Picture this: You’ve finally bought your dream home. You have a shiny new homeowners insurance policy tucked away in a drawer. You sleep soundly, thinking, “If anything happens to this house, I’m covered.”
The bad news? You probably aren’t covered for everything.
There is a massive gap between what new homeowners think is covered and what is actually in the fine print. Discovering these gaps after a disaster strikes can devastate your budget.
At DIY Dollar Sense, we believe in protecting your biggest investment without breaking the bank. In this guide, we’re breaking down exactly what standard homeowners insurance does not cover—and more importantly, how you can fill those gaps so you aren’t left footing the bill.
1. The “Big Two” Natural Disasters: Floods and Earthquakes
This is the most common and dangerous misconception in real estate. A standard policy (HO-3) almost never covers flood or earthquake damage.
- Floods: Whether it’s a hurricane storm surge or a river overflowing, water damage coming from outside your home into it is an exclusion.
- Earthquakes: Structural damage from ground movement is not covered.
How to Get Coverage:
- For Floods: You need a separate Flood Insurance policy. If you live in a high-risk zone, your lender likely requires it. If you’re in a low-risk zone, it’s often surprisingly cheap—and worth every penny.
- For Earthquakes: You can add an Earthquake Endorsement to your existing policy or buy a standalone earthquake policy. This is critical if you live in seismic hotspots like California or the Pacific Northwest.
2. Maintenance and “Wear and Tear”
Homeowners insurance is for sudden, accidental damage (like a tree falling on your roof). It is not a maintenance plan. If your roof leaks because it’s 30 years old and you ignored it, that’s on you.
Common maintenance exclusions include:
- Mold: Unless it resulted from a covered peril (like a burst pipe), mold is usually considered a maintenance issue.
- Termites and Pests: Damage from termites, rats, or bed bugs is almost universally excluded.
- Rot and Rust: Slow deterioration is considered homeowner negligence.
The Fix: The best insurance here is prevention. Keep up with your DIY home repairs!
3. Appliance Breakdowns (The Grey Area)
If your refrigerator motor dies or your HVAC system quits in the middle of a heatwave, your homeowners insurance will likely deny the claim. They view this as mechanical failure, not an “accident.”
How to Get Coverage:
This is where many homeowners get confused. For mechanical breakdowns and appliance failures, you don’t need insurance; you need a Home Warranty.
Read More: Confused about the difference? Check out our simple guide: Home Insurance vs. Home Warranty: The Simple Guide You Need.
4. Sewer and Drain Backups
If water backs up into your home through your sewers or drains (yuck), it causes massive damage to floors and walls. Surprisingly, standard policies rarely cover this.
How to Get Coverage:
Ask your agent for a “Water Backup” endorsement. It typically costs about $50–$100 a year and can save you $10,000+ in cleanup costs. It is one of the best value-for-money add-ons you can buy.
5. High-Value Valuables (Jewelry, Art, Cash)
If your home burns down, your policy covers your “personal property.” However, there are sub-limits for specific categories.
- Jewelry: Often capped at $1,500.
- Cash: Often capped at $200.
- Firearms: Often capped at $2,500.
If your engagement ring is worth $5,000 and it gets stolen, the insurance check will leave you short.
How to Get Coverage:
“Schedule” your valuables. This is called a Floater or Rider. You appraise the item, list it specifically on your policy, and pay a small extra premium to cover its full value (often with no deductible!).
6. Dog Bites (Certain Breeds)
Your policy includes liability protection if your dog bites a guest. However, many insurers have a blacklist of “aggressive” breeds (often including Pit Bulls, Rottweilers, or Dobermans). If you own a restricted breed, your liability coverage may be void.
How to Get Coverage:
Shop around. Some insurers are breed-neutral. Alternatively, purchase a separate Canine Liability Policy.
Summary: How to Cover the Gaps
Don’t let this list scare you. The goal is to be aware so you can budget for the right protection.
| Exclusion | The Solution |
| Floods | Buy a separate Flood Policy (FEMA/NFIP). |
| Earthquakes | Buy an Earthquake Endorsement. |
| Appliance Failure | Consider a Home Warranty. |
| Sewer Backup | Add a “Water Backup” Rider (Highly Recommended!). |
| Expensive Jewelry | “Schedule” your items with a Personal Property Floater. |
Final Dollar Sense:
Review your policy today. Adding a simple endorsement for water backup or scheduling your wedding ring costs very little compared to the financial ruin of a denied claim. A little DIY research now saves you thousands later.
Disclaimer: Insurance policies vary by state and carrier. Always read your specific declaration page to understand your coverage.
