Does Homeowners Insurance Cover House Settling?

Homeowners insurance policies provide financial protection against a range of unforeseen events that can impact a dwelling. Many homeowners often wonder about the extent of this coverage when it comes to structural issues, particularly those related to house settling. Understanding how these policies address foundation movement is important for any property owner.

Defining House Settling for Insurance

House settling refers to the downward movement of a home’s foundation, which can lead to various structural issues. From an insurance perspective, differentiating between normal, gradual settling and more significant damage caused by specific events is crucial for coverage determination. Minor structural shifts, such as small hairline cracks that develop over time due to soil compaction or changes in moisture content, are generally considered part of normal wear and tear and are typically not covered by standard homeowners insurance.

The cause of settling is paramount in evaluating an insurance claim. Policies distinguish between gradual damage, often excluded as preventable through maintenance, and sudden, accidental damage, which might be covered. Common causes of structural movement include expansive soils, poor soil compaction, or significant plumbing leaks underneath the slab.

Standard Homeowners Policy Coverage

Standard homeowners insurance policies, such as HO-3 or HO-5 forms, typically cover damage to the dwelling on an “open perils” basis, meaning they cover all risks unless specifically excluded. However, these policies contain common exclusions directly relevant to house settling. Excluded perils frequently include earth movement, such as earthquakes, landslides, mudslides, or sinkholes. Damage resulting from natural settling, cracking, shrinking, bulging, or expansion of pavements, foundations, walls, floors, or roofs is also generally not covered.

Water damage originating from outside the home, such as floods, sewer backups, or water seeping through the foundation, is typically excluded from standard policies. Damage due to neglect, poor construction, or a lack of maintenance is also excluded. However, if foundation damage arises from a covered peril, such as a fire, a sudden and accidental discharge of water from a burst pipe, a windstorm, or a falling object, the resulting damage to the foundation might be covered.

This concept is known as “peril-based” coverage; the policy responds if the direct cause is a covered peril. For example, if a sudden burst pipe under the house leads to soil erosion and subsequent foundation shifting, the damage could be covered because the initial cause (burst pipe) is a covered peril. However, if the same foundation shift occurs due to long-term, gradual seepage or poor drainage, it would likely be excluded.

Additional Coverage Possibilities

While standard policies have specific limitations, homeowners can acquire additional coverage for perils that could lead to severe house settling. Earthquake insurance is a separate policy or endorsement covering damage to the home’s structure and personal property caused by seismic activity. Standard homeowners policies do not cover earthquake damage, making this an important consideration in earthquake-prone regions. Deductibles for earthquake policies are typically higher, often ranging from 5% to 25% of the dwelling’s coverage limit.

Similarly, flood insurance is a distinct policy, often obtained through the National Flood Insurance Program (NFIP), which covers damage directly caused by flooding, including structural components like the foundation. This policy is separate from homeowners insurance and is necessary for flood-related foundation damage, as standard policies exclude it. However, flood insurance generally does not cover foundation damage caused by soil erosion or settling from surface runoff not directly related to a flood event.

Some insurers offer specific endorsements that can expand coverage for certain foundation-related issues. A foundation repair endorsement might cover damage to the foundation resulting from a sudden and accidental discharge of water, such as from a plumbing system. This type of endorsement can be a low-cost addition that helps address a common cause of foundation problems not typically covered by the base policy. Another relevant endorsement is for water backup, which covers damage from sewer or drain backups or sump pump overflow, preventing water intrusion that could destabilize a foundation.

What to Do After Discovering Damage

Upon discovering potential settling damage, a homeowner should take immediate, actionable steps to protect their property and prepare for a potential insurance claim. First, document the damage comprehensively by taking clear photographs and videos from multiple angles, showing the extent and location of any cracks, shifts, or other visible issues. Include close-ups and wider shots to provide context. It is also advisable to document the date of discovery and any potential contributing factors.

Next, take reasonable steps to prevent further damage, such as patching small leaks or diverting water away from the foundation, but avoid making extensive permanent repairs before the insurance adjuster has assessed the situation. Review your specific homeowners insurance policy carefully to understand your coverage limits, deductibles, and any exclusions related to foundation damage or earth movement. Look for clauses regarding sudden and accidental damage versus gradual deterioration.

Promptly contact your insurance provider to report the damage and initiate a claim. Be prepared to provide details about the damage, when it was discovered, and any potential causes. Cooperate fully with the claims adjuster who will inspect your property, providing them with all documentation you’ve gathered. The adjuster will evaluate the cause of the damage to determine if it falls under your policy’s covered perils.