What is never included in homeowners insurance?

Standard homeowners insurance never covers floods, earthquakes, general wear and tear, and pest infestations.

According to guidelines from Colstan Insurance and Policygenius, standard policies cover sudden and accidental damage rather than routine maintenance or broad natural disasters.

Common Exclusions

• Floods and Surface Water: Damage from heavy rains, overflowing rivers, storm surges, or sewer/sump pump backups is excluded (requiring a separate flood policy or water-backup endorsement).
• Earth Movement: Earthquakes, landslides, mudslides, and sinkholes are excluded.
• Wear and Tear / Maintenance: Gradual deterioration, rust, rot, and aging roofs are considered homeowner responsibilities.
• Pests and Termites: Infestations by termites, rodents, birds, or insects are never covered.
• Mold: Gradual mold damage is excluded unless it is the direct result of a sudden, covered internal plumbing leak.
• Home-Based Business Operations: Business property and commercial liability are excluded, requiring a separate business insurance policy.
• Intentional Damage and Government Actions: Acts deliberately caused by the homeowner or confiscation/seizure of property by the government are not covered.
• High-Value Items (Sub-limits): Items like jewelry, fine art, and firearms have strict payout caps and require special scheduled riders for full replacement value.

Standard homeowners insurance policies typically do not cover floods, earthquakes, wear and tear, and pest damage.

Natural Disasters and Earth Movement

• Floods: Ground-level water rising from heavy rains, overflowing rivers, or storm surges requires a separate policy, often through the National Flood Insurance Program.
• Earth Movement: Earthquakes, landslides, sinkholes, and mudslides are excluded and need specialized endorsements.

Maintenance and Deterioration

• Wear and Tear: Gradual aging, such as a 30-year-old roof leaking or worn-out plumbing, is the homeowner's responsibility.
• Pests and Vermin: Damage caused by termites, rodents, birds, or insects is viewed as a preventable maintenance failure.
• Mold: Mold is generally excluded unless it directly stems from a sudden, covered water disaster like a burst pipe.

Specific Exclusions and Limits

• Water Backups: Backups from sewers, drains, septic systems, or failed sump pumps are typically not included without an add-on endorsement.
• Home-Based Businesses: Business equipment, inventory, and liability for commercial operations run from home are heavily limited or excluded.
• High-Value Valuables: Items like fine jewelry, art, firearms, and collectibles have strict payout caps, requiring "scheduled personal property" floaters for full replacement cost.
• Intentional and War Damage: Acts of war, nuclear hazards, and intentional destruction of property by the owner are strictly excluded.

Based on recent industry surveys like J.D. Power's property and satisfaction studies, the lowest-ranking homeowners insurance companies for customer satisfaction and claims include Universal Direct, Tower Hill Insurance, National General, Homesite, and Foremost.

Lowest-Ranking Home Insurers

• Universal Direct: Ranks at the very bottom of major customer satisfaction and claims surveys due to slow response times and service issues.
• Tower Hill Insurance: Frequently scores near the bottom for overall customer experience and policyholder satisfaction.
• National General: Scores poorly on consumer satisfaction metrics regarding communication and payout handling.
• Homesite: Routinely lands at the bottom of J.D. Power claims satisfaction rankings for property coverage.
• Foremost: Receives below-average customer satisfaction scores for handling claims and policy value.

You can lower your homeowners insurance by bundling policies, raising your deductible, and upgrading your home safety features.

Policy Adjustments

• Bundle policies: Buy your home and auto insurance from the Liberty Mutual or another same company to save up to 30%.
• Raise your deductible: Move your deductible from $500 to $1,000 or $2,500 to cut your yearly premium. Make sure you have enough cash saved to pay that higher amount if you need to file a claim.
• Shop around: Compare quotes from multiple insurers every few years instead of auto-renewing.
• Review coverage: Remove extra coverages for items you no longer own or value at high amounts.

Home Improvements and Safety

• Upgrade your roof: Install damage-resistant materials or replace an old roof to avoid surcharges.
• Improve security: Install smoke alarms, burglar alarms, deadbolt locks, or monitored security systems.
• Add smart tech: Install smart water leak detectors or automatic shut-off valves to prevent costly water damage.
• Remove hazards: Take out high-risk items like trampolines, old treehouses, or in-ground pools that raise liability.

Financial and Personal Habits

• Improve your credit score: Pay down debts and keep your credit score high, as insurers use it to set rates.
• Avoid small claims: Pay for minor repairs out of pocket rather than filing small claims that raise your risk tier.

Avoid policies and coverage traps that leave you unprotected or financially exposed when buying homeowners insurance.

Policies and Plan Types to Avoid

• Actual Cash Value (ACV) Policies: Avoid policies that pay out based on ACV instead of replacement cost. ACV subtracts depreciation for age and wear, meaning you will receive far less than what it actually costs to rebuild your home or replace items today.
• The Cheapest Policy Available: Do not automatically pick the lowest-cost premium. Rock-bottom prices usually hide high deductibles, low coverage caps, and severe structural exclusions.
• Poorly Rated Insurers: Research financial stability and customer satisfaction. Companies with low A.M. Best ratings, excessive NAIC complaint ratios, or a reputation for slow claims processing (such as certain low-tier or high-complaint regional providers) can make post-disaster recovery painful.

Coverage Gaps and Exclusions to Watch For

• Standard Flood and Earthquake Exclusions: Standard policies never cover rising natural floodwaters or ground movement. If you skip separate flood or earthquake endorsements, you carry 100% of the risk.
• Sewer and Drain Backups: Water backup from overloaded municipal sewers or failing sump pumps is excluded by default. Always add an endorsement if your basement contains finished living space.
• Unscheduled High-Value Valuables: Standard limits for jewelry, fine art, firearms, and collectibles are very low. Avoid leaving these items unlisted; purchase a scheduled personal property rider.

Common Mistakes During the Buying Process

• Insuring for Market Value vs. Rebuilding Costs: Never base your policy limit on your mortgage balance or original purchase price. Insure your home for current local construction and labor replacement costs.
• Neglecting a Home Inventory: Failing to document your belongings with photos or videos before a loss makes the claims process slow and difficult.
• Failing to Disclose High-Risk Features: Forgetting to mention trampolines, aggressive dog breeds, or unpermitted renovations can lead an insurer to deny a claim or cancel your policy entirely.