Home insurance - The loopholes

Your home insurance plan most likely follows the basic outline of most home insurance plans around the country. That is, it will most likely cover damage that occurs to the structure of your home and other structures on the property (like a shed), liabilities you incur should someone be injured on your property, and damage to objects you store in your home, as well as extra costs of living that you may incur should your home become uninhabitable.

A basic home insurance plan, however, is not without its loopholes. Certain events that may fall under one of the categories listed above may not be covered if the cause is one that the insurance company precludes.

For example, a common loophole can be found in the structure of home coverage outlined in your home insurance plan. Say you find that you have termites and that now the foundation of your home is destroyed and needs replacing. Most insurance companies will not cover this, because the termites were most likely there before you purchased your home.

Another interesting loophole can be found in coverage of your personal belongings. The effects on your home and property due to natural disasters such as earthquakes and floods – especially in the aftermath of Hurricane Katrina – are not covered in most basic home insurance policies. Should your home be flooded as a result of excessive rain, your insurance claim will not be honored. However, should your home be flooded because the pipes break, then the damage to your belongings and home will be covered.

Make sure you read the fine print in your home insurance contract carefully and consider possible loopholes. If necessary, purchase extra home insurance coverage so that you will never be caught by surprise.

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