3 Types of Home Insurance Coverage You Might Not Need to Pay For

Most homeowners have a policy type known as HO-3, which covers the home itself, as well as your personal property (the home's contents). It also provides liability coverage and medical payments, which is extremely important if someone gets hurt on your property and provides coverage for living expenses while your home is unusable.

However, there are some perils that are typically not covered by the standard HO-3 policy. Flood damage is a major one, but there are also earthquakes, hail, damage caused by neglect, pet or animal damage (or the pets themselves), mold damage, or normal wear and tear, just to name some of the things that could potentially leave you on the hook. There are also some unlikely exclusions, such as damage caused by government actions, war, or pollution.

In some cases, you can buy a supplemental insurance policy to fill one or more of these gaps. Here are three in particular that are quite common, but that you may not need.

1. Flood insurance

As mentioned, flood damage is one of the most common types of exclusions to homeowners insurance policies. It is also one type of damage that is among the most common causes of uninsured losses.

If you live in a high-risk flood area and have a mortgage, you are typically required to carry flood insurance. But even if you own a home free and clear, it's still a good idea to maintain flood coverage if you live in an area where it's likely to happen.

But what about if you don't live in a "flood zone"? All properties are vulnerable to flooding to one extent or another, and you can buy flood insurance. While a policy for a home in a flood zone can be pricey, one for a home that isn't considered a major risk isn't likely to come with a massive price tag. The average policy cost from the National Flood Insurance Program (NFIP) is about $700 per year. While some experts will say that every homeowner needs flood insurance, it's a good idea to speak with a local real estate agent or your trusted insurance company to decide if you need to pay for it.

2. Windstorm coverage

When I moved to Florida about 15 years ago, I got a crash course in windstorm insurance. Until that point, I thought a standard homeowners policy would always cover the damage.

Most homeowners insurance policies cover damage caused by windstorms, but that isn't always true in areas where hurricanes are common. If you live in a high-risk coastal area, you might need a separate windstorm insurance policy. This is in addition to flood insurance -- flood insurance typically covers damage from water entering your home. Windstorm insurance covers damage caused by a qualifying weather event (typically a named storm).

The good news is that in most areas, windstorm insurance isn't required by mortgage lenders and the coverage provided by a standard homeowners policy is sufficient.

3. Earthquake insurance

As mentioned, standard homeowners insurance policies exclude earthquake damage. But that doesn't mean you need to pay for separate earthquake coverage, even if you live in an area where earthquakes frequently occur.

According to FEMA, most homes impacted by an earthquake wouldn't even experience damage that was greater than their insurance deductible. So, unless you live in a particularly vulnerable area or have an older home that would likely be significantly damaged, you may not need to pay for earthquake coverage. Although 90% of earthquakes in the U.S. happen in California, only 10% of residents choose to buy earthquake insurance.

Be aware of the risks

To be clear, if your lender doesn't require these types of insurance and you choose not to pay for them, it's important to keep in mind that you're taking a risk. Now, some areas are very unlikely to flood, and I mentioned that most homeowners in earthquake-prone areas don't feel the need to buy an additional policy. But there's always the chance that a disaster could strike, so be aware that skipping these types of insurance isn't a smart move for everyone.