What Doesn’t Homeowners Insurance Cover?

Homeowners insurance provides financial protection for a dwelling and personal belongings against various unexpected events. While policies offer broad coverage for common perils like fire, theft, and certain weather-related damage, they do not encompass every possible risk or type of loss. Understanding the limitations and exclusions within a standard policy is important for property owners to avoid unforeseen financial burdens.

Catastrophic Natural Disasters

Standard homeowners insurance policies typically exclude damage from certain widespread natural disasters due to their potential for extensive and costly damage. Flooding, for instance, is a common exclusion, regardless of its source. To obtain coverage, homeowners generally need a separate flood insurance policy, most commonly available through the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA). The NFIP offers building coverage up to $250,000 and contents coverage up to $100,000 for residential properties. In areas designated as Special Flood Hazard Areas, flood insurance is often a mandatory requirement for properties with federally-backed mortgages.

Earthquakes and other earth movements, including landslides, mudslides, and sinkholes, are also generally not covered by standard homeowners insurance. Homeowners in earthquake-prone regions can purchase separate earthquake insurance policies or add an endorsement to their existing homeowners policy. Such policies often come with higher deductibles, potentially ranging from 5% to 25% of the dwelling’s coverage amount. This specialized coverage typically addresses structural damage, personal property damage, and sometimes additional living expenses resulting from seismic activity.

Maintenance Issues and Neglect

Homeowners insurance policies are designed to cover sudden and accidental damage, not issues arising from a lack of routine maintenance, wear and tear, or gradual deterioration. Damage from mold, mildew, or rot is frequently excluded unless it is the direct result of a sudden and accidental covered peril, such as a burst pipe. Even when mold is caused by a covered event, policies may have limited coverage, often ranging from $1,000 to $10,000 for remediation. Mold stemming from chronic leaks, high humidity, or neglected maintenance is generally not covered.

Pest infestations, including damage caused by insects like termites or rodents, are also typically excluded from standard policies. Insurers consider damage from pests as preventable through regular upkeep, and therefore, the costs associated with pest removal or the resulting structural damage are usually the homeowner’s responsibility. Similarly, damage from routine wear and tear, rust, corrosion, or gradual deterioration of components like roofs, plumbing, or appliances is explicitly not covered.

Damage caused by poor workmanship or construction defects is another common exclusion. While the policy may not cover the cost to repair the defect itself, subsequent damage resulting from a covered peril (e.g., a fire caused by faulty wiring) might still be covered. Additionally, damage from sewer or drain backups, including sump pump failures, is generally not included in a standard homeowners policy. Homeowners can often add specific water or sewer backup endorsements to their policy for an additional premium, which covers damage to the home and belongings from such incidents.

Intentional Acts and Prohibited Uses

Homeowners insurance policies contain exclusions for damage caused by deliberate actions of the policyholder or household members. If damage to the property or injury to another person is intentionally caused by the insured, the policy will not provide coverage. This exclusion is a fundamental principle in insurance, preventing individuals from benefiting from their own willful misconduct.

Damage resulting from criminal or illegal acts committed by the policyholder is also typically excluded. Homeowners policies are primarily designed for residential use, and damage or liability arising from business activities conducted on the property is generally not covered. Homeowners operating a business from their residence may need to acquire a specific home business endorsement or a separate commercial policy to ensure adequate coverage for business-related risks.

Events of a broader societal scale, such as war, government action (like confiscation or condemnation of property), or nuclear hazard, are also explicitly excluded from standard homeowners insurance policies. These exclusions are in place because the scale of potential damage from such catastrophic events is immense and beyond the scope of typical personal property insurance.

High-Value Possessions and Specialized Property

While homeowners insurance provides coverage for personal belongings, there are often specific limitations for high-value items. Standard policies typically have sub-limits for categories such as jewelry, furs, art, collectibles, firearms, and cash. These limits mean that if a valuable item is stolen or damaged, the policy might only pay a fraction of its true worth. For example, cash coverage can be as low as $200, and jewelry limits might be around $1,500.

To fully protect these high-value possessions, homeowners can purchase a “scheduled personal property endorsement,” also known as a floater or rider. This endorsement allows specific items to be listed individually with an appraised value, providing broader coverage, often on an “all perils” basis (except for explicitly named exclusions), and sometimes with no deductible. An appraisal or proof of value is usually required for scheduling these items.

Certain detached structures on the property, such as sheds or detached garages, are typically covered by homeowners insurance. However, if these structures are used for business purposes or as rental units, their coverage may be limited or excluded.

Vehicles, including cars, boats, and recreational vehicles (RVs), are generally excluded from homeowners policies. These assets require separate, specialized insurance policies, such as auto insurance or watercraft insurance, to cover damage, theft, or liability. While the vehicle itself is not covered by homeowners insurance, personal belongings stolen or damaged from inside a vehicle might be covered under the homeowner’s personal property coverage, subject to policy limits.