I helped several people with their home insurance last week. They all own or are buying homes in the Dallas / Fort Worth area. In each case I discussed what their new home policy covers, but one seasoned home owner asked me something different and that was what does his policy not cover.
It’s an excellent question as it makes us look at the other side of the coin for the home insurance policy we were discussing. All home policies have things they don’t cover, or exclude from the policy’s coverage. There are five items no home policy covers; acts of war, nuclear meltdown, flood, earthquake, and sewage backup.
Acts of War: No home policy covers damage caused by an act of war. Not since the bombing of Pearl Harbor has the United States had an act of war committed on our soil. I don’t spend much time thinking about our being invaded or bombed by a foreign country.
There’s some discussion among claims adjusters as to what constitutes an act of war and who determines it.
- Is an act of war determined by the county that initiates military action against the United States?
- Or does the President, or Congress, have to declare the action as an act of war?
While it is up to Congress to declare war on another nation, most adjusters are in agreement there would need to be some official declaration from Congress or the President to determine any act considered as war.
Nuclear Meltdown: There have been two major nuclear power plant accidents of note in recent history, Fukushima in 2011, and Chernobyl in 1986. If an event like this happened at any nuclear plant in the US, homes affected by the radioactive fallout would not be covered by their home insurance policy. The financial impact of such an event would be staggering. Even if the area near the plant were declared “safe” the immediate loss in home values would be catastrophic.
Flood: Flooding is not a pipe bursting in your home or the sudden rupture of your water heater. Insurance companies view flooding as water entering a home from outside a home as a result of tidal surge or rising water from creeks, streams, rivers, or lakes overflowing their boundaries. No home insurance policy covers damage to a home or its contents as the result of flooding. Only flood insurance covers that.
There are two potential parts to a flood policy:
- Coverage for the home structure
- Coverage for the contents
In order for the home and the contents to be fully covered, both parts must be purchased. For more information on flood insurance, read An Introduction to Flood Insurance at http://50.87.248.161/~wiseinsu/an-introduction-to-flood-insurance/.
Earthquake: There have been numerous small earthquakes in Texas, Oklahoma, and other states in the last couple of years. These have been in areas where fracking takes place, usually near the site of an injection well where waste from the fracking operation is being put into the ground.
There have been a few instances where a home was damaged by a tremor in these areas. The damage has been limited to some of the brick veneer being shaken off. In order for this damage to be covered, the homeowner would need to purchase earthquake coverage, either as optional coverage on their home insurance policy, or as a separate policy that covers earthquake damage (see http://50.87.248.161/~wiseinsu/earthquakes-home-insurance/).
Sewage Backup: Backup of sewage pipes into the home is not covered by most standard home insurance policies. It can, however, be added as an option to most home policies, and it’s an option I highly recommend. Backups don’t happen very often, but when they do, it’s a real mess to clean up (see http://50.87.248.161/~wiseinsu/sewer-drain-backups-are-you-covered/).
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