Don't End Up Surprised When Your Home Insurer Won't Cover These Disasters

Homeowners insurance is supposed to provide asset protection. A policy will be there to pay out if a home must be rebuilt or replaced after a covered loss. The money won't have to come out of a homeowner's bank account when something goes wrong.

It's important to realize, though, that homeowners insurance doesn't necessarily cover every possible calamity. Some common causes of problems are excluded from standard homeowners insurance coverage. It's important to know that before a disaster strikes, so be aware that these issues usually will not be paid for by an insurer. 

Flood damage

Standard homeowners insurance policies exclude flood damage. If there is a flood event that causes water intrusion and damages or destroys the structure of the home, insurance will not pay for it. This is the case with policies across the country, including insurance policies for homes in designated flood zones and elsewhere. 

Homeowners who live in an area where a flood may occur should strongly consider obtaining a separate flood insurance plan through the National Flood Insurance Program (NFIP), which is managed by FEMA and delivered through 50 insurers and NFIP Direct. 

To find a flood insurance provider, look at the database on FloodSmart.gov, or contact the NFIP via phone at 877-336-2627.

Earth movements

Earth movements, including earthquakes and sinkholes, are generally excluded from standard homeowners insurance policies. But, it is possible to get separate earthquake or sinkhole coverage. 

Many insurers offer this as a rider or add-on policy that can be purchased in addition to standard coverage. There are also some state-specific options in high-risk areas. For example, in California, where earthquakes are a major risk factor, the California Earthquake Authority (CEA) offers earthquake insurance coverage. 

Homeowners should check with their insurers and their state to explore options and put a plan in place before a problem occurs. 

Wildfires 

In areas prone to wildfires, home insurers generally exclude coverage for this type of damage. This means if a fire strikes, any resulting losses will not be paid for.

To find out if wildfires are excluded, homeowners should read their policies carefully. If there's a clause saying wildfire damage won't be paid for, it's important to consider getting the necessary protections. Fair Access to Insurance Requirements (FAIR) plans can offer wildfire coverage where standard insurers don't. 

FAIR plans vary by state, but often come at a higher cost than standard home insurance policies. Still, it is best to get this coverage if no other protection is available from an insurer. 

No homeowner wants to experience a disaster and then discover that their insurance will not pay for it. To avoid this, it's crucial to read the fine print on a policy and to ask any questions necessary to understand the extent of the coverage provided -- and the exclusions. 

Homeowners who discover that a potential source of loss is not part of their policy should look into getting protection in place from other sources ASAP to avoid a devastating financial catastrophe if something goes wrong.