Some things, like nuclear war, no company will cover. Others, like the family dog, may vary by insurer and by breed. Here are some common coverage gaps.By Liz Pulliam WestonMost people think about their homeowners insurance only a few times in their lives: when they select their insurer, when they’re writing premium checks and when they have a claim.By the time something goes wrong, however, it’s usually way too late to begin learning about your policy.There are some gaps in your coverage you can’t do anything about, of course. Insurers aren’t going to cover you for a nuclear accident, for example, no matter how many companies you ask.Many so-called exclusions, though, vary by the insurer. If you know about them in advance, you may be able to switch carriers or buy extra insurance to stay protected. So pull out your policy and check for the following:Mold and water damageA spike in mold-related claims at the turn of the century led most insurers to strike the coverage entirely from their homeowners policies.The frenzy over toxic mold reached a peak around 2002, the year television personality Ed McMahon filed a $20 million lawsuit against his insurer over mold that he said sickened his family and killed his dog. (McMahon later settled for $7.2 million.) A huge increase in mold-related claims in Texas, California, Florida, Nevada and Arizona led insurers to eliminate or at least reduce their exposure.Most homeowners insurers now exclude mold from their coverage, said Frank J. Coyne, chairman and CEO for the Insurance Services Office, which supplies statistical data to property and casualty insurers. Many insurers also limit how much they’ll cover for water damage.In fact, in some cases you may have trouble getting coverage for a home that’s had water claims in the past. Read “Insurers keep a secret history of your home” for more details.Sewer backupThe only thing more disgusting than a bathroom floor overflowing with waste is the fact that you may have to pick up the cleaning bill yourself.Sewage backups are frequently not covered by homeowners policies unless you purchase a special rider. Many homeowners who experience this particular disaster try to get their cities to pay for the damage, but governments typically aren’t liable unless the homeowner can prove negligence — and is willing to go to court over the matter.A cheaper solution? Check your policy, and if you’re not covered, buy the rider for $50 to $100.War, nuclear accidents and terrorismIf your home is burned in a riot or other civil commotion, your insurer probably will pay to rebuild it. If your home is damaged by an invading army or is irradiated by a nearby power plant, however, you’re not covered. If your house is destroyed during a terrorist attack, you also may be on your own.Insurers have long excluded war and nuclear accidents from the list of perils they cover. Until the Sept. 11 attacks, though, most homeowners policies either covered terrorism or were silent on the issue, which usually implies coverage.Since the World Trade Center attacks, an increasing number of insurers are specifically excluding terrorism coverage from their personal insurance lines, such as homeowners, in addition to banning it from their commercial coverage.
Natural disastersIf your home burns in a wildfire, you’re probably covered if you live in a developed area. If you live in a remote cabin or your home is rattled apart by an earthquake, inundated by a flood or blown away in a hurricane, you may not be.The more likely you are to be a victim of a natural disaster, the more reluctant insurers may be to cover you. That’s why residents who live near the Gulf Coast or the Atlantic Ocean typically need to supplement their homeowners insurance with hurricane coverage offered by a high-risk pool (and the number of properties considered high-risk has exploded since Hurricane Katrina). California residents, meanwhile, get earthquake coverage from the state-run California Earthquake Authority or from a handful of insurers willing to write earthquake policies.Many insurers also won’t cover fire risks for people who live in forests or far from fire stations. That’s true even though some of the biggest wildfire losses have come in developed areas: the Oakland Hills fires of 1991, for example, the Laguna Beach and Malibu fires of 1993, and the San Diego wildfires in 2003. Most of those homeowners had no trouble getting insurance before the fires, while their more remote neighbors often had to buy insurance from high-risk pools.Continued: Neglect, trampolines and dogsFloods, meanwhile, aren’t covered under homeowners insurance policies — something many Katrina victims learned to their chagrin. The National Flood Insurance Program, run by the Federal Emergency Management Agency, offers coverage. If you live in an area that’s prone to either floods or hurricanes, you need both wind and flood coverage.If you’re the victim of a landslide, however, you’re pretty much on your own. That kind of earth movement usually isn’t covered, so it pays to get a geologist’s report before buying any home near a cliff or on a hill.NeglectIf a tree topples over in a windstorm and crushes your house, you’re covered. If your home collapses because of a termite infestation, you’re probably not.Insurers expect you to take care of your home and deal with any maintenance issues on your own dime. Insurance generally covers sudden and unexpected losses, not losses from termites, rodent infestations or a water leak you never quite got around to fixing. You’re expected to detect the problem and prevent the situation from getting out of control. If you don’t, any damage done typically won’t be covered by your insurer.Bruce Johnson, author of “50 Simple Ways to Save Your House,” recommends you conduct regular inspections to detect such problems. At least twice a year, tour the exterior of your home looking for cracks, decay or water damage. Check the condition of the roof and inspect the basement or crawl space for other hidden problems, including rodent droppings, termites or leaks.If you find a problem, fix it. Remember that home maintenance problems usually just get more expensive.TrampolinesInsurers charge more for certain hazards, like pools and spas. Trampolines, though, are often excluded outright.They’re a whole lot of fun, but they also offer a whole lot of ways to seriously hurt yourself. That’s why your homeowners policy probably excludes trampolines from coverage and why your current insurer may threaten to drop you if you buy one. They simply don’t want to pay for the lawsuit and medical bills if the neighbor kid breaks his neck.If you insist on having one, you may need to shop around for an insurer that will tolerate, if not cover, trampolines. But you might want to think seriously about a less hazardous form of at-home fun.
DogsIf you own a toothless Chihuahua, your insurer probably doesn’t care. Buy a pit bull, Rottweiler or wolf hybrid, however, and you may find your insurance gets more expensive — if you can persuade your insurer to cover you at all.Dog bites cost insurers about $310 million a year, and an increasing number of companies have a blacklist of breeds they won’t accept or charge more to cover. Pit bulls, which lead the Centers for Disease Control and Prevention’s list (.pdf download) of deadly breeds, are particularly unwelcome. Other troublesome breeds include German shepherds, Rottweilers, wolf hybrids, huskies, malamutes and Dobermans.If your dog has ever bitten anyone, regardless of its breed, you’re probably going to have trouble getting coverage as well — particularly if it was an unprovoked attack. (See “Your dog’s bite could bankrupt you.”)Each insurer has different policies, though, so you may be able to find affordable coverage if you shop around. You also can ask the insurer to exclude your dog, meaning that you’ll pay for any damage it does. You also should invest in some training, since a biting dog is a hazard to everyone around you.
Intentional damageIf your ex sets fire to your home, you’re probably covered. If the fire is started by your rebellious teenager or an estranged spouse, however, you may not be.Intentional damage by an insured person — or by the person’s spouse, children or relatives living in the house — typically isn’t covered. Estranged spouses often come into a gray area. Although they may not live in the home, they may be listed on the policy or the property deed and be considered to have an insurable interest in the home. Companies have, in fact, made this argument to deny or limit coverage to homeowners whose property was damaged by an estranged spouse. (See “Your teen’s troubles can cost you a bundle.”)Victims’ advocates complain these policies are unfair, since there’s often no way to prevent such damage. If you’re worried about the risk, however, it may motivate you to get help for a destructive teen, beef up your home’s security system or reach a quicker divorce settlement.Computer equipmentIf you have a personal computer or two, your homeowners insurance may pay you enough to buy a new one — or it may not. If you’re running a home business, however, your homeowners insurance almost certainly will fall short.Here’s another area where it pays to read your policy. Some insurers will give you a check only for what your computer equipment is worth now, which is probably a fraction of what you paid for it. Even those that do pay for replacements typically have a cap, often about $2,500. Many require you to have supplemental coverage if you want a bigger check than that, or if you run a business from your home.Read your policy, note the limits and talk to your insurer about supplemental coverage if you need more.Also, know that most policies won’t cover the value of digital information stored on your computer, including your music and photo collections. That’s all the more reason to invest in a good, off-site backup system and to use it frequently.Luxury items and collectiblesIf you don’t own anything special, the entire contents of your home are probably covered under your homeowners policy. If you have antiques, guns, jewelry, collectibles or fine furs, you may need extra coverage.The typical policy limits coverage for luxury items and collectibles. You might get as little as $200 for the coin collection you were hoping would fund Junior’s college, or $1,000 to cover all your jewelry, watches and furs.Once again: Check your policy, and buy supplemental insurance if you want more coverage. To make sure you have enough coverage for all your stuff, use the home inventory software available at the Insurance Information Institute.

Liz Pulliam Weston is the Web’s most-read personal-finance writer. She is the author of several books, most recently “Your Credit Score: Your Money & What’s at Stake.” Weston’s award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Updated July 14, 2009http://articles.moneycentral.msn.com/Insurance/InsureYourHome/10ThingsYourInsuranceMayNotCover.aspx?page=all

9 secrets of home insurance claims
What you don’t know about filing a homeowners insurance claim after serious damage can definitely hurt you. Don’t get caught by these common surprises.[Related content: insurance, homeowners insurance, insurance claims, policies, insurance rates]
By Insure.com
You’re at a disadvantage when you have major house damage or a total loss of your home. You face a home insurance claimprocess that could easily stretch out for more than a year, require reams of paperwork and leave you exhausted.
Unless you’ve already run the gantlet of a major home insurance claim, you don’t know what to expect. We asked Ron Reitz, the president of Quality Claims Management in San Diego, to give us an inside look at what, many times, is an eye-opening process for policyholders.
Reitz helps policyholders work through the insurance claim process and shows them how to recoup their losses. “Most people don’t learn anything about insurance until they have a loss,” Reitz says.Public adjusters work on behalf of policyholders to help people get all they’re entitled to from insurance claims. Adjusters help evaluate damage and rebuilding costs, track the flow of insurance payments and amounts due, and work with home insurance companies to expedite their clients’ insurance claims.
Here is a look at many of the things that can take people by surprise when they have a large home insurance claim:1. A claim for a total loss of a house can cost less than rebuilding a damaged house.
Construction from scratch costs less per foot than construction for rebuilding. Often it’s “easier” to fix your problem if your house is simply gone, rather than to try to repair the damaged sections of what’s left.”When you start from scratch, you don’t have to incorporate changes that exist with the building, so you have a clean slate,” Reitz says. Also, it’s often more costly to retrofit your old house to prevailing code than to start fresh.2. If you have a mortgage, your insurance checks will be made out to both you and your mortgage bank.Your mortgage holder is likely listed as a “loss payee” on your home insurance policy, so payments for rebuilding are issued to both you and your lien holder. And don’t expect your mortgage holder to sign over the check to you.Policyholders “have to endorse and send the check to the mortgage company, and it will sit in escrow until repairs are made,” Reitz says. Mortgage banks typically release the funds back to you in three installments over the course of your reconstruction. Mortgage companies want to be sure your property is repaired before releasing payment to you. As a result, you may have to advance your own money for construction costs until the mortgage company verifies the repairs.3. Don’t cash any insurance checks marked “full and final settlement.”In some states, such as California, it’s illegal for an insurer to issue a check like this. You don’t want to cut yourself off from any funds you’d be entitled to if you later discover that not everything has been paid for.4. Don’t sign a release on your home insurance claim.This takes the home insurer off the hook for any future payments on your claim.”Insurance companies ask the insured to do it when they think there’s a problem or big dispute coming,” Reitz says. The home insurance policy does not require the insured to execute a release, so why should you sign?5. Don’t let your insurance company replace your Pottery Barn stuff with Wal-Mart stuff.The values of particular items are often disputed in home insurance claims. If you’ve bought expensive items, your insurance company may say it can replace them with very similar items from Wal-Mart or Target.”We battle back and forth,” Reitz says. The insured is entitled to be paid for what he had — not a knockoff version of it.6. Many condo owners have no idea that they need their own home insurance policies.They think that the condo association’s policy covers their property. However, the association’s policy covers only common areas, typically up to the walls of the condo. If you want your own space and belongings protected, you need an HO-6 home insurance policy. Otherwise, all your belongings, furniture, appliances and cabinets are uninsured.Without an HO-6, you also may have no liability protection if you’re sued for something that happens within your condo, like a slip-and-fall injury.
7. If you’re forced to evacuate, don’t sleep at a shelter.Your home insurance covers your “additional living expenses” if there’s a mandatory evacuation, including hotels and food — even additional transportation costs.”Why sleep on a cot when you could go to a hotel?” Reitz asks. “You don’t realize you have that coverage until you have a loss.”8. After a widespread disaster, insurance companies will bring in company adjusters from out of state who aren’t familiar with local costs.Adjusters from outside your area may not have a handle on how much electricians, plumbers or other workers charge, or how much it costs to rebuild a house. Often they will rely on a software program called Xactimate, which isn’t very exact if you don’t account for local costs.
“The insurance company will bring in out-of-state adjusters who are probably not licensed in the state,” observes Reitz. “They’re not as familiar with local building codes. What we saw from the 2007 fires in Southern California was that out-of-state adjusters can’t comprehend that it will cost $800,000 or $1 million to rebuild someone’s house. They can’t comprehend local building values.”9. People regularly settle for less than the total cost of their damages because they are exhausted.Especially near the end of a complicated claim, such as a total home loss, homeowners just want the process to be over.Even if your policy entitles you to “replacement cost” of your belongings, home insurance companies will initially issue checks for your belongings’ actual cash value. Then, once you’ve replace the items, you must submit your receipts to get the difference between the initial checks and what you actually paid for replacements.”In reality, most people don’t go back and submit receipts because they’re so frustrated with the claim, they’re done with it. They’ll settle for less and close the claim and rebuild for less, and the insurance company knows this,” Reitz says.Hiring a public claims adjuster can put you on an even playing field with your insurance company. Your insurer may assign three adjusters to work on your claim: one for “additional living expenses,” one for your personal property and one for the building portion of your claim. A public adjuster will be able to explain the process and work on your behalf handling the countless meetings, e-mails, phone calls and paper documents that flow for a large claim.The insured can get on with daily life and leave the insurance adjusting to a professional, Reitz says.
Published April 5, 2010