Top 10 Nasty Homeowners Insurance Surprises

Doesn’t matter how much you love surprises, you’ll wind up with more than a nasty taste in your mouth when realizing that which you’ve assumed was covered by your homeowners insurance policy– isn’t.

“Yuck!” Doesn’t begin to describe the disturbing results of a study by the National Association of Insurance Commissioners (NAIC.)

It found that an alarmingly high percentage of homeowner policy holders are completely clueless about what is and isn’t covered.

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Don’t you know what happens when you ass-u-me? Don’t wait to find out what’s what until it REALLY matters.

Learning in the aftermath of a catastrophe only makes an already terrible situation worse.

Now to the nasty…

Let’s get the Stink out by Setting Your Homeowners Insurance Facts Straight:

1. Flooding

Despite massive media coverage of thousands of families being denied claims after Hurricane Katrina drowned Louisiana neighborhoods – 33% of people who own a home and have a homeowners policy STILL believe flood damages are included in their policy.

Wake up people! If you live in an area that could suffer a flood – you need to get special coverage. Your standard Homeowners policy does NOT cover it.

2. Earthquakes

Can you FEEL my head shaking through this page?!
35% of you homeowners policy holders out there think damages from earthquakes are covered.

Just because you live near a fault-line, don’t assume your agent made sure you got the extra coverage. Don’t suffer an extra aftershock – please be sure to double check that you have the extra insurance.

Earthquakes are NOT part of a standard homeowners policy.

3. Water Line Breaks

I thought I might bust a line myself after reading that 51% of heads of households with homeowners think these are covered by their policy.

Damages from a break in the water line on your property supplying water to your home is NOT part of the standard coverage.

4. Sewers and Drains

This assumption could wind up draining your wallet beyond repair. There are 37% falling victim to the assumption that damages due to a break in the sewer line on their property connecting to their municipal sewer system are covered.

5. Termites

There’s a reason prospective buyers RUN from a property upon mention of this word. If your home is bit by the bug, you’re outta luck – it’s not covered in a standard homeowners policy.

Still, 31%assume that damage from termite infestation will be taken care of by their homeowners insurance. D'oh!

6. Mold

Another lesson that should have been learned from all of those endless hours of Television coverage post the Katrina tragedy.

However, 34% of you homeowners policy holders apparently need me to inform you that damage caused by mold is not covered by your standard homeowners policy.

7. Pets

There are two things to tackle here. One is regarding what happens when something happens to your pet – the other is about what happens to you when your pet “happens” to someone else.

22% of those surveyed by the NAIC were under the impression that if their pet was injured or stolen from their property – their insurance would cover it. In short: no.

Now, your dog biting someone is worth discussing further.
According to the NAIC, dog bites account for almost a quarter of all liability claims – but don’t assume your pretty pup is covered.

Good news is that most insurance policies do cover your liability when this happens. But, don’t assume that your pretty pup is protected. Many companies exclude coverage for certain types of breeds, such as pit bulls.

8. Vehicles

I’m wondering if a staggering 68% of homeowner’s policy holders surveyed by the NAIC have car insurance… since they seem to think vehicles such as cars, boats and motorcycles stolen from or damaged on their property are covered.

A home contents insurance policy may cover things inside it if they’re stolen – but not the vehicle itself.

9. Renovations

If you’ve done any big home improvements, and haven’t told your insurance company about it, they are not covered.

So be sure to let your carrier know so it can be included and protected.

10. Cash Value vs. Replacement Cost

Be sure you know the difference… and which kind you have to avoid a nasty surprise.

  • A cash value policy will only pay out the value of the property at the time it was damaged or stolen.
  • A replacement value policy will pay out the amount that it’ll take you to replace your stuff.

Therefore, an actual cash value payout could be thousands of dollars lower than a benefit calculated at the replacement cost. Take into account what you’re protecting and decide which option is best for you.

Avoid the Nastiest Surprise of all: A Bogus Policy

Doesn’t really matter what is or isn’t covered by your policy – if you find out it’s a scam!

When you are shopping around online for homeowners insurance quotes, beware. Make sure that you’re giving your information to a trusted site that will send it around to all the major companies you know and trust.

Sites like or are great.

There are a lot of scams out there, so be sure you only trust your information to an unbiased site that will send it on to legitimate companies.

Here is a list of free resources and links to helpful websites.
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