You have never filed a homeowner’s insurance claim before, but your policy was issued by a reputable company, and you pay your premiums on time. Filing this claim should be simple.
Usually, it is. Most homeowners’ claims are paid promptly after review by the insurance company. Trusted Choice reports that in the most recent reporting year, Alabamans received $755,341,000 in loss payouts from insurance carriers.
The Surprise No One Wants
Homeowners’ insurance protects your family’s assets and provides peace of mind. The surprise when a claim is denied can be frustrating, even overwhelming. The reason for a denial is usually right in front of them, but often, homeowners have no idea that they are in violation of the terms of their policy.
The Operative Words – Covered Loss
Insurance is a contract. In exchange for the premiums you pay, an insurance company agrees to reimburse you for a “covered loss.” Those are the operative words in insurance claims.
A covered loss means the risks or perils that your policy insures against. Most homeowners try to protect against the most risks possible. Many opt for a standard H-03 policy that offers the broadest coverage available.
While other policies specify what they will cover, H-03 policies cover all damage and risks, except those specifically excluded by the policy.
That is often the source of homeowner frustration when filing a claim. They are not aware that the damage to their home is excluded by their policy.
Common Policy Exclusions
Discovering that your flooded basement and soggy baseball card collection is not covered can ruin the day for any premium-paying homeowner. Knowing what is excluded from coverage in your policy can prevent much of the claim anxiety homeowners experience. The most common policy exclusions are:
- Defective Construction, Design, and Maintenance – Homeowner neglect is a primary reason for denial of a claim under this exclusion. Failing to secure your property, repair a roof, or ensure that pipes won’t freeze can leave you paying for the damages.
- Dog Bites and Damage from Certain Breeds – Whether it is true, or not, some breeds are rated as more dangerous than others, not only Pit Bulls, but common breeds like German Shepherds, Great Danes, and even some smaller dogs may be excluded by your policy. Know what pets are not covered by your policy and make an appropriate choice when selecting a new pet.
- Earth Movement – Policies do not cover damage from earthquakes, mudslides, landslides, sinkholes, and other types of earth movement disasters.
- Intentional Loss – Most people know that if you intentionally damage your property, the policy coverage is void. You can’t set fire to your house and expect to collect the insurance.
- Damage to Vacant Property – Unsecured or vacant property is not covered by most policies without an additional rider.
- Flooding – Damage from exterior rising water is generally excluded from homeowners’ policies. If your home is in a flood zone, purchasing separate flood insurance is a good idea.
- Settling, Wear and Tear – Normal aging, settling and defects in manufacturing and construction are not covered.
- Mold – Preventing the conditions that lead to mold is considered a homeowner responsibility. If you see it or suspect if, get rid of it. Mold is a health hazard.
- Insect and Rodent Infestations – Another responsibility of the homeowner is to stop or treat pest infestations and prevent the damage they can cause to homes, furnishings, and personal possessions.
- Running a Businesses from Your Home – If you operate a business from home, and that business activity damages your home, your claim will probably be denied unless you have additional insurance covering the business operation.
- Government and Association Actions – Seizures, forfeitures, and condemnations by government boards are not covered.
- Nuclear Accidents – Most policies exclude any damage resulting from your home’s location in proximity to a nuclear power plant.
Homeowners’ insurance is essential to protecting your family’s largest asset from loss. A full understanding of your policy and its exclusions will ensure that there are no surprises when the time comes to file that claim.
photo credit: Kᵉⁿ Lᵃⁿᵉ Real Estate Photography (109 Santee Street, Asheville NC) via photopin (license)