Your home insurance policy does not cover these things

On 27 Sept., 2021

However, most conventional home insurance policies do not cover a few things. In this article, we discuss what the most common exclusions from a typical home insurance policy are.

Your home insurance policy does not cover these things

Buying a home is a once-in-a-lifetime event. A home is one of your biggest, costliest, and most treasured assets - you invest your life savings in purchasing it. The time, energy, effort, and resources that you spend and invest on its purchase is unparalleled and you would, perhaps, never do so on anything ever again.


It is only obvious then that you protect this valuable asset in all possible ways. And, home insurance does a great job at protecting your home against a wide range of calamities and damages. In the event that an unanticipated trouble hits your home, you know that your home insurance will act as a safeguard for you and your entire family.


However, most conventional home insurance policies do not cover a few things. In this article, we discuss what the most common exclusions from a typical Home Insurance policy are.


#1. Issues related to maintenance

When you own a house, you are expected to take good care of it and maintain it appropriately. Regular servicing and maintenance of the house is the duty of the owner. 


A conventional home insurance policy does not cover damages caused to a home due to routine wear and tear, neglect, and maintenance issues. 


#2. Water damages

In many basic home insurance policies, damages caused due to water are excluded. So, overflows from sewers, drains, or sump pumps are not covered and you might have to pay for them on your own.


#3. Certain catastrophes such as flooding or earthquakes

While most calamities such as fires, hurricanes, and windstorms are covered under home insurance, certain specific calamities such as earthquakes and flooding are not accounted for in a basic home Insurance Company Policy. And this is for obvious reasons: floods and earthquakes are more common than people believe and insurers do not want to pay out more than they can earn and get into losses.


Thus, you might be required to either buy an additional policy or supplement your existing one by paying an extra amount if you need this coverage.


#4. Nuclear hazards or war

Damages caused due to nuclear hazards, wars, and other such activities are other significant exclusions from typical home insurance. The reason for this is that insurers cannot accurately calculate the premiums to charge from customers for any damage incurred due to such activities. Moreover, the number of claims due to such activities could be very high and the quantum could be exorbitant, making it infeasible for insurers to pay out such claims.


Imagine if a war occured in a certain country, most people would be adversely impacted by it. If all such people apply for claims, which could run into huge amounts, it could drive the insurer into bankruptcy. 


#5. Acts of terrorism

A conventional home insurance does cover you against any acts of terrorism that might destroy or vandalize your property and its contents. So, if a terrorist attack has damaged your home, you might have to pay for its repair by yourself.


The reason for the exclusion of acts of terrorism from conventional home insurance is the same as that of the exclusion of nuclear hazards and war - it is very difficult to estimate the damage caused by such activities and, thus, charging premiums to cover such acts is difficult to compute. 


#6. Business on property in a separate structure

A regular home insurance covers a broad range of damages to your home and the structures in its boundary such as a garage, gazebo, garden, fence, shed, and driveway. However, if you are operating a business from a separate building in your property, it will not be covered.


#7. Wilful destruction of property

A standard home insurance does not cover for any wilful or malicious destruction of property. So, if it is proved that your home or its contents were destroyed or stolen intentionally, you cannot apply for any claim.


#8. Loss of property due to unoccupancy

A property may become worn out due to not being occupied by people. Also, many times, a mishap or accident can occur on a property that has not been habitable. Remember that a typical home insurance policy does not cover for any loss of property that might have occurred due to such factors.


Limited coverage for certain items

Here are a few items for which only a limited amount of coverage is provided.


#1. Jewellery or art work

Most home insurance policies provide only a limited coverage for high-value items such as jewelry, fur, gold, silverware, or art work. You might have to read the fine print of your policy and, perhaps, buy additional coverage to protect such assets.


#2. Ordinance of Law exclusion

A few of the home insurance policies cover for damages to a building as it exists. In the event of a loss, they do not cover for the additional costs that might be required to upgrade the existing structure of the building to the current building codes and ordinances. In essence, you will be covered for costs of replacement, but not for costs of upgrading.


Consider this scenario. You are looking to replace the wiring of your house following a fire accident. However, the prevailing building code requires a higher grade of electrical wiring than that you had in your home previously. In this case, you may not be eligible to claim all the amount for this upgrade of wiring and might have to pay the difference in cost of the new and old wiring out of your own pocket.


#3. Cash

You are eligible to claim for any lost or stolen cash from your home only upto a certain amount. It is recommended that you read the fine print to understand more about how much you can reimburse.


While these are some general exclusions from conventional home insurance, it is advisable that you read your policy document thoroughly to understand the exclusions better.


Your home insurance policy does not cover these things