause of the damage is known, such as a burst pipe or a fallen tree, it is important to document this cause thoroughly. Promptly documenting the scene helps establish the timeline and nature of the loss.

Following documentation, homeowners have a duty to prevent further damage to the property. This might involve turning off the water supply in the case of a leak or boarding up broken windows to secure the home. All receipts for emergency repairs or materials purchased to mitigate damage should be kept, as these costs may be reimbursable. This mitigation effort demonstrates responsible property ownership and can support the claim process.

The next step is to contact the insurance provider to initiate the claim. This can typically be done via phone, through an online portal, or using a mobile application. When contacting the insurer, it is helpful to have the policy number, the date the damage occurred, and a clear description of the damage readily available. The insurer will then typically assign an insurance adjuster to inspect the damage.

The adjuster’s role is to assess the extent of the damage, determine the cause, and evaluate whether the damage is covered under the policy. Homeowners should be present during the inspection and provide all documentation, including photos, videos, and receipts for any emergency repairs. After the inspection, the insurer will issue a decision, which may be an approval, a denial, or a partial approval of the claim. Homeowners should carefully review this decision and the accompanying explanation.

If the claim is approved, homeowners should obtain multiple repair estimates from qualified contractors. These estimates help ensure a fair settlement and provide a basis for the repair work. The settlement process will involve understanding how the deductible applies and whether the payout is based on Actual Cash Value (ACV) or Replacement Cost Value (RCV), which affects the amount received. While less common, if a claim is denied and the homeowner believes the denial is incorrect, they may have the option to appeal the decision directly with the insurance company.