Few people are fully aware of the coverages they have purchased for their home insurance. As a result, many homeowners assume that they have coverage for losses that aren’t covered. Keep reading to learn about common limitations or exclusions in a standard homeowners’ insurance. We’ll also be covering alternative options to better protect your home.
1. Cash and Valuables
The annual number of theft cases, in Dallas TX alone, is more than 46,000. Even with security cameras and burglar alarms, crime rates rise especially by the end of each year. Standard home insurance provides coverage for theft. However, there is a limitation for cash and high value items. Therefore, it is beneficial to know the extent of coverage in advance.
The extent of coverage varies by insurance companies and plans. For stolen cash, a typical homeowner’s policy can cover up to $100. In other words, it’ll only cover up to a certain dollar amount. As for securities such as stocks and bonds, $500 is the max. High value items such as jewelry rings, watches and fur coats are also covered up to $500.
It is wise not to have too many cash or jewelry at home. Using a safe deposit box within a bank is an alternative. As for high value items, you can list them as Scheduled Personal Property on your home insurance. With a little additional premium, this endorsement will provide extended coverage for specific valuables.
2. Commercial Equipment or Inventory Stored at Home
Theft of computers or equipment included in business inventory are typically compensated up to $2500. However, each insurance company may offer different limits. It’s best to check the coverage on your home insurance in advance. If you have a business insurance, find out if theft coverage extends to business inventory stored within the home.
3. Mold Damage
A typical home insurance doesn’t cover mold damage, just as termite damage is excluded. There was a time when many insurance companies in Texas had to temporarily stop selling home insurance. It was in result to a tug-of-war between state authorities on whether to pay for mold damage. There is no separate insurance for mold coverage. However, most insurance companies provide options to add coverage at an additional cost. The coverage limit is usually around $5,000.
4. Damage Caused by Underground Pipe
Water damage caused by an underground pipe that result from lack of maintenance or wear and tear are not covered. For a water damage caused by a pipe to be covered, the primary cause must be sudden and accidental. For example, if a sudden weather change causes a pipe to burst, leading to a water damage, it is likely covered.
If the damage is due to a covered loss, you will receive assistance based on your coverage. Home insurance helps pay for various expenses such as drying, cleaning, repairing or replacing wet carpet and walls. If your home is uninhabitable, you can also receive assistance in temporary housing expenses. Keep in mind that home insurance provides coverage for the damages caused by the damaged pipe not the repair or replacement of the pipe itself.
5. Damage from Earthquake
Homeowners insurance does not cover natural disasters such as earthquake and flood. A separate insurance exists for earthquake. In California, where there is a high change of earthquake, a separate earthquake damage insurance can be purchased. It’s available from a state-run company called California Earthquake Authority (CEA) designed to help victims from these risks.
Naturally, people living in areas highly exposed to earthquakes or floods, have higher insurance costs compared to those living in areas that do not. Earthquake insurance deductibles usually range from 2% to 20% of the property’s value.
6. Flood Damage
Typically, home insurance does not include flood coverage. Therefore, it is recommended that people living in flood prone areas to obtain flood insurance. In most cases, if you apply for a loan while buying a house located in a flood-prone area, the loan company requests you to submit a certificate of flood insurance.
The flood damage caused by Hurricane Katrina in New Orleans caused an enormous damage that was unprecedented in U.S. history. It is said that many of the victims have left for other areas without any compensation because they didn’t have flood insurance.
Flood insurance is managed by the Federal Emergency Management Agency (or FEMA). The actual sale and service is provided by insurance companies designated by the government.