Do homeowners insurance policies have loopholes?

Homeowners insurance is a necessity to help protect your home, but there can be coverage gaps that you may not be aware of which can leave you unprotected. Flood and earthquake damage along with mold and other issues are excluded from most standard homeowners insurance policies. 

Here are some common exclusions that could leave you unprotected in the event of a disaster:

Flood Damage: Flood damage is excluded from most homeowner policies and if you are not carrying a separate flood insurance policy, you will be on the hook for any damages caused by flooding. Flooding from heavy rain, rising groundwater or storm surge can cause massive damage which is why carrying flood insurance is important.

Flood insurance can be purchased via the National Flood Insurance Program (NFIP) or in the private market. The majority of flood insurance policies have a 30-day waiting period before coverage kicks in so do not wait until a storm is headed your way before putting a plan in place.  

Sewer Backups: Sewer backups or a failed sump pump can lead to extensive and expensive water damage. Unfortunately, most standard insurance policies exclude this type of damage. 

Putting a sewer backup endorsement on your policy or purchasing a separate rider are usually available as a policy add-on. These riders will cover sewer and sump pump damage up to your coverage limits. Consider adding a backflow valve can also reduce the risk of water damage. 

Earthquake Damage: Earthquake damage is also excluded from most homeowner policies which leaves you on the hook for any damage caused an earthquake. Earthquake coverage is typically sold as a separate policy or an add-on to your homeowners coverage. While earthquake insurance can be expensive, particularly in high-risk areas such as California but it can be a financial lifesaver if you home is damaged by an earthquake. 

Mold Growth: Unless a broken pipe or other covered peril is directly responsible for mold damage, it is excluded from coverage. Mold damage is usually considered a preventable issue by insurers which leaves the cost of remediation to the homeowner. It is often possible to purchase a rider or endorsement that will cover mold damage for an additional premium. Repairing mold damage can be very expensive, making this additional coverage a good idea. 

Pet-Related Damage: If your pet bites a neighbor or guest, the liability portion of your policy will cover those damages. However, it will not cover damage your pet does to your property. Chewed furniture, scratched floors or other property damage costs will fall to you. 

In some cases, a homeowner policy may exclude certain dog breeds from liability protection, making it essential to read your policy in full to make sure your particular dog breed is covered. 

Termites and Pests: Just like mold damage, insurers consider damaged done by termites, and rodents to be preventable so any pest damage is excluded from coverage. This means that you will need to cover any pest damage out of pocket. 

Most insurers do not sell riders or other pest policies so the best way to protect yourself against this type of damage is to contact a local pest control company.