Insurance is always a confusing subject, no matter what kind of insurance we are talking about. It seems like all it does is take your money in exchange for a “sense of protection”— that’s until you actually get to use it. Then you are either relieved and thankful for having insurance or devastated to find out that the damages you claim aren’t covered. This is why it helps to know possibilities and limitations of your coverage, especially when it comes to something as important as homeowner’s insurance.
Of course, every insurance policy is different, but there are a few major categories of risks many standard home insurance policies don’t cover. While some of them might be obvious, others may come as a surprise.
As you might have heard, flood damage is not covered by homeowner’s insurance. There is, however, separate flood insurance you can purchase. In fact, it is mandatory for many residential and commercial properties located in high-risk areas prone to flooding. While flood insurance makes sense if you live next to a creek or other body of water, you shouldn’t overlook it even if your home isn’t facing imminent flooding. About 20% of flood insurance claims come from moderate and low-risk areas—and these folks were glad they had coverage when flooding occurred. If you live in Maryland, it’s smart to make flood insurance one of the homeowner insurance considerations.
Earthquake damage is also not covered by most home insurance policies. If you live in a seismically active area, you can get an add-on coverage with a separate policy. Thankfully, Maryland gets very rare and minor quakes, making this extra expense unnecessary, unless you want to get it “just in case.” Sinkholes, as well as foundation cracks caused by settling ground, also fall into this category of damage from earth movement and are not included in most policies.
If we consider the likelihood of events, sewer backup would probably be somewhere between flooding and earthquakes for Maryland residents. While it’s not very common, it can happen to anyone, anytime without any warning. Keep in mind that many homes, especially those in historic urban neighborhoods like Baltimore, are connected to century-old pipelines. Some of them may be damaged by invasive tree roots, while others may get overwhelmed with the street runoff—a disaster waiting to happen. Most standard polices exclude sewer backup from their coverage, but it can often be added for an additional premium.
It’s never good news to find a termite infestation in your current or newly purchased home. It’s even worse to discover that your homeowner’s insurance won’t pay for this damage. And in most cases it won’t, because insurance companies consider this type of damage preventable through timely inspections and remediation. Other insects and rodents, such as rats and mice are also on this list. If you are concerned that pests may damage your property and affect its value, the best thing you could do is pest-proof your home and treat all pest problems as soon as they develop.
Unless it was caused by lightning, a power surge that fries all your electronics is likely not covered by your homeowner’s insurance. To protect your appliances, use surge protectors throughout the house. Unfortunately, if your local power station accidentally sends 1.21 gigawatts of electricity through your circuits, all the resulting damage becomes your financial burden.
Insurance companies have all these policy exclusions to allow homeowners keep their premiums low. To save yourself unnecessary frustration and potentially expensive damage repairs, talk to your Maryland home insurance agent. It often takes professional guidance to understand all ins and outs of even the most basic policy.