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Homeowners Insurance Coverage Questions

What Losses Are Covered Under My Homeowners Insurance Policy?

Ordinance And Code Coverage, Endorsements, Sump Pump Failure And More

So you purchased your policy and are wondering what is covered and what is not. Will my fire claims be paid? Will my water damage be covered? Am I covered for contractors negligence? I have an HO3. Is that the best policy to have? I have code coverage and ordinance coverage will get paid in advance for those items? Many questions come up. Some of the answers might shock you. Remember each policy is different and the language of the policy will control. The policy is a contract between you and the insurance company. So let me tell you… A skunk walks into a bar and say… and sprays…is your business covered for such a claim. The answer follows below.

In the insurance industry knowledge is power. It is your best defense or should I say offense to dealing with an insurance claim or looking to buy a policy of insurance. You need to know exactly what type of homeowners policy you have, what it covers and what it does not cover.

HO1 – Homeowner Insurance Coverage And Losses

The oldest and least often seen policy is known as a HO-1 Policy. In essence it was a simple fire policy and was limited to very few perils. The HO-1 is not sold in many states. It is only seen in a few states still. Really not sure why it is even sold. The next homeowner’s policy is a HO-2. The HO-2 homeowners policy expanded coverage significantly. It is generally known as a “broad form” since it covers basically 16 different perils. Such as;

  1. Fire or lightning
  2. Windstorm or hail
  3. Explosion
  4. Riot or civil commotion
  5. Damage caused by aircraft
  6. Damage caused by vehicles
  7. Smoke
  8. Vandalism or malicious mischief
  9. Theft
  10. Volcanic eruption
  11. Falling objects
  12. Weight of ice, snow or sleet that causes damage to a building
  13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire-protective sprinkler system or from a household appliance.
  14. Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system or an air conditioning or automatic fire-protective system.
  15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system or of a household appliance.
  16. Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component).

HO3 – Homeowner Insurance Coverage And Losses

The next policy, which is what most homeowners have, is an HO-3 policy. The HO-3 policy is known as the “special form” policy. It is almost opposite of the others mentioned above since it covers everything except. In other words your covered unless the policy excludes the situation of the loss.

So let’s look at the exclusions of the HO-3, “special form” policy. The standard HO-3 policy contains these exclusions:

  • Ordinance or law: such as demolition or construction required to bring your house up to code.
  • Earth movement: such as earthquakes, shockwaves, sinkholes, landslides and mudflows.
  • Water damage: such as floods, sewer back-ups and water that seeps through the foundation.
  • Power failure.
  • Neglect: meaning you failed to take reasonable means to save your property during or after a loss.
  • War: including undeclared war and civil war.
  • Nuclear hazard.
  • Intentional loss: meaning something you did on purpose with the intent to cause a loss.
  • Governmental action: such as the destruction, confiscation or seizure of covered property by any governmental or public authority.
  • Loss to property: resulting from faulty zoning, bad repair or workmanship, faulty construction materials and defective maintenance.

I strongly suggest you have a face to fact conversation with your home insurance agent. If you do not feel confident with his answers and explanations ask to speak to the owner of the agency or supervisor.

Whatever you are told about coverage you should put down in writing. Ask him or her.

  • What losses does your policy cover and not cover?
  • What exclusions are there?
  • If you have a code endorsement, then ask how it works, will it cover something that is not already in my home but I am required to install it such as a sprinkler system.
  • What additional coverage can I purchase or do you think I might benefit from and need?

Don’t Be Afraid To Ask Questions About Your Homeowners Insurance Coverage

Since policies can differ from insurance company to insurance company you must read your policy to see what is excluded. When you find a paragraph in the policy you do not understand, call and ask questions. Lets look at some examples generally…

Q: What happens when the skunk walks in and decides to spray?

A: You’re covered since the animal has vandalized your home. Vandalism is covered under most standard policies. But note what about rat infestation? Such may not be covered. What about a raccoon. In the past adjusters have tried to deny such a claim stating similar to a rat issue. We demonstrated such was not since the raccoon is actually in the bear family. And yes if a bear invades your Colorado ski villa while your away, your covered. This happens more than you might think. They claw marks make for good conversation.

Q: What if I need a building code upgrade such as additional insulation or a sprinkler system?

A: Not covered in most circumstances UNLESS you have the proper additional coverage such as and commonly known as Code upgrade and ordinance coverage. A standard insurance policy does not ocver code or ordinance upgrades. But if you get the extra coverage you are safe. This extra coverage pays a specific amount toward upgrade costs.

Q: Sump pump failed or storms flooded my basement. Am I out of luck?

A: Usually yes you are out of luck . Unless you have the additional coverage for flood or sump pump back up. But again you need the additional endorsement. Again, water coming into your home from backed-up sewers or flood is typically excluded, but you can buy endorsement coverage to protect yourself.

Q: My toilet exploded and leaked while I was out of town. My whole downstairs carpet and walls are ruined. Can I make a claim and will I get paid for the damages?

A: Sudden explosions of water and pipe bursts are usually covered. Compared to slow leaks or flooding from storms or sump pumps which are not.

Q: My home’s value went down when they build the prison next door. Can I make a claim for the reduction in my property value?

A: No. Decrease in value to a home is not a covered or insurable loss usually.

Q: I had a power outage and the food in my freezer and fridge is lost. Can I make a claim?

A: This is not an easy on. You need to check your policy. Each policy contains some coverage for power outage but the amount and what is different also. For example the loss of food in your refrigerator and freezer is usually covered for up to $500. Note some electronics may not be or may be depending on various factors.

Q: Am I covered for a lighting strike?

A: Yes. Any damage caused by lightning is covered under fire and power surge.

Q: My oven caught fire but it was small damage compared to the water that was used to put it out. Are all the damages covered? What about the smoke from the fire is that covered?

A: Yes, all the damages are covered. This is an example of a covered loss that was sudden and accidental.

Q: I have a small business I run out of my home. Will my homeowners policy cover it in the event of a fire?

A: No, Homeowners policies do not usually cover business loss or equipment. You need to purchase additional coverage such as a business policy.

Q: Suppose an antigovernment militia invades my neighborhood. Is my destroyed home covered?

A: If the United States government determines that it was not an act of war, you should be covered. Acts of terrorism are covered, but not acts of war.

Q: My home has been radiated due to a nuclear power plant failure. Will I be paid?

A: No. This one falls under a specific exclusion. Nuclear accidents are a standard exclusion.

Q: What if my home is hit by a plane, train or automobile?

A: You’re claim should be paid. Here the Cars and trains fall under coverage for damage from vehicles hitting your house. An airplane striking the house and causing damage is paid for by coverage for objects falling out of the sky.

Q: The cliff gave way and my house went with it. Am I covered?

A: No. If you build or buy a house on a cliff, be aware of the risks involved. A standard home insurance policy will not honor a claim for a house that slides down because of a landslide or any other reason. That’s considered “earth movement” and is excluded. However, check with your agent about specific endorsements you can add to get coverage for such a loss.

Q: My house was built over an old coal mine and has been swallowed up by a sinkhole. Will I be paid?

A: No, there is a specific exclusion for this. “Earth movement.” This is a problem for homeowners in Coal Belt states. But again you can purchase additional coverage to cover such a loss.

Q: My policy says I am not covered for mold. But what if the water that put out the fire that we had causes the mold?

A: In this situation you are covered since the loss, the fire is a covered loss and all damages occurring from that loss should be paid. But mod growing in a basement from the high moisture level usually is not.

Ok so as one can understand there are many situations that may occur. Talk with your agent and make sure he or she is knowledgeable. In the event of a loss, make sure to consult with experts that have your interest at heart. The staff and Harris Claims Services are such a source. We love to help and are located in Lincolnwood, IL near Chicago. Contact us today!

Best Regards
Jason Harris