With plenty of options available, the most suitable insurance coverage for the structure of your home as well as the foundation is homeowners insurance. Homeowners insurance recovers belongings in case of an unfortunate event, however like most policies, there can be various exclusions on damage to your home depending upon the coverage. The foundation of a home is a counterpart as much as it is a whole and can be greatly impacted in a variety of ways policies consider. The best way to understand what homeowners insurance covers is by separating the types of risk events that can ideally occur into two categories according to a standard policy.
Events unlikely to be covered by homeowners insurance.
An insurance company will most likely not cover events that may appear to be common reasons for damage to your foundation. Here’s a list of what homeowners insurance doesn’t cover, and may put you in a position to seek more particular coverage.
- Earthquakes & flooding
- Faulty construction
- Pressure from tree roots
- Cracking
- Shrinking
- Bulging
- Intentional acts
- Pests
- Expansion of the foundation
- Natural settling
Insurance companies are likely to avoid responsibility for wear and tear which can stem from numerous events over time–the list above to name a few. However, options to modify or include additional coverage apart from standard homeowners policy are possible. For example, earthquakes are best managed with earthquake insurance while flooding events are covered by hidden water endorsements or personal property insurance. Inquiring in a separate coverage may be best considered when assessing the condition of the home as well as its history if any. Overall, these types of damages are considered policy exclusions and are classified as responsibilities governed by the homeowner.
Events mostly likely to be covered by homeowners insurance.
There are three types of homeowners insurance, H0-2, HO-3, HO-5–each one with its basic level of coverage. All have a standard level of coverage towards certain events distinguished by covered perils. A peril in homeowners insurance is something that causes damage or loss towards your home, some of which are:
- Vandalism and theft
- Volcanic eruption
- Power surge
- Fire or lightning
- Freezing
- Vehicle
- Falling objects
- Weight of snow
- Smoke
- Sudden accidental damage to HVAC or water heater
- Accidental discharge of overflowing water
- Explosions
- Hail and windstorm
HO-2
The HO-2 is also known as a broad form policy and is limited to up to sixteen named perils listed within the policy form. The HO-2 consists of dwelling coverage which covers physical repair on the structure of the home and built-in appliances. It reimburses replacement cost. Structure coverage covers detached objects from the property and is reimbursed through a replacement cost as well. HO-2 will also cover personal property both inside and outside. It will pay for living expenses while waiting for repairs, known as loss of use. Examples are medical bills in case of liability to someone else’s injury, as well as medical payments to others in case a guest is injured in your home (despite whose fault it is).
HO-3
The HO-3 policy, also known as Homeowners Policy Special Form 3, is most standard for stand-alone homes. They go at the same rate as an HO-2, yet are differentiated by covering open perils vs. named perils. In other words, HO-3 policy covers all risks with high evaluations ranging between 100k-500k under personal coverage, while medical payments to others range between 1k-5k and exclude water damage, earthquakes, war, and wear and tear.
HO-5
The HO-5 policy is also known as the comprehensive form policy and consists of a stronger coverage for personal property including all the same coverage as HO-2 and HO-3, covering everything except specific perils mentioned in the policy. The H0-5 policy consists of reimbursing property of equal cost and will receive the value of a new item. This is the second most common option of the three. One of the major differences between HO-5 and the others is that providing proof is on the insurer when filing, instead of compiling evidence to receive reimbursements. The best option is the HO-5 policy when considering the number of personal items owned to receive optimal protection.
3 most common foundation issues
When it comes to foundation issues, unfortunately homeowner policies do not cover common problems that are expected to occur with your home. It is the homeowners responsibility to maintain the quality of the home. There are many ways to prevent a lot of damage, and it is not an insurance company’s job to fix what ought to be avoided by standard home care and control. There are natural occurrences that are deemed wear and tear. These types of repairs must be managed by the homeowner on a regular basis. Below are examples of preventative measures and maintenance that homeowners insurance will not cover on your behalf.
Foundational cracks
When the soil expands and contracts this can cause a disturbance in the foundation which results in cracks on the surface and gaps on brick exteriors. This can increase into serious problems over time. Within the first 2-3 years it is normal for houses to settle, but horizontal lines can potentially indicate serious problems, one being that the home is under a lot of pressure.
Settling
Settling is an ordinary sign for a foundation issue and can be noticed when one side of the house is tilting, or if the center of the home is sinking. If settling is ignored, the foundation can sink completely into the earth and is worth tending to sooner than later.
Upheaval
When soil expands and contracts, it creates an upheaval in slab foundations and can be caused by extreme moisture, plumbing leaks, and frost heave. The most troublesome type of soil is clay due to its ability to absorb in high volumes when affected by moisture.
The best policy to secure your foundation.
Homeowners insurance will cover foundation issues when it comes to choosing your policy. Sticking with HO-3 and HO-5 will reassure the most reimbursement while considering high-risk events.
