Published March 30, 2011
If you're like most homeowners, you probably don't think about your property insurance very often. It's common to enjoy the security of knowing your insurance company has you covered.
Or does it?
Sure, your basic homeowners' policy will cover you for the run-of-the-mill stuff like fires (the accidental variety, at least). But what if you have the misfortune of suffering a more unusual type of calamity?
In that case, it's important to know whether you have an "open perils" or "named perils" policy. Most homeowners' policies cover your dwelling on an "open perils" basis, sometimes conversely referred to as "named exclusions." With this type of policy, anything not specifically excluded by your policy is covered. A named perils policy is just the opposite: Everything's excluded except what is specifically listed as covered.
Even within those categories, policies can vary widely, depending on your location and the type of coverage you have. So you need to study your policy carefully. Here's a look at some of the more unusual things that could happen to your home, and how your insurance company might react. We'll get some help from Bill Wilson, associate vice president of Education & Research for the Independent Insurance Agents & Brokers of America.
This may not be considered very "freaky" because it is fairly common. But it's perhaps the most common calamity not covered by a standard policy -- which many homeowners discover the hard way. "Homeowners' policies rarely, if ever, cover flood," says Wilson. "This means surface waters that accumulate from heavy rains; lakes or streams that overflow their banks; wave or wind-driven water and surges common in coastal areas; underground water and springs; sewer and drain backups; and almost any other kind of flooding that doesn't originate from your home's plumbing system. Flood insurance can be purchased from most insurance agents but it is underwritten by the federal government and provided in policies separate from your homeowners insurance." For more information visit the National Flood Insurance Program Web site at FloodSmart.gov.
2. Mine Subsidence
Residents of the Pennsylvania village of Drifton got a shock when the ground opened up and swallowed parts of two homes. The village sits atop old abandoned coal mines, so this wasn't as shocking as it sounds (in fact, the same thing had happened on the same block 30 years earlier). Mine subsidence isn't covered by regular insurance -- insurance for this must be obtained through a special program run by the state, at an average cost of around $250 per year. In the Drifton example, one affected property had this insurance; their neighbor did not.
Surprisingly, many homeowner policies actually do cover damage from volcanic eruptions. (Likewise, if you have comprehensive auto coverage and your car gets damaged from a volcanic eruption, you may be covered.) This coverage is usually limited, however, to damage caused by the material which comes out of the volcano such as lava and ash. Damage caused by volcanic ground tremors usually isn't covered, unless you have an earthquake policy. In Hawaii, there's a state volcano insurance program that covers homeowners who live in the highest-risk areas.
4. Meteors, Comets and Space Debris
If the thought of your home being leveled by a meteor or wayward space station keeps you awake at night, you'll be relieved (and maybe a bit surprised) to learn you'll probably be covered. Wilson says it's rare for policies to specifically exclude this type of damage; it's generally covered under the "falling objects" heading.
5. Stampeding Animals
"Most homeowners policies cover damage to the dwelling caused by animals you don't own or keep," Wilson says. Keep in mind; some policies distinguish between "domestic" animals and wild animals. So while you're OK if a herd of stampeding wildebeests charges your bi-level, you might have a problem if, say, an abnormally aggressive pack of kittens somehow destroys your home. While we're on the subject of animals, keep in mind that owning certain types of pets might make it tougher for you to get coverage in the first place. "Increasingly, insurance companies are shying away from insuring households with dogs, or at least certain breeds of dogs because of the liability exposure," Wilson says.
"Most homeowners policies, even if endorsed with earthquake coverage, won't cover landslides." says Wilson. "If you have that exposure, it is most commonly provided by a special 'DIC' policy known as 'differences in conditions' coverage."
7. Sinkhole Collapse
This may or may not be covered, depending upon whether your insurance company lumps it in with the general category of "earth movement," so check with your agent about this risk.
A few more ...
Wilson provides a few more interesting examples of claims which have been covered by open perils policies:
*Windstorm damage to watercraft not inside fully enclosed building (this is a common source of claims involving boats at marinas).
*Skunk discharges inside the home.
*Murder in house, significant damage from bodily fluids.