Most homeowners insurance policies get squared away in the early stages of home buying and aren’t much looked at again until the time comes when they’re needed, say, after a burglary or significant storm damage. But don’t wait until the day you need to invoke it to learn what your policy doesn’t cover. A number of liabilities¡ªranging from trampolines to certain pests, and from out-of-the-home businesses to certain dog breeds¡ªmay not be included. So, before you’re caught off guard in a worst-case scenario, double-check your policy to make sure you’re protected for the following scenarios.
1. You Run Your Business Out of Your Home.
Typically, home insurance covers only minor damages on at-home work equipment, up to a $2,500 loss limitation for business property, such as computers. Yet, for those who keep large amounts of inventory on their premises, such a small payout in all likelihood wouldn’t cover the cost of replacement. So, for business conducted in your home¡ªnot to mention liability for potential lawsuits¡ªit’s wise to purchase a separate business insurance policy.
I learned this the hard way when a friend of mine, who runs a small Etsy shop from her garage, had a pipe burst that ruined half her inventory. She thought her homeowners policy would cover it, but the $2,500 cap barely made a dent in her losses. If you’re running a side hustle or full-on business from home, talk to your insurer about a business owner’s policy (BOP). These policies can cover inventory, equipment, and even liability if a client gets hurt while visiting your home office. For example, a basic BOP might cost around $500-$1,000 a year, depending on your business size, which is a small price to pay compared to replacing thousands in damaged goods. Plus, some policies offer coverage for lost income if your business is disrupted, which can be a lifesaver.
2. The House Sustained Flood Damage.
If you, like many homeowners, mistakenly believe that your homeowners insurance policy covers your property for flood-related damage, you’re not alone. Most people are surprised to learn that floods are excluded from coverage on almost every standard homeowners policy. Those who want protection need to apply through the federal government’s National Flood Insurance Program, which is run by FEMA.
Living in a coastal area, I’ve seen neighbors scramble after hurricanes, only to find out their standard policies didn’t cover flood damage. FEMA’s National Flood Insurance Program (NFIP) is a solid option, with average premiums around $700 a year for $250,000 in coverage, but it’s worth noting that it might not cover everything, like temporary living expenses. If you’re in a high-risk flood zone, check your flood risk on FEMA’s flood maps and consider private flood insurance for more comprehensive coverage. Also, keep in mind that NFIP policies have a 30-day waiting period before they kick in, so don’t wait until a storm’s on the horizon to sign up.
3. Your Sewer Backed Up.
Torrential downpours could cause sewer backups into your drains and basements, causing thousands of dollars in damage. Most sewer backups, however, are not covered under a standard policy, nor are they covered by flood insurance. The good news: You may be able to purchase a separate rider for protection. If your current insurer provides no such rider, consider looking elsewhere for coverage. Experts typically advise homeowners to reassess their insurance needs and coverage every two or three years. Gather and compare quotes from multiple companies, and be sure to consider online-only providers as well as traditional insurers. Remember also that premium costs aren’t everything. Consumer reviews are valuable as well.
A sewer backup is every homeowner’s nightmare¡ªI’ve heard horror stories of basements filled with, well, let’s just say unpleasant stuff. A sewer backup rider can cost as little as $50-$150 a year, depending on your location and home setup, and it’s worth every penny if you’ve got a finished basement or live in an area prone to heavy rain. When shopping for coverage, I’d also recommend checking out customer service ratings on sites like J.D. Power, since you’ll want an insurer that’s responsive when you’re knee-deep in a mess. And don’t skip the reassessment tip¡ªmy last review saved me a couple hundred bucks by switching to a provider with better rates and a sewer backup option.
4. You Own a Certain Dog Breed.
According to the Insurance Information Institute, dog bites and other dog-related injuries accounted for more than $500 million in homeowners insurance liability claims paid out in 2014, constituting more than one-third of all homeowners insurance claims. While most injuries caused by pets are covered by home insurance, some policies exclude those caused by certain ¡°high-risk¡± breeds, like German shepherds or pit bulls. Check with your agent to be sure your dog’s breed won’t compromise your coverage.
My neighbor’s German shepherd is the sweetest dog, but her insurer flagged it as a ¡°high-risk¡± breed and jacked up her premiums. Dog bite claims have only grown since 2014, with some estimates now putting annual payouts closer to $800 million. If you own a breed like a pit bull or Rottweiler, ask your agent for a list of restricted breeds upfront. Some companies, like State Farm, are more lenient and evaluate dogs on behavior rather than breed, which could save you from higher costs or policy cancellations. Also, consider training classes for your pup¡ªnot only do they reduce the risk of incidents, but some insurers offer discounts for certified training.
5. You’ve Detected Termites.
According to the National Pest Management Association, in the United States termites cause an estimated $5 billion in damage each year¡ªnone of which is covered by homeowners insurance. While you can sometimes obtain something like termite coverage through a pest removal service, you’re much better off taking measures to prevent the problem. Trim back trees, keep your roof in good repair, and avoid ice dams caused by snow accumulation in order to keep these pests from penetrating your property. If your home is prone to termites, schedule a regular inspection with a pest professional.
Termites are sneaky little destroyers¡ªI once found them chewing through a wooden beam in my attic, and the repair bill wasn’t cheap. Preventative steps like keeping mulch away from your home’s foundation and sealing cracks in your exterior walls can make a big difference. A professional inspection might run you $100-$200 annually, but it’s a small price compared to the thousands you’d spend on structural repairs. If you’re in a termite-heavy area, like the Southeast, consider a termite bond with a pest control company, which often includes annual inspections and treatment guarantees for a few hundred bucks a year.
6. Everything Is Under Construction.
Considering a remodel this year? It’s nearly impossible to collect on a claim from your homeowners policy for faulty, inadequate, or defective workmanship, materials, or maintenance. That means, if you plan to hire a contractor, it’s important to confirm that he is licensed for liabilities. Request a physical or digital copy of any contractor’s insurance certificate from his insurance company. In the event that a contractor does something that injures someone or damages your home, he’ll be liable to pay for it¡ªnot you. You may also want to invest in additional coverage, such as a ¡°builder’s risk policy¡± (also called a ¡°course of construction¡± policy), to protect the premises during the construction process from damages including wind, rain, and even theft.
When I redid my kitchen, I made sure to check my contractor’s insurance certificate¡ªit saved me a headache when a worker accidentally damaged a neighbor’s fence. A builder’s risk policy can cost anywhere from $500 to $2,000, depending on the project’s scope, and it’s a smart move for big renovations. Also, don’t skimp on vetting your contractor¡ªcheck reviews on sites like Angi or ask for references. I learned that a good contractor will happily show you their insurance details, while a sketchy one might dodge the question. Pro tip: keep a record of all construction-related documents in case you need to file a claim.
7. Burglars Found the Cash.
Let this be a lesson: Don’t go stashing significant cash underneath your mattress or between couch cushions. A standard homeowners insurance policy offers very limited coverage on lost paper money, typically capped at $200 (although the amount of coverage depends on the individual insurance company and the specific policy). Cash often gets lumped into the same category as collectibles, coins, medals, and banknotes, as ¡°personal property,¡± with an aggregate limit in a standard homeowners policy. Unless the policy specifically states otherwise, don’t expect to be reimbursed for those bills lost during a burglary.
I know someone who lost $1,000 in cash during a break-in and was stunned to get only $200 back from their insurer. If you must keep cash at home, invest in a fireproof safe and document what’s inside¡ªphotos or receipts can help with claims. For high-value items like jewelry or collectibles, consider a personal articles floater, which can increase coverage limits for specific items. These floaters might add $100-$300 to your annual premium but can save you big time if something valuable goes missing. Also, installing a home security system can lower your premiums and deter burglars in the first place.
8. Your Pool Rivals a Water Park.
While you could jump from a diving board at nine out of 10 in-ground swimming pools about 15 years ago, today those boards are a much less popular addition¡ªwith good reason. Depending on the policy, premiums may increase significantly or liability claims may be denied due to these ¡°high-risk¡± pool features. Such equipment may even disqualify a home from coverage altogether. Weigh the risks against the rewards before walking the plank.
My cousin’s diving board was a hit with the kids until his insurer raised his rates by nearly 20% because of it. Pools already increase liability risks¡ªdrowning incidents account for thousands of injuries annually, according to the CDC. If you’ve got a pool, install a fence with a self-locking gate to reduce risks and possibly qualify for a premium discount. Also, check if your policy requires specific safety measures, like removing diving boards or slides, to stay covered. It’s a bummer to limit the fun, but the peace of mind (and lower premiums) is worth it.
9. You Set Up a Trampoline.
Similarly, while kids consider trampolines a blast for the backyard, most insurance companies call them a liability. The U.S. Consumer Product Safety Commission cites that trampoline-related accidents account for nearly 92,000 emergency room visits each year. Some homeowners insurance policies will not cover trampolines at all, meaning that if you, your kids, or any neighborhood kids get injured on the trampoline, your insurance company is not liable for the claim. Adding a trampoline could even result in non-renewal of your current policy. Before you buy or install a trampoline or any other ¡°high-risk¡± playground equipment, you’ll want to read the fine print on your policy.
Kids love trampolines, but after a friend’s kid sprained an ankle on one, I saw how fast medical bills add up. If you’re set on getting a trampoline, look for one with safety nets and padding, and check with your insurer first¡ªsome companies, like Allstate, might allow it with added safety measures but still charge higher premiums. A safety net might cost an extra $100-$200, but it’s cheaper than an ER visit or a canceled policy. Also, set clear rules for use (like no flips or unsupervised jumping) to keep everyone safer and your coverage intact.