Common Coverage Gaps Home Insurance Won’t Cover

A single-family home covered by home insurance.
Homeowners insurance coverage is important for keeping your home protected. It doesn’t matter whether your home is a brand new construction or has been paid off for several years, your home insurance policy is a necessary safeguard against a variety of perils. These perils can range from fires to theft to hail damage and more, but standard home insurance policies are not comprehensive by nature.

Several perils that your home may face will not be covered in the event of a loss, but there are also ways that homeowners can remain protected even if it is not through a home insurance policy. Being blindsided by such perils can be a frustrating and expensive problem to have. Stay educated and learn about common gaps in your home insurance policy and how you can overcome them.

Flood Events Are Not Covered by Your Homeowners Insurance

Flooding continues to be a problem throughout many regions of Texas. There are tropical storms and hurricanes which come in from the Gulf of Mexico and bring with them devastating storm surges and torrential rainfall. Severe thunderstorms may also bring flash floods which can overflow rivers and flood urban areas such as Houston and Dallas.

Unfortunately for many homeowners, a misconception is that flood events are a covered peril by home insurance policies. This can turn a loss into an even more frustrating nightmare for homeowners in the aftermath of a flood. To stay protected from flooding, homeowners will need a separate flood insurance policy.

Even in cities that are prone to flooding, many homeowners forgo flood coverage. This is a risky option considering the average flood damage claim costs homeowners more than $42,000. Combining this fact with FEMA reporting around 25% of all flood damage-related claims come from homes outside of high-risk areas, and you’ll see that flood insurance is important for every home in Texas. Here at Freedom Insurance Group, we help homeowners find affordable flood insurance which can supplement their home insurance and keep their homes protected from flood events.

Personal Property Coverage Has Limits

A standard homeowners insurance policy, known as HO-3, is comprised of several different coverages that protect your home and your family. It is also tasked with the responsibility of protecting your personal possessions. Coverage C: Personal Property offers the typical homeowner protection but only up to 25%-50% of your home’s coverage limit. This means that homeowners with damages exceeding such coverage will find themselves having to pay out of pocket to fully restore their loss. Some of the most common items which can cause homeowners to exceed their coverage limits include:

  • Antiques and Collectibles
  • Art
  • Designer fashion
  • Electronics
  • Instruments
  • Jewelry and Precious Metals

To avoid such predicaments, homeowners have options. The first is the use of an endorsement known as Scheduled Personal Property Coverage. Its purpose is to protect personal items which exceed your home insurance policy’s limits. Another option is to purchase HO-5 homeowners insurance. The key difference between HO-3 and HO-5 policies is that HO-3 use “named perils” to determine coverage, while HO-5 uses “open perils”:

Type of Coverage How Your Home is Protected
Named Perils The peril must be explicitly listed in your home insurance policy to be covered.
Open Perils Any peril is covered unless it is explicitly excluded from your policy.

HO-5 home insurance policies will cost more than a traditional HO-3 because it protects against more, but the coverage may be worth it if you are a homeowner with a considerable amount of valuables or looking for a more comprehensive coverage option.

Business Supplies and Working From Home

Even before the outbreak of the COVID-19 pandemic, Americans were no strangers to the home office. Now, there are plenty of positions that are either full or part-time remote to keep companies moving forward. Business supplies are not always covered by your home insurance policy. Whether you are using the Internet for a side hustle, are working from home full-time, or telecommute a few days a week, it is important to speak with your insurance agent to understand what is and what is not protected by your home insurance policy could help avoid confusion should you experience a loss.

Homeowners Insurance Won’t Cover Sewage or Utility Line Damage

Many components connect to your home which millions of Americans may take for granted. Our cable, electricity, WiFi, sewer systems, water lines, and gas lines are all critical components for the modern home. But don’t look to your home insurance policy should you run into an issue, because these perils are not covered.

A sewage backup is something no homeowner hopes to face. You may not expect to run into the issue but besides being downright gross, a backed-up sewer can lead to losses that can reach over ten or twenty thousand dollars! Likewise, utility lines which suffer damage are costly to restore and it is your responsibility as the homeowner to restore such losses.

By adding a water backup endorsement to your home, you’ll be able to protect against costly, disgusting sewer backup and sump pump failure. Many coverages are very affordable and can help you reduce the amount of out-of-pocket costs you would receive in the event of such a loss. Service line coverage is also there to protect you in the event a utility line suffers a loss and requires repair or replacement.

Consider Renovations and the Cost of Building Materials

Performing home renovations are a great way to make your house a home, add value, or simply enhance your lifestyle. There’s nothing wrong with responsible renovations to your home, however, an area many homeowners forget to be mindful of is their home insurance policy. The cost of building materials and the cost of labor to construct homes continues to rise. These costs saw astronomical increases in both 2020 and 2021 making it even more expensive to build. This also made it harder for homeowners to remain covered by their home insurance.

This is because while it is important to remain current with your home insurance coverage and to have enough to rebuild your home after suffering a total loss, things change. Prices change and values may change when factoring in renovations. A marble floor is going to look beautiful but it is also going to cost more to insure and replace than the vinyl flooring that was factored in as part of your original premium.

Staying protected against the rising cost of building materials is simple and there are a couple of different suggestions on doing so:

When making major changes to your home, always notify your home insurance provider so that there are no surprises and you can maintain the right coverages for your home’s value.
Extended Replacement Cost is a coverage that helps you restore your home and possessions in the event you suffer from losses that surpass your home’s coverage.

Another consideration for homeowners while renovating comes from risk. Your homeowners insurance premium is calculated by insurance brands after determining the amount of risk you pose as a client. The more risk you have, the more you’ll pay, and vice versa. Some home renovations will not only leave you with a coverage gap but could see your insurance provider drop you as a client altogether. A common example is when a homeowner installs an inground pool without notifying their insurer. This may void your homeowners insurance policy and will expose you, your family, your possessions, and your home to several varieties of perils. Always speak with your agent before conducting renovations to your home.

Find the Right Home Insurance Endorsements With Freedom Insurance Group

Here at Freedom Insurance Group, we make sure that each of our clients receives the protection they deserve. Proudly stationed in Flower Mound, TX, since 2005, we’ve served all of Texas with incredible customer service and a dedication to finding the right coverage for the lowest price. Home insurance is important. It protects against many dangerous perils, but for extra protection, we can provide you with the right coverage options at an affordable cost to deliver you peace of mind. Get a free home insurance quote or contact us to better protect your home for less today!

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