5 common scenarios not covered in a standard property insurance policy
Most people assume their insurance will protect them from any disaster that affects their property. But standard policies have various exclusions and limits. Many people believe that common losses—from fallen trees and floodwater to pest damage and pricey jewelry—are covered that often are not. The difference between being protected and getting stuck with a large bill usually comes down to policy details.
Here are five common scenarios not covered in a standard property insurance policy:
Scenario #1: During a hurricane, your neighbor's tree falls onto your property but doesn't hit a structure.
Why people assume it's covered: Your neighbor is responsible for everything on their property.
Reality: Standard homeowners policies typically only pay to repair structures hit by a fallen tree, and may include debris removal when a covered structure is damaged. If the tree falls onto your lawn without hitting a structure, cleanup is usually your responsibility.
What to do: Photograph the scene, contact your insurance agent, and talk to your neighbor. If the tree was diseased or not properly maintained, and this had been previously communicated to your neighbor, then you might have a negligence claim.
Scenario #2: Heavy rain causes a nearby river to overflow, flooding your basement with standing water.
Why people assume it's covered: People with “water damage” coverage mistakenly think that means “any damage caused by water.”
Reality: While the risk of a flood is often greater than the risk of fire or theft, homeowners policies do not cover flood damage. In fact, floods require a separate insurance policy.
What to do: Just one inch of floodwater can cause thousands of dollars' worth of damage. So even if you don't live in a major flood zone, it's worth considering getting flood insurance to ensure you're protected if disaster strikes.
Scenario #3: Your foundation is compromised due to severe termite damage.
Why people assume it's covered: Wood-structure damage seems like it would fall under “dwelling coverage.”
Reality: Unfortunately, damage from insects or rodents is considered to be maintenance-related and is not covered by a standard insurance policy.
What to do: Keep inspection and extermination records. If you find damage, repair it quickly to avoid larger claims being denied.
Scenario #4: Your computer gets stolen from the apartment you're renting.
Why people assume it's covered: Most renters think their landlord is responsible for insuring the building and everything in it.
Reality: While your landlord is responsible for insuring the building, in most cases their policy does not cover your personal belongings.
What to do: Consider getting renters insurance. It can protect you financially if you lose any personal possessions while renting a house or apartment. It covers your items—clothes, furniture, kitchenware, and more—whether they are stolen or damaged by fire, smoke, lightning, severe storms, vandalism, or water damage not caused by a flood.
Scenario #5: You lose your engagement ring.
Why people assume it's covered: Many people assume expensive items are automatically insured under their homeowners policy.
Reality: This one is tricky. Short answer: Your home insurance policy might cover such a loss. But it would be covered only up to a limited amount.
What to do: If you already have property insurance, talk to your insurance agent about adding blanket coverage or scheduled property coverage to your existing policy. For any special, high-value jewelry, you may want to consider a stand-alone jewelry insurance policy to make sure your items are insured for their appraised value.
When it comes to insurance, don't ever assume. Read your policy details carefully and talk to your insurance agent if you're unsure or need more clarity. A simple policy review each year—and before or after major life changes or purchases—can save you a lot of money and stress down the road.
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