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7 Exclusions In A Homeowner’s Policy You May Not Know About
Homeowner’s insurance policies can possibly give you the widest range of coverage you can find anywhere. But there is a big drawback that comes as a result of wide protection.
Because coverage is so wide, we often assume something is covered when it is clearly stated as an exclusion in the documents.
You read that right. There are exclusions.
Although insurers all sell homeowner’s policies, the terms and details can differ slightly from insurer to insurer.
This is reason enough to spend at least half a day reading over and pondering on the papers you are considering putting your signatures on. There are some events that you probably know implicitly that will not be covered.
Here are some exclusions that are we can easily fail to acknowledge.
If you operate a business at home, you have to quickly get acquainted with the fact that your homeowner’s policy does not include any coverage for property damage or injuries related business.
The tricky part is to determine whether whatever you are doing at home can be defined as a business activity.
To be labelled a business, your activities must be generating a revenue and also have continuity. That basically means that almost everything can be called a business as long as a savvy lawyer can show that these 2 elements exist.
So if you are conducting private tuition classes at home for the last year, there is no coverage if any of the students fall down and gets injured.
Even if you operate an internet business from your home, the computers you use for your operations and the data assets you have built up have no coverage.
And if you are a lucky employee who gets to work from home, your work equipment like notebook computers and printers are excluded as well.
To eliminate these exclusions or coverage gaps as some might call it, you can get an endorsement on your homeowner’s policy.
Check with your agent on your options. Also check if your employer if they have bought their own insurance to cover your work equipment. Maybe they have already done so.
2) Property in custody
Property damage is not included for items in your custody.
This refers to things that you rent, borrow, or use. They don’t belong to your and you are just in possession of them for one reason or another.
Damage claims will not be entertained. But again there is a giveback. Causes like smoke, explosions, and fires can be nullified. Meaning they are excluded from the exclusion.
If the items in your custody are important enough to get coverage for them, you can consider an umbrella policy that covers property damage in your care. And if you are renting stuff, rental companies will often ask you if you want to get insurance to go along with them.
Sometimes, they are automatically insured as they are already packaged together. And if you are taking a long term loan on an item belonging to a friend, ask your agent about a loss payee on your existing policy to specifically cover the item.
3) Renting out part of your home
Many people who live alone are tempted to rent out vacant rooms for additional income. You get some company and also get others to pay for your hefty mortgage payments.
But when there are more than 2 tenants living in your single family house, injuries to them are not included in homeowner’s insurance. In this case, your remedy can be to cancel the policy and get a commercial policy for rooming, or restrain yourself from renting out to more than 2 tenants at any one time.
To make matters even more confusing, this exclusion has it’s own exclusions as well. You will find that some ways of renting out is included in homeowner’s policies. They can include short term stays, office rental, etc.
Check out your own policy to learn the details that apply to you.
4) Other rented or owned premises
Most people will instinctively understand this. But just in case you are one of the few who don’t, your homeowner’s insurance only covers you for your primary home.
This means that your rental real estate anywhere else or the vacation home your joined in a group buy is not included.
You can extend liability coverage to the other locations by getting an endorsement. It does not cost much when you take a look at the bigger picture of protecting your business and income.
Liabilities as a result of all contracts are excluded. But in certain situations, they also come with givebacks.
This basically means that the exclusion is terminated. The details of the eligibility of these givebacks vary. It is best to check with your agent on the details applicable to you.
Mold can be a serious problem to a house if left unattended to.
They can cause enough damage to result in a “total loss” of a house.
That means that a house has to be demolished and rebuilt as it is no longer inhabitable.
Because of such a potentially monstrous claim for very little, insurer are very care when it comes to insuring for mold. So much so that many of them would probably run as far away from you as possible the moment you bring this up as a topic.
If you do end up with some limits on mold, it will usually be quite low as well.
One way to protect yourself from lawsuits and mold liability claims is to get an umbrella policy to defend and pay any judgment against you that exceeds your existing limit.
7) Loss assessment
You may have never taken notice of it. But you are part of an association when you live in communities like town houses, or condominiums.
And these associations that you belong to can make loss assessment claims against you if injuries or property damages came from a result of your actions.
To be protected from these actions, you will have to get loss assessment coverage as an extension to your home policy.
They will include a bunch of exclusions again. Loss assessments can be quite substantial and your surely don’t want to be facing one without an insurer who has got your back.