Your homeowner’s insurance covers more than just your home. These policies also provide protection for things that few policyholders would expect them to—in some cases, even things that occur thousands of miles away from home.
There is a catch—making a claim may lead to increased premiums for the next five to seven years. As a result, it generally is not worth making claims that result in payouts of less than $500 to $1,000 after accounting for the policy’s deductible. (See page four for additional details about the risk of filing a claim.) But there are good ways to use your policy that you probably never thought of. (Of course, check your policy for specific coverage.)
Here, nine unexpected things covered by most homeowner’s policies…
Lawsuits against you stemming from incidents that did not occur on your property. The liability section of your homeowner’s insurance does not just provide coverage if a guest slips and falls in your kitchen or your dog bites a deliveryman in your front yard. It generally will pay settlements and judgments against you and provide legal representation even if someone sues you over an incident that occurs elsewhere. Examples: You break someone’s nose playing pickup basketball…your dog bites someone at the park. Personal liability coverage included with homeowner’s insurance usually has a cap that is low by today’s standards—perhaps $100,000—but it is there if you need it.
Exceptions: Homeowner’s insurance usually will not cover you if a suit against you involves a motor vehicle or watercraft…business activities…intentionally causing injury or property damage…and in certain other situations. Read the “Liability Coverage” section of your policy for details.
Sheds and gazebos. Most policies cover outbuildings on a property up to either 10% or 20% of the amount of coverage provided for the primary structure. That generally is more than enough to replace a shed or gazebo. This component of your coverage also might cover any freestanding guesthouses, barns, retaining walls, swimming pools and other things built on the property aside from the main house, so if you have pricey outbuildings, a wall and/or a pool, check the “Other Structures” section of your policy to confirm that you have sufficient coverage. If you don’t, find out how much it would cost to increase this coverage.
Possessions stolen from storage units, hotel rooms, cars, luggage or kids’ dorm rooms. Your homeowner’s insurance provides coverage for your stuff even when that stuff is not in your home. In fact, it protects your possessions even overseas.
This away-from-home coverage typically is capped at 10% of the maximum amount that the policy would pay to replace the contents of the home. Losses due to theft or disasters such as fires typically are covered (though usually not losses due to floods or earthquakes, which typically are specifically excluded from homeowner’s insurance). Note that possessions in dorm rooms, or stolen from children who live in dorm rooms, are covered, but possessions in off-campus apartments, or stolen from students who live in off-campus apartments, are not. A student living off campus would need his/her own renter’s policy to have coverage. Look for the section of your policy labeled “Off-Premises Coverage” for details.
Helpful: Items stolen from people when they are not at home sometimes are items those people have only just purchased. If so, contact the issuer of the credit card used to make the purchase before contacting your insurance company. Many cards offer coverage for the theft of recently purchased items.
Spoiled food. Your policy probably provides coverage if a prolonged power failure ruins your frozen and/or refrigerated food. Some policies even offer a lower deductible or no deductible at all. The coverage typically is capped at $500 or less. Exception: Food ruined by a power failure caused by an event specifically excluded from coverage in your policy, such as a flood or earthquake, likely will not be covered. Details about this coverage might be in the “Property Coverage” section of your policy or in a “Special Endorsements” section. Insurers generally do not raise a policyholder’s rates because of spoiled food claims, but there are no rules prohibiting them from doing so, and proof generally is not required.
Home upgrades required by new laws and ordinances. If your home is more than a few years old, new building codes and ordinances might have taken effect since it was constructed. If you try to have the home repaired or rebuilt following a disaster, you might be required to comply with those new rules, potentially increasing your costs. Most homeowner’s policies will pay some or all of these additional costs, though details and limits vary. Look for a section of your policy labeled “Ordinance or Law” or a similar phrase for details.
A small percentage of policies will pay a portion of the cost of upgrading the home to meet current codes and ordinances even when the upgrade is unrelated to a disaster that’s covered by the policy.
Landscaping. Your trees, shrubs, flowers and other landscaping probably are covered by your insurance. This coverage usually is capped at 5% of the home’s coverage limit. And the coverage might provide protection only if landscaping is damaged by specific causes listed in the policy—and wind, a common cause of landscaping damage, sometimes is not listed. Typically only trees and plants you purchased for the property will be covered, not plants that grew on the property on their own. Look for a section of your policy labeled “Trees, Shrubs and Other Plants”…“Landscaping”…or something similar for details. Take photos of your landscaping so that you have evidence of the damage and/or save receipts and invoices from landscapers, nurseries and home centers.
LESS COMMON COVERAGE
These are included in some, but not most, policies. Be sure to check yours so you’ll know…
ID theft and counterfeit money. Some homeowner’s insurance policies include a limited amount of coverage for losses related to ID theft and/or accidentally accepting counterfeit currency. This coverage often is capped at around $500, however, and usually covers only very specific types of
ID-theft losses. A cynic might say that it’s more a marketing gimmick than real insurance. Look for a section of the policy with a label featuring terms such as “ID Theft,” “Credit Cards” or “Counterfeit Money” to see how much, if any, coverage you have. If you want more extensive coverage, you’re likely better off buying specialized ID-theft coverage from a company that offers it.
Fire department service charges. Your homeowner’s insurance might pay some or all of the bill if a fire department charges you after it responds to a call to protect your property. If you have this coverage, there should be a section of your policy labeled “Fire Department Service Charge” or words to that effect. When offered, it typically has a lower deductible than the policy’s standard deductible, if it has any deductible.
Grave markers. Your homeowner’s insurance might cover the cost of repairing or replacing a loved one’s grave marker or mausoleum—even if the grave is not located on your property. Look for a section of your policy labeled “Grave Markers” or similar for details. Cemeteries typically are responsible for repairs to grave sites but not grave markers unless cemetery equipment caused the damage.
THE RISK OF FILING A CLAIM
When a home owner files a single claim, his/her homeowner’s insurance premiums increase by an average of 9% for the next five to seven years, according to a study. But this is just an average. Some policyholders have discovered that their rate increases are significantly higher or lower, often because of…
Where they live. Rate hikes for filing one claim were 17.5% or more on average in Wyoming, Connecticut, Arizona, New Mexico, California, Utah, Illinois and Maryland. They were 5% or less in New York, Massachusetts, Florida and Vermont. Warning: Filing multiple claims within a five-to-seven-year period will lead to substantial rate increases everywhere.
What type of claim they filed. A claim related to liability, fire, theft, vandalism or water damage typically results in an increase of 12% or more. But a claim related to weather damage to the home (especially weather damage unrelated to hail or wind) or a medical bill stemming from an injury suffered by a guest on the property usually results in an increase of just a few percentage points.