Let's say you've got water damage coverage. One day, a pipe bursts in your basement and the whole thing is flooded. Good thing you've been making those insurance payments all this time, right?
Well, not so fast. The reality is, there are a lot of reasons that your claim might go unrequited.
First off, it is really unlikely that the insurance company is going to cover your burst pipe. They rarely ever cover home repair costs. Roof damage? No luck. Leak in the basement? Sorry, Charley.
In fact, it is just as likely that you could wind up getting nothing if you aren't careful.
1. They could claim that you were negligent. Perhaps you should have had the heat turned up higher. Maybe it was the pipe itself.
2. Perhaps the pipe should have been blown out for the winter.
3. Perhaps you should have had an inspection that would have diagnosed the problem before it happened.
4. Maybe there is evidence that the pipe was leakin g and you never investigated what the leak was.
You may have had great reasons for all those things and you can explain until you are blue in the face. Maybe you had no money for repairs or to hire someone to blow it out because you were trying to keep up your insurance payments.
Too bad, because all of those things would qualify you as negligent and get the insurance company out of any obligation to pay for your stuff.
A lot of the time people think flood insurance should cover this. There is no way that the insurer will believe that that's a flood, or that a flood would be covered by water damage should you suffer under torrential downpours.
This is why you need to know the ins and outs of your policy. Especially what your insurer will not cover.
Most policies cover:
- Fire
- Vandalism
- Weather
Most policies do not cover:
- Natural disasters (Tornadoes, Earthquakes, etc.)
- Termites and insect damage
- Floods
- Power outages
- War
- Manmade disasters (e.g. nuclear power plants)
- Sinkholes
All of these things will need to be added in.
Home Value
Watch the value of your home carefully. If you took out an in surance policy years ago, the value of your home may have changed, so you could be paying too much for the value now.
You could also now be underinsured if your property appreciated.
Work from home?
If you have a home office, you will probably need a clause in the contract specifically mentioning your business or employment, because the home insurance might not cover it.
Yard
While you might have $300,000 of coverage on the home itself, your landscaping might only have a few hundreds dollars of coverage. If you have some expensive work out there, such as a pool, statues, or even a prized flower collection, you will need that to be added on to the policy.
Home insurance is tricky. Review your policy very carefully and even consult an expert or a lawyer about your home insurance policy. Get some home insurance quotes and find a new provider if you're not happy.
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