What Homeowner's Insurance Doesn't Cover

Along with the cost of a mortgage and property tax, homeowner's insurance is one of the major regular expenses involved in owning a house. Fortunately, these insurance plans aren't usually very expensive, and can end up saving homeowners a huge sum of money in the event something catastrophic happens to their home. However, homeowner's insurance isn't as similar as the health or car coverage plans many already pay into. The primary reason for owning an insurance policy on a home is to cover the cost of rebuilding it should it ever be completely destroyed. Beyond that, homeowner policies don't cover much else without higher costs involved.

If you are a new homeowner or are unfamiliar with your policy, it's never a bad idea to double check what exactly is covered. In general, there are a number of events that insurance will not pay for. These exemptions underscore the importance of a smart savings plan for homeowners.

Natural disasters

The Insurance Information Institute created a helpful guide  to the most common events that are included in various grades of homeowner's policies. These include a great deal of various natural disasters and accidents like lightning strikes, wind damage and even volcanoes. However, some other severe weather events are not covered by standard policy types and may require extra insurance.

"Homeowner's insurance policies come in standard packages."

Flooding is one such event that standard insurance will not pay for. That's why the federal government created an exchange for homeowners to purchase insurance against damage from flooding. The National Flood Insurance Program will cover replacement of the home's structure if damaged by a flood, as well as any possessions at cash value. In some areas, like those especially prone to flooding, flood insurance may be legally required.

Earthquakes are also not covered by a standard homeowner's policy, according to the III. People living in areas prone to earthquakes should consider purchasing a policy to protect against this threat.

Termites and mold

These are generally more common and less obvious problems to have in a home, but they are usually costly and dangerous nonetheless. But as real estate website Zillow found, home insurance policies don't usually cover  these irritating infestations. This is because the presence of mold or termites is considered a maintenance issue rather than an unforeseeable event like an earthquake.

This means the best protection against the high costs of treatment and repairs for termites or mold involves prevention. Zillow suggested staying vigilant of water leaks and seepage from the ground which often leads to mold. Termites may require a professional inspection to find, and this should be scheduled once every two years.

Sewer and pipe problems

Most conventional homeowner's insurance policies will not cover any damage caused by a backed up sewer line. According to the III, protection against this event can be purchased in a separate policy , but is unlikely to be found normally. However, most insurance plans will provide reimbursement for expenses incurred while living elsewhere after a sewer backup causes damage.

Sewer backups are generally the fault of the utility operator or local government, but legal action may be required for this to be proven.

Burst pipes, on the other hand, are generally covered by insurance, according to the III. Similarly to other incidents, they will not be covered if the break is determined to have been the fault of the homeowner. This may include bursts caused by pre-existing leaks or frozen water in the winter.

As always, the best defense against these and any number of other perils is to be prepared. Insurance may take a decent bite out of a homeowner's monthly budget, but it's important to remember that even this cost won't cover everything that can go wrong. There are numerous other considerations that need to be made regarding home insurance, including liability coverage or special policies that allow for a business to be conducted within the home, if applicable. These additional considerations and policies may mean higher insurance payments each month, but that could ultimately end up paying off in the event of an untimely accident.

For more advice on how to save and spend wisely, talk to the money pros at Vectra Bank.