Home insurance exclusions: What does homeowners insurance not cover?

Homeowners insurance covers your home’s structure, personal property and other structures if damaged or destroyed by a covered peril. While homeowners insurance covers a wide variety of perils, some are excluded from almost all standard homeowner policies.

Earthquakes, flooding, lack of maintenance and even damage from war are commonly excluded from home insurance coverage. You may need additional coverage such as flood or earthquake insurance to protect your home fully.

Keep reading to learn about the most common exclusions on standard homeowners insurance policies.

What is not covered by homeowners insurance?

Common exclusions for homeowners insurance may surprise you. Many people don’t know that flood damage isn’t covered, and you may be shocked to learn that damage from war, nuclear accidents and even a power failure may not be covered.

There are a number of perils that are excluded from a standard homeowners policy. Here is a quick list followed by more detailed explanations of these exclusions:

• Ordinance or law
• Earth movement
• Water damage from floods and water backup
• Power failure
• Neglect
• War
• Nuclear hazard
• Intentional loss
• Governmental action
• Loss to property

Ordinance or law: If repairs are needed to bring your home up to current building codes after a loss, you must cover those additional costs out of pocket. A homeowners insurance policy will cover the cost of repairing your home up to the state it was in when the loss occurred. If building codes have changed since your home was built, the additional costs to bring it up to code will fall to you. It is possible in most situations to purchase a rider for your policy that will cover these costs.

Earth movement: Standard homeowner policies almost always exclude damage that is caused by “earth movement,” which includes things such as sinkholes, earthquakes, landslides and mudflows. If you live in an area prone to earthquakes, you should consider a separate earthquake policy or endorsement.

Water damage from floods and backup: While a standard homeowners policy covers damage from sudden and accidental discharge of water like a burst pipe or rain that comes in through a damaged roof or window, damage caused by flooding, water seeping up from the ground and sewer or sump pump backups are not covered. If your home is in an area prone to flooding or severe storms, you should consider a separate flood insurance policy.

Power failure: A homeowners insurance policy does not cover damage caused by a power outage or power surge.

Neglect: Claims for damage you ignored or due to a failure to keep up with the maintenance of your home are not covered.

War: Homeowners insurance doesn’t cover any damage caused by war, regardless of whether it is declared, undeclared or even a civil war.

Nuclear hazard: Any nuclear hazards are not covered. This can include nuclear waste leaks, reactor failures or even nuclear warheads.

Intentional loss: If you intentionally damage your home, your claim will be denied. For example, in a fit of rage, you throw a golf club through a picture window; in this case, you will cover the cost of a new window because the damage was intentional.

Government action: Government action, both local and federal, is not covered by a standard homeowner policy. This can include items such as the destruction, confiscation, or seizure of covered property by any governmental or public authority.

Loss to property: If you experience a loss due to faulty zoning, bad repair or quality, faulty construction materials and defective maintenance, the damage will not be covered by your homeowners policy.

Additional exclusions

The above were standard exclusions for a homeowners policy. Other exclusions can vary by insurance company. Check with your insurer and read your policy in full to ensure you know all exclusions. Here are a few additional exclusions that may turn up in homeowners insurance:

• Dog breeds: Most homeowners policies will cover dog bites, but some policies have exclusions based on the dog breed. Your pup may be excluded from coverage if it is a Rottweiler, German Shepherd, or Pit Bull. Check your policy for breed exclusions.
• Home-based business: If you run a business out of your home most homeowner insurance policies will not offer liability coverage for losses related to the business. Business property loss is capped at around $2,500 with most homeowner policies.
• Pest damage: A standard homeowner policy will exclude damage caused by pests and will not cover the cost of pest removal.

Real-life examples of common home insurance exclusions

Since policies can differ by state and insurance company, the only way to know your exclusions is to read your policy. If you come across something you don’t understand, ask your agent or insurance company about it. Here are some scenarios related to home insurance exclusions.

Termites destroy my wood deck

Home insurance doesn’t cover infestations such as termites or rodents. The deck repair would, in this case, not be covered.

My home needs a building code upgrade

This would not be covered. If your home suffers damage and you are required to upgrade it to meet current building codes when you repair it, you’ll have to do it at your own expense.

A standard home insurance policy pays only for what you originally insured. However, some insurance companies sell a “rebuilding ordinance or law coverage” rider. This extra coverage pays a specific amount toward upgrade costs.

My basement flooded, and most of my possessions have been destroyed

Homeowners insurance always excludes flood damage. For protection against floods, you’ll need flood insurance.

My home’s value plummeted after the city built a prison in the area

Unfortunately, you are out of luck. This would fall under the government action exclusion. The selling cost is not insurable. Your home is insured for the amount you’ll need to rebuild it and replace the contents.

Damage to my home that resulted from a power outage

A standard homeowner policy covers food loss in your refrigerator and freezer, usually up to $500, but this is usually in combination with a larger claim for damage by a covered peril. Electronics, such as your computer, are not covered under standard home insurance policies if there’s a surge when the power comes back on unless the surge is due to a covered peril such as lightning.

A company dumped pollutants into a stream that runs through my property

Your homeowners insurance would not cover the clean-up or reimburse you for damage to your property. If something like this were to happen, the party responsible would be liable for your clean-up bill — probably after a lengthy court battle. But some insurance policies contain coverage to clean up oil spilled in your house by the oil company that fills your tank.

Sewage backed up into my home through the pipes.

Any damage caused by water and sewer backup is excluded, although you can add an endorsement for this type of damage to most policies.

I’m running a small business from my home.

If you run a business out of your home, you should be insured separately. For example, a simple home office might require only an endorsement of a home insurance policy. Still, a hair salon, daycare or construction business poses greater potential liability and requires a separate business insurance policy. See our business insurance section.

Unusual incidents and home insurance exclusions

Let’s have a quick look at some unusual incidents and unusual situations that may or may not be covered by your homeowners policy:

A plane, train or automobile crashed into my living room

The damage should be covered. Cars and trains fall under coverage for damage from vehicles hitting your house, while airplane damage is paid for by coverage for objects falling out of the sky. However, if a car drives into your home, the vehicle owner’s liability insurance is the first line of defense.

A nuclear power plant problem irradiated my home

You are on your own when it comes to clean up and replacing your now glowing possessions. Nuclear accidents are a standard exclusion. You’d have to go to the power company that owns the nuclear plant and get it to pay up.

My house slid down a cliff

If you build or buy a house on a cliff, be aware of the risks involved. A standard home insurance policy won’t pay if your house slides down because of a landslide or any other reason. That’s considered “earth movement” and is excluded. Your best bet is to check with your agent about getting coverage for such an event. (If you live in California, a California Earthquake Authority policy will cover earth movement only if it is seismically induced, so if you live on a cliff overlooking the Pacific, you will need additional coverage.)

My house, which was built over an old coal mine, was swallowed by a sinkhole

This is also excluded as “earth movement.” This is a problem for homeowners in Coal Belt states, including Illinois, Ohio, Pennsylvania and West Virginia, but random sinkholes have appeared all over the country. While a home insurance policy doesn’t cover sinkholes due to old mines, you can purchase coverage (known as mine subsidence insurance), usually from your state’s Mine Subsidence Authority. Check with your state’s department of insurance or your insurance agent.

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