What homeowners insurance doesn't cover

Why there are many choices for coverage

If you're new to the world of home ownership and homeowners insurance, you may be surprised at the "menu" of coverage choices available to you. Unlike most auto insurance coverage, which typically offers the same range of options for almost every car in any part of the U.S., homeowners policies can be much more "custom made" for you. Why the difference, you ask?

Homes can be very different, even those of the same construction style and size can differ in other ways. For example, the quality of construction can vary widely. In your foyer, you might have modestly priced floor covering or expensive Italian marble. The potential size of a covered loss and the replacement value would differ greatly.

Or, consider the art objects in your home. You might prefer reasonably priced prints for your walls. You may also favor expensive original oil and water color art works, costing much more than even the best prints. "One size fits all" insurance coverage does not properly protect your personal property.

Depending on where you live, your geography, weather patterns, crime statistics, recent area historical loss data, or propensity to natural disasters, your level and cost of home insurance coverage will reflect your local data. Home insurance rates may widely vary, even for similar houses within a relatively short distance of each other.

Home insurance companies attempt to offer this menu of choices to give you the opportunity to select the best coverage possible for your home. Be sure to always get competitive quotes because some companies may focus on your state or area, offering excellent coverage at reasonable prices.

Other home insurance companies, could be scaling back their coverage or increasing prices to better protect themselves. Sometimes, it simply depends on who or when you ask for premium quotes. You'll still have a wide choice of options to customize your homeowners insurance to suit your needs and preferences.

Typical perils that aren't covered (without extra endorsements or riders)

Some perils and natural disasters are excluded from home insurance coverage that many homeowners understand. However, there are some lesser-known exclusions that should be considered, but often are not. Here are some of the more common exclusions that apply to many basic homeowners insurance policies.

Floods

You should conmsider purchasing this protection from The National Flood Insurance Program. Be aware that you don't have to live near bodies of water to suffer flood damage.

Volcano eruptions

More people live near potential volcano activity than you might at first believe.

Hurricanes and tornadoes

Your homeowners insurance policy may or may not have this coverage. If not, you should be able to add protection if you want it.

Expensive jewelry and antiques

If you have diamond rings or other expensive jewelry, you should add a rider to your homeowners insurance policy to cover replacement in the event of theft or loss. Standard personal property coverage typically does not cover these valuable pieces or antiques.

Consider "mysterious disappearance" coverage for the always present risk that your favorite diamond ring simply finds its way into a sink drain. Basic home insurance coverage seldom covers this type of loss

See also: Personal possessions and home insurance | Make a list, check it twice

Sewage and water backups

People often assume this unpleasant and costly hazard is covered in standard home insurance policies. Most often, it is not. Clean up and restoration can easily cost $1,000 to $4,000 per incident. You should consider an endorsement that covers you up to $5,000 to $10,000 per loss.

Sufficient home-office coverage

If you have a home-based business or a well-equipped home-office for any reason, look closely at your home insurance coverage. In many homeowners insurance policies, business property coverage is "capped" at around $2,500. This maximum is often insufficient to protect your home-office equipment.

Depending on your activities, you should also consider a business insurance policy to add additional liability coverage to cover business-related claims since standard homeowners insurance often provides no business coverage at all.

Understand the difference between "all risk" and "named perils" coverage

All risk coverage covers many, if not most losses, except those that are specifically excluded and noted in your home insurance policy. Conversely, named perils protection covers those losses suffered from specifically named hazards , excluding all others that are not noted. There is a potentially big difference in these two primary forms of coverage.

Understanding what your homeowners insurance doesn't cover is just as important as knowing what hazards are covered. In many cases, you'll want to add coverage for some perils and ignore others.

A good home insurance company will offer you a menu of options to create the coverage you want and that you can afford.