7 common exclusions in home insurance you must know
You buy home insurance to sleep at night—not to read fine print. Yet most claim disputes boil down to one simple truth: exclusions. These are the “not covered” items hiding in your policy, and they often surface when you need help most. The good news? A few minutes of learning today can save months of frustration after a loss. Below are the seven exclusions that surprise homeowners most, why they exist, and how to fix the gaps—without overpaying.
Why exclusions matter in home insurance
Insurers price for the risks they expect to cover. Everything else gets excluded or limited. Some exclusions (like war or nuclear hazards) are obvious outliers. Others—like flood or sewer backup—catch people off guard because the damage “feels” like a normal home claim.
How policies differ:
Most standard policies cover sudden, accidental events. Ongoing problems (wear and tear, mold from long-term leaks) are usually excluded because they’re considered maintenance.Perils vs. open-peril:
A “named perils” policy only covers listed causes of loss. An “open-peril” (or “all-risk”) policy covers all causes except those explicitly excluded. The exclusions still apply either way.The fix is simple:
For many exclusions, you can add an endorsement, buy a stand‑alone policy (e.g., flood), or tweak limits for pennies compared to the cost of a denial.
1) Flooding and storm surge
What’s excluded
Standard home insurance typically excludes flood—water rising from the outside into your home—whether from heavy rain, river overflow, storm surge, or rapid snowmelt.
Common misunderstanding:
Water damage from a burst pipe inside your house may be covered, but flood water coming from outside usually is not.
How to cover it
You can buy flood coverage through a government-backed program (like NFIP in the U.S.) or private flood insurance. Both can work; the right choice depends on your location, home value, and risk tolerance.
NFIP vs. private flood insurance at a glance
Sources: FEMA flood program guidance; private flood market summaries—click here to read more.
Real-life scenario
Scenario:
A family’s ground floor floods after monsoon rains. Repairs total the equivalent of several years’ mortgage payments. Their home policy denies the claim because the water came from outside. A separate flood policy would have stepped in.
Quick claim tip
Action:
If you’re in any area where water can pool, get a quote for flood—both public and private options. Ask about content coverage and temporary living expenses.
2) Earth movement (earthquakes, landslides, sinkholes)
What’s excluded
“Earth movement” usually includes earthquakes, landslides, mudflows, and sometimes sinkholes. Damage can range from cracked slabs to total structural failure.
Hidden risk:
Even small tremors can crack foundations or shift walls—repairs get expensive fast.
How to cover it
Earthquake endorsement or policy:
In many regions, you can add an earthquake endorsement or buy a stand‑alone policy. Expect a separate deductible—often a percentage of your home’s insured value.Sinkhole and landslide:
Options vary. In some places, sinkhole coverage exists as a specific add-on; landslides may be available through specialty markets.
Real-life scenario
Scenario:
After a minor quake, a homeowner notices stair-step cracks along brickwork and doors no longer closing square. The standard home policy denies the claim. An earthquake endorsement would have applied (minus the quake deductible).
Quick claim tip
Action:
If you live near fault lines or hillsides, request quotes for earthquake and ground-movement coverage. Ask about masonry veneer, chimneys, and retaining walls—these are common pain points.
3) Sewer, drain, or sump backup
What’s excluded
Water backing up through sewers, drains, sump pumps, or due to power failure of a sump system is usually excluded under standard policies.
Why it stings:
Backup water is contaminated and can ruin flooring, walls, and belongings fast.
How to cover it
Endorsement:
Most insurers offer a sewer/sump backup endorsement with limits you choose (e.g., 5,000; 10,000; 25,000). It’s one of the most cost‑effective add‑ons.
Real-life scenario
Scenario:
A summer storm knocks out power to a sump pump. The basement floods, soaking stored furniture and kids’ books. The standard policy denies it; a $50–$150/year endorsement could have covered cleanup, drying, and replacement.
Quick claim tip
Action:
Install a battery backup for your sump and a backflow valve. Insurers may offer credits; document upgrades with photos and invoices.
4) Mold, rot, and infestations
What’s excluded
Damage from mold, rot, fungus, and pests (termites, rodents) is typically excluded or tightly limited. Insurers consider long‑term moisture and pest control to be maintenance.
Limited exceptions:
If a covered event (like a sudden pipe burst) causes mold, you may see a small sublimit for mold remediation unless you buy higher mold limits.
How to cover it
Mold endorsement:
Some insurers let you increase mold limits (e.g., from a few thousand to higher amounts).Pest treatment:
Usually not insurable; prevention and routine inspections are your best defense.
Real-life scenario
Scenario:
A slow leak behind the fridge goes unnoticed for months. When the hardwood buckles, testing reveals mold. The claim is denied as “long‑term seepage.” A $5 valve leak detector and quarterly checks could have prevented it.
Quick claim tip
Action:
Use smart leak sensors under sinks and near appliances. Photograph under‑cabinet areas twice a year so you can show “no prior damage” if a sudden leak occurs.
5) Wear and tear, neglect, and construction defects
What’s excluded
Policies pay for sudden, accidental loss—not gradual deterioration or poor workmanship. Think worn shingles, rusted pipes, settling cracks, or faulty installation.
But note:
Resulting damage from a sudden event can still be covered even if the original defect isn’t. For example, a pipe fitting installed incorrectly years ago suddenly fails—repairs to the water damage may be covered, but not fixing the faulty fitting itself.
How to cover it
Betterment vs. loss:
Insurance doesn’t fund upgrades you were due to make. A maintenance budget is your “policy” for wear and tear.Builder’s warranty or contractors’ guarantees:
Keep documentation for workmanship claims; some defects are recoverable from the builder.
Real-life scenario
Scenario:
An aging roof finally leaks during a normal rain. The insurer inspects and finds extensive granule loss and brittle shingles. The claim is denied as wear and tear. Regular replacement schedules could have prevented interior damage.
Quick claim tip
Action:
Keep a home maintenance log with dates, contractors, and receipts. It strengthens your case when a sudden event—not neglect—caused the loss.
6) High‑value items and special limits (jewelry, art, collectibles)
What’s excluded
Not excluded outright, but subject to “special limits of liability.” Jewelry, watches, furs, art, collectibles, firearms, silverware, musical instruments, and cash often have low caps for theft or mysterious disappearance—far below actual value.
Typical issue:
A policy might cap jewelry theft at a small fraction of your ring’s value unless it’s “scheduled.”
How to cover it
Schedule items:
Add a “scheduled personal property” endorsement with appraisals. It often removes the deductible and covers mysterious disappearance.Safe storage:
Insurers may offer better terms if you use a safe or vault.
Real-life scenario
Scenario:
An engagement ring goes missing after a party. The policy’s sublimit pays only a small amount. A schedule would have paid the full appraised value with no deductible.
Quick claim tip
Action:
Photograph valuables with a ruler or coin for scale, keep appraisals current, and store invoices. Update the schedule after life events (weddings, inheritances).
7) Ordinance or law (building code upgrades)
What’s excluded
When you rebuild after a covered loss, current building codes may require upgrades (rewiring, sprinklers, energy standards). The extra cost to bring undamaged parts of the home up to code is often excluded or limited.
Why it matters:
Older homes can face five‑figure upgrade bills after even a modest fire.
How to cover it
Ordinance or law endorsement:
Add 10%–50% of Coverage A (dwelling) as ordinance coverage, depending on your home’s age and local codes.
Real-life scenario
Scenario:
A kitchen fire requires partial rebuild. Code now requires GFCI/AFCI circuits and hardwired interconnected alarms throughout. The base policy covers replacing damaged items; the upgrade cost is denied unless you added ordinance coverage.
Quick claim tip
Action:
Ask your contractor to itemize code-required work on the estimate. Match that line item to your ordinance or law limit to avoid shortfalls.
Provider comparison snapshot: add‑ons and limits
The goal isn’t to pick a brand—it’s to see which provider makes it easiest and cheapest to plug your gaps. Here’s an illustrative comparison of how three typical insurers might handle common add‑ons. Use it as a checklist when you shop.
Tip: Ask each provider to map exclusions and sublimits on one page. If they can’t, that’s a red flag.
Claim‑smart checklist: how to avoid denial surprises
When something goes wrong, you don’t want to learn policy language by flashlight. Use this quick checklist to keep claims smoother and avoid “exclusion shock.”
Start with safety:
Don’t delay emergency steps (shut off water, board windows). Document everything as you go.Document the scene:
Take wide shots first, then close‑ups. Include serial numbers and measurements.Protect from further damage:
Cover openings, dry wet areas, and keep receipts. Insurers expect “reasonable steps” to mitigate.Call fast, share facts:
Report the loss promptly and be clear about what happened. Stick to facts; don’t speculate on causes.Ask the adjuster two questions:
“Which policy section applies?” and “Is any exclusion or sublimit involved?” Get answers in writing.Push for cause analysis:
If the cause determines coverage (e.g., backup vs. flood), request a written determination and the evidence.Disagree politely, escalate smartly:
If denied, request the exact exclusion language, the inspection notes, and your appeal options. A contractor or public adjuster can help clarify the cause and scope.
Premium‑savvy ways to plug exclusions affordably
You can close most gaps without blowing your budget. Prioritize by likelihood and impact.
Target high‑impact gaps first:
Flood, sewer backup, and ordinance coverage often deliver the biggest real‑world value for the cost.Bundle discounts:
Adding an endorsement may trigger multi‑policy or protective device credits. Ask how upgrades (sump backup, water sensors) affect your premium.Increase deductibles strategically:
Accept a higher base deductible to free budget for endorsements that protect against catastrophic or common exclusions.Use parametric or micro‑policies:
In some regions, small stand‑alone covers (e.g., “storm” or “quake” triggers) pay a flat amount quickly and cheaply.Shop renewal, not just purchase:
Endorsement pricing changes. Re‑quote flood, earthquake, and backup at each renewal—you might find better terms.Invest in prevention:
Backflow valves, gutter guards, grading away from the foundation, and leak sensors often cost less than one uncovered cleanup.
Case study: the 3-hour storm that cost 30,000
Setting:
A homeowner on a tree‑lined street experienced a fast summer downpour. The city sewers backed up. Water surged through the basement drain, ruining flooring, a water heater, and stored keepsakes.Outcome without endorsement:
The standard policy denied the claim as “water backup.” Dry‑out and replacement costs topped 30,000, paid out of pocket.Alternate outcome:
A 25,000 sewer backup endorsement plus a 500 sump battery upgrade would have covered cleanup, new flooring, and appliances—minus the endorsement’s deductible.Takeaway:
A small, targeted add‑on can turn a nightmare into an inconvenience.
Real‑world shopping checklist you can use today
Print or copy this into your notes app and fill it in with each insurance quote.
Home basics:
Year built, square footage, foundation type, roof age.Water risk:
Distance to water, local drainage, history of backups, sump present.Exclusions to address:
Flood, earth movement, sewer backup, mold limit, jewelry sublimit, ordinance or law.Endorsements you want:
Sewer backup limit, increased mold limit, scheduled valuables, ordinance %.Target budget:
Monthly/annual premium goal, max deductible you’re comfortable with.Provider answers to log:
Included sublimits, optional add‑on costs, waiting periods, claim service standards.
Industry insights and further reading
Insurance Information Institute (III):
Overviews of what homeowners policies typically cover and exclude, plus claims trends—click here to read more.FEMA Flood Resources:
Clear explanations of flood risk, flood maps, and how separate flood insurance works—click here to read more.National Association of Insurance Commissioners (NAIC):
Consumer guides on policy types, endorsements, and shopping tips—click here to read more.
These resources provide plain‑language primers and data on frequency and severity trends so you can calibrate your coverage intelligently—click here to read more.
Conclusion and key takeaways
Exclusions aren’t traps; they’re boundaries. Once you know where the line is, you can redraw it to fit your life. Start with the seven big gaps:
Flood:
Buy stand‑alone or private flood if water could reach your home.Earth movement:
Add earthquake/sinkhole where relevant—mind the separate deductibles.Sewer backup:
This low‑cost endorsement has an outsized payoff.Mold/infestations:
Boost mold limits and prevent moisture; pests are on you.Wear and tear/defects:
Insurance covers sudden loss; maintenance and workmanship are separate.High‑value items:
Schedule jewelry, art, and collectibles to beat sublimits.Ordinance or law:
Add a % of dwelling coverage to handle code upgrades.
Direct answer: Review your declarations page this week and circle every exclusion or sublimit that could hit your home. Price the endorsements in order of risk (likelihood × cost of damage). In an hour, you can turn the fine print into peace of mind—and make your coverage truly yours.
