One of the most important areas to understand on home insurance policies is the gaps in coverage, or exclusions on your homeowners policy. There are several that you may not be aware of. Even if your homeowners insurance policy is written on an HO-3 form which covers replacement value on an all-risk basis, there are certain exclusions that you may be unaware of. We will discuss some of the most common insurance gaps.
Flood Insurance- A flood loss is defined as waters rising up from the ground from excessive water that finds its way into the house. To be covered for flood losses you must purchase a separate flood policy from the federal government under The Federal Emergency Management Association(FEMA). Your home insurance policy will absolutely not cover you for flood insurance of any kind.
Earthquakes- An endorsement can be added to your policy that will cover you for earthquakes. Where we are located here in Charlotte, NC we don’t see earthquakes like in other parts of the country but if you want to be covered for such a loss you need to add this endorsement to your policy.
Water/Sewer Backup- Water backing up into your home from sewer or plumbing pipes is not covered on your home insurance policy unless this endorsement is added. A lot of home insurance policies don’t have this endorsement so to adequately protect yourself it is important that you talk with your insurance agent about adding this coverage.
Jewelry and other personal property- Most home insurance policies will only cover you up to a maximum of $1500 for jewelry losses. If you want to be covered for anything over this amount you need to add the Scheduled Personal Property endorsement to your policy. In most cases items over $5000 would need to have a recent appraisals that will proof the value of each item. This figure could vary so check with your agent to find out what is required.
Jewelry is the most common type of personal property that has limitations under your policy but there are several others. Musical instruments, guns, computer equipment, silverware, money, and bullion, are some some other examples of personal property that has limitations as well.
Residence Premises- Residence premises is a term used to define the residence where you reside. If you purchase a home insurance policy such as an HO-3, HO-2, HO-8, or HE-7 there is only coverage in the event of a loss if you reside in the home. The home must be your primary residence to be covered. It is the duty of the insured to notify the insurance company once the residence becomes vacant for any reason or if it has become tenant-occupied.
This is very important to know because your insurance company can deny coverage if you do not notify them so that the policy can be rewritten on the correct form such as a vacant home policy or tenant-occupied dwelling also known as rental or landlord insurance.
To further explain, please read the following examples:
A home has been temporarily vacated so that renovations can be completed.
The home is being renovated before moving in.
You move to another location and the home is vacant while you are trying to sell it.
You move to another location and rent the property out to a tenant.
The home is in the name of your elderly mother who lives in a nursing home and you reside in the home.
These are all examples of situations where a claim can be denied for a total loss or partial loss due to the policy being written incorrectly.
Incorrect named insured- It is very important that your home insurance policy is written with the correct owner of the property at the time of writing the policy. The owner or owners should be listed on the policy. If the policy is written in the name of another party and that party does not have insurable interest, the claim can be denied. The same holds true if ownership changes for any reason due to divorce, death, etc. It is imperative that the correct named insured be listed on the policy.
These are just some of the coverage issues you may encounter by not being fully educated on the type of policy that you are purchasing. There are others so please contact your agent with any questions you may have. Don’t wait until you have had a loss and it is too late. Please feel free to call us at 704-494-9495 with any questions as well.