What you need to know about your homeowner's policyIf you are a homeowner, you might want to take a closer look at your Homeowner's policy. While we hope that the disasters will never strike in our backyards, it is always safer to plan for the unthinkable.

It's for this reason that you should take a closer look at your current Homeowner's or renter's policy, and examine the exclusions your policy might have. In addition to standard exclusions for certain types of behavior (e.g. criminal or intentional conduct), or policy limits (e.g. $200 for jewelry), there might be categorical exclusions (meaning NO coverage) for damage caused by the following types of situations:

  • Earth Movement--this exclusions is particularly likely  if you are living in an earthquake prone geographic area, read: California. Exclusions for earth movement can include anything from mudslides to earthquakes. This exclusion means that any damage determined to be caused by an earth movement is not covered by your policy.
  • Flood Insurance--similar to the earth movement exclusion, flood related damage may be more likely to occur in areas where flooding is more likely, particularly properties that fall within flood plains, etc. BUT, keep in mind that just because the area in which your home is located is not prone to flooding, the exclusion may still exist on your policy. It's also worth taking a closer look at the policy for water damage related exclusions.
  • Home Business Purposes--most people who run a business out of their home may not realize that their Homeowner's policy probably excludes coverage for any damage or injury arising out of business related interactions. An illustrative example is a home based daycare. Your typical Homeowner's insurance policy probably does not cover any injuries suffered as a result of people coming and going from your home, let alone those that happen as a direct result of your daycare business.
  • Fire Damage-- this may be more of a geographic issue, but take a look at whether your policy covers damages suffered as a result of fire, particularly those incurred as a result of wildfire damage. This was a huge issue with the Southern California fires several years ago.
  • Falling Trees-- falling trees or other plants are one of the exceptions that people would probably never expect. It makes a difference, according to most policies, whether falling trees are a result of negligent maintenance or caused by "Acts of God," or other  courses of action.

The good news is that you can probably get a supplemental insurance policy for many, if not all, of these different exclusions. Don't wait until the insurance company is denying your claim to discover what your policy actually covers!

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