Which Area Is Not Protected by Most Homeowners Insurance

Last modified: March 13, 2022

Once you have taken out a homeowners insurance policy, you may think you have all the protection you need; But, unfortunately, certain areas are not usually covered. This article will explain which area is not protected by most homeowners insurance, so you understand what is covered if you ever need to make an insurance claim.   

Which Area Is Not Protected by Most Homeowners Insurance?

When taking out insurance cover, it is essential to know what homeowners insurance does not cover. Luckily, this article will help you understand what is and is not covered by most insurance companies.   

What Is Often Not Covered by Insurance?

The list below shows some things that are not covered by homeowners insurance:

  • Termites and insect damage   
  • Sinkhole damage 
  • Neglect resulting in property damage
  • Earthquake damage

What Is Covered by Homeowners Insurance?

Homeowners insurance coverage is divided into six main categories. This makes it easier to understand what your exact coverage entails. 

What Are the Six Categories Typically Covered by Homeowners Insurance? 

  • Dwelling Coverage (Coverage A) 

Dwelling Coverage (Coverage A) provides cover for your home itself. This homeowners insurance covers plumbing, heating systems, the roof, and electrical system. Detached external structures on your property will not be protected by dwelling coverage, but exterior areas attached to your home, such as your porch and deck, should be covered.  

  • Other Structures (Coverage B) 

Coverage B is known as Other Structures cover and offers protection for parts of your property that are separate from the main dwelling, sit on an independent foundation, and are not regularly occupied. Coverage B covers external structures such as sheds, fences, barns, and garages.     

As your Dwelling Coverage does not cover these structures, it is crucial to make sure your insurance offers this coverage. Your Other Structures cover also needs to reflect the cost of replacing external structures, which many people undervalue.         

  • Personal Property Coverage

The majority of homeowners insurance policies offer Personal Property Coverage. Personal Property Coverage covers the homeowner’s belongings such as furniture, appliances, and other items that are not part of the actual property.     

It is essential to check the limits of your Personal Property Coverage carefully. Some items may not be covered and could require a separate policy, and others may not be covered in full if a claim is made. Examples of property that could fall into this category are high-value artwork and jewelry.      

  • Liability Cover

Liability Cover is usually offered as part of a homeowners insurance policy. If you are wondering whether home insurance covers damage to other people’s property, the good news is that yes, it does in most cases.        

Liability Cover protects you and your household members if a guest is injured at your home or you accidentally damage their personal property (excluding damage to a vehicle). Liability Cover will typically payout towards the cost of you being sued by your guest if you are found guilty and your legal expenses for their injury or property damage.           

  • Guest Medical Protection

Guest Medical Protection can cover the cost of reimbursing a visitor that suffers injuries on your property. Most insurance companies will cap the amount that can be claimed for Guest Medical Protection as it is used in cases where a visitor is injured at your property but does not take action to sue you.    

  • Loss of Use Coverage

Loss of Use Coverage can be used to cover the cost of accommodation expenses when your home is not suitable for living in for some time as a result of damage or an event preventing you from returning to your property (such as a storm or a wildfire).      

Replacement Cost vs. Fair Value 

Replacement cost valuation and fair value vs. current cost are phrases you will frequently see when searching for the best homeowners insurance. Therefore, to choose the right insurance coverage, it is essential to understand the difference between replacement cost and present value.

Is Fair Value the Same as Replacement Cost?  

Fair value and replacement cost are two separate ways insurance companies decide on your payment when you make a claim. An example of a replacement cost is an amount you would pay to replace an item with the same or similar item. 

In contrast, an example of fair value could be considered a depreciated replacement cost. A replacement value formula can be used to calculate fair value: Replacement cost – depreciation cost = fair value.                

What Is a Homeowners’ Insurance Deductible? 

An insurance deductible is a percentage deductible on homeowners insurance when you make a claim. For example, a $5,000 home insurance deductible means you pay this amount toward your claim, and the insurance covers the remainder.           

How Does Homeowners Insurance Deductible Work?— Common Questions       

Who Do I Pay My Home Insurance Deductible To?  

You will pay the deductible to the company carrying out the repair, as your insurance will claim the remainder.   

Is Home Insurance Deductible per Claim or Year? 

Home insurance deductibles are required for each claim.  

How Can You Avoid Paying Home Insurance Deductible? 

You can avoid paying the deductible if your repair is less than the deductible amount, and you can cover the cost yourself.    

In Conclusion

Which area is not protected by most homeowners insurance is something that every homeowner needs to know. The main areas that are not covered by homeowners insurance include: 

  • Damage caused by earth movements such as sinkholes and earthquakes.
  • Issues caused by neglect or improper maintenance of the property.
  • Damage caused by termites and other insects. 

FAQs

Which Is Not Usually Covered by Homeowners Insurance?

There are three key areas to remember when wondering which area is not protected by most homeowners insurance; earth movement, neglect, and termites/insect damage. 

Is the Loss of Use Not Protected by Most Homeowners Insurance?

Homeowners insurance often covers loss of use and helps cover the cost of living elsewhere while you cannot stay in your home.

Is the Home Protected by Most Homeowners Insurance?

The dwelling itself is usually protected under Category A homeowners insurance.